Workers in 10 countries in Southeast Asia can now move freely to any country in the economic bloc to find work. While positive, there are tax implications for workers, businesses and the authorities. This issue was discussed at the Tax - Global Staffing conference in Ho Chi Minh City.
There are no accurate statistics on the needs and the exact number of workers who have moved countries in the ASEAN Economic Community in the last 6 months. According to experts at the conference, demand is high. Nearly 100 domestic and FDI enterprises at the conference have also expressed their happiness at a more mobile workforce. However, an understanding on tax related issues to the movement of labour is still very limited.
"Each country has different laws and tax regulations. If the businesses know about these laws, they’ll be more are different ... if they have more information they’d perhaps be more proactive on transferring staff", said Nguyen Thi Khanh Ha - Head of Finance Division, United Airlines.
According to Thomas Mc Clelland - Tax Country Leader of Deloite, Vietnam - a leading tax consultancy, little understanding of the laws and tax policies can create large risks if misinterpreted by businesses in AEC countries. It could damage businesses and employees could face double taxation or have legal problems with their immigration status.
Representatives of the Ho Chi Minh City Tax Department admitted that foreign workers based in Vietnam at the point AEC established had inaccurate tax statuses and this may have led to losses.
For example, a foreigner working for 9 months in Vietnam, a month in Singapore and 2 months working in Japan. Under Vietnamese law, a basis for taxation is the total income of the person in Vietnam, Singapore and Japan. But many foreign workers only declared their income in Vietnam.
"People think that if they work in Vietnam, they should only declare their tax in Vietnam, and if they work in Singapore or Japan they will declare their tax there. But it’s not correct. They need to declare global income", said Tran Thi Le Nga - Deputy Director, HCM City Tax Department.
Ho Chi Minh City Tax Department are proposing to the Ministry of Planning and Investment to amend a number of policies where regulations that are unclear and overlapping, concerning personal income tax. This issue has been a problem for many years.
