[ingodirectors] Update from PACCOM on PIT Exemption - 6 June 2017

Tue Jun 6 21:58:15 ICT 2017

Dear INGO directors:

Please find enclosed a letter from Mr. Phan Anh Son, PACCOM Director
General, with the latest update on PIT exemption issue.
The letter is self-explanatory and I will keep you informed of any
other new developments as they happen.

Warm regards,

Marko
---------
Marko Lovrekovic, Managing Co-Director
VUFO-NGO Resource Centre
Trung Tu Diplomatic Compound
6 Dang Van Ngu, Dong Da, Hanoi
Building E3, Room 201, 2nd floor
Mobile: +84 904 191 871
Phone: +84 4 3832 8570
Email: director at ngocentre.org.vn
Web: http://www.ngocentre.org.vn

On 26 May 2017 at 12:42, Marko Lovrekovic <director at ngocentre.org.vn> wrote:
> Dear INGO directors:
>
> Last week I met PACCOM senior leadership to discuss the issue of PIT
> exemption. I informed them that many of you received a letter from
> Hanoi Tax Department, challenging the Article 1.4 in your agreements
> with VUFO and requesting retroactive payments of Personal Income Tax
> (PIT) for INGO foreign staff.
>
> I told PACCOM leaders that our INGO community needs their support in
> resolving this crisis. We need an advocate at the highest level (Prime
> Minister, Government's Office, Ministry of Finance, Foreign Affairs
> and Tax Department). If the crisis does not get resolved, some INGOs
> will have to pull out funding from provinces to pay for PIT bill; and
> some may need to close their missions. INGO funds for projects will
> get reduced by 25% to 30%. Several INGO headquarters expressed deep
> concerns and requested clarifications from the highest level.
>
> The crisis with PIT exemption was triggered by the following key
> changes in INGO agreements:
> - Agreements are now signed with VUFO (previously it was COMINGO)
> - Article 1.4 says "facilitate exemption" (previously it was "granted")
> - Article 1.7 says PACCOM is our "focal point" (previously it was VUFO)
>
> I requested clarification why some of you (chief representatives) lost
> the PIT exemption privilege; why was COMINGO replaced by VUFO in
> formal agreement; who is the official "governing body" authorised to
> grant exemption; what does "facilitation of PIT exemption" mean; is
> Tax Department ignoring international treaties signed between Vietnam
> and some governments (such as the US Government, June 2005)?
>
> PACCOM did not have answers to these questions but they will schedule
> meetings with high-level officials at the Ministry of Finance and Tax
> Department (this week). Following these meetings PACCOM will organise
> a meeting with INGO directors to provide feedback.
>
> PACCOM Director General said that they are taking the issue seriously,
> but it may take some time because it is a policy-level issue. In the
> meantime, INGOs should wait and do nothing. INGOs should contact
> PACCOM directly and share any new information which can contribute to
> resolving of the PIT exemption crisis.
>
> I will keep you informed of further developments.
>
> Warm regards,
>
> Marko

> On 17 May 2017 at 13:14, Marko Lovrekovic <director at ngocentre.org.vn> wrote:
>> Dear INGO directors:
>>
>> Following the mini-survey on PIT exemption from last week, I would
>> like to thank those of you who quickly responded. I received 33
>> replies from you. Ten (10) INGOs confirmed receiving a letter from
>> Hanoi Tax Department (HTD), although the number is likely much higher
>> — HTD said they sent it to 30-40 INGOs. In the letter HTD asked INGOs
>> to deduct, declare and pay PIT for foreign staff which is currently
>> working / has worked in Vietnam. In some cases, the letter listed
>> names of all expatriate staff that have worked between 2009 and 2017.
>>
>> The majority of INGOs who responded are registered as Representative
>> Office (14) or Project Office (14). Only five (5) respondents are
>> registered as Operations. There are 72 expatriates working / have
>> worked for these 33 organisations. Majority (23) of INGOs have signed
>> MoU which includes Article 1.4. granting the exemption from PIT on
>> salaries and allowances. Most of them (20) have already submitted
>> lists of expatriates to HTD, but only 2 received approval. Two (2)
>> INGOs received negative responses, while others are still waiting.
>>
>> I will meet PACCOM senior leadership this Friday to share my findings
>> and to discuss the course of action. PACCOM committed to organise a
>> meeting with INGO Steering Committee and other INGO representatives
>> later next week. Now, I just wanted to provide an update, as well as
>> share some relevant documents. Most of you are familiar with it, but
>> there may be some country directors who have not yet seen it. Here is
>> an overview of the attachments with key articles noted for your
>> reference:
>>
>> - sample of the recent HTD letter notifying INGO on non-eligibility
>> for PIT exemption
>> - Decree 12: Article 23 — Personal income tax on expatriate staff
>> - Law on Personal Income Tax: Article 4 — Income which is tax exempt (point 14)
>> - Letter from the Ministry of Finance 13231/BTC-TCT, 18 September 2009
>> - Sample of MoU between COMINGO and INGOs — articles 1.4 and 1.7
>> - my old letter to HTD on behalf of INGOs, December 2009
>> - HTD response to my letter, January 2010
>>  (the last two attachments are 8 years old, but some questions are
>> very relevant)
>>
>> There are some other relevant legal documents, such as bilateral
>> agreements between Vietnam and your governments; Decree 93; Labour
>> Code; etc. I can share it upon request. There are more detailed
>> circulars guiding the implementation of Decree 12 and 93; various
>> amendments, letters, decisions and other documents related to the
>> above-listed legislation. I just wanted to share the most relevant
>> papers. Let me know if you need original documents in Vietnamese.
>>
>> I will keep you informed of further developments, following my meeting
>> with PACCOM.
>>
>> Warm regards,
>>
>> Marko

>> On 11 May 2017 at 17:47, Marko Lovrekovic <director at ngocentre.org.vn> wrote:
>>> Dear INGO directors:
>>>
>>> Some of you have received letters from the Hanoi Tax Department
>>> recently, in which they asked for payments of Personal Income Tax
>>> (PIT) for your foreign staff. A few of you have been asked to pay PIT
>>> for your foreign staff retroactively, as far back as 2013. Hanoi Tax
>>> Department claims that some foreign staff does not meet sufficient
>>> conditions for PIT exemption and/or that some INGOs have no provisions
>>> on PIT exemption in their partnership agreements signed with VUFO, on
>>> behalf of COMINGO.
>>>
>>> If such claims proved valid, this may have significant consequences
>>> and implications on our work. I would like to propose a meeting with
>>> the VUFO-NGO Resource Centre Steering Committee, PACCOM senior
>>> leadership and selected INGO directors affected with the
>>> above-mentioned request. Before we schedule a meeting, I would like to
>>> collect some basic information in order to get a 'bigger perspective'
>>> on the current status of this issue within the INGO community.
>>>
>>> I have prepared 8 simple questions, mostly with 'yes' or 'no' answer.
>>> It should not take more than 3 minutes of your time; and it would help
>>> me greatly to prepare a follow up. Kindly note that the questions are
>>> intended for INGOs which employ foreign nationals, including those
>>> with dual citizenship. Click here:
>>>
>>> https://goo.gl/forms/iEdMupdyRxPnjC6o2
>>>
>>> Thank you in advance for your prompt responses. I will keep you
>>> informed about further developments.
>>>
>>> Marko
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