09 Mar Follow-Up on Enhanced PIT Scrutiny & New Decree on Exit Suspension – Decree No. 49/2025/ND-CP – Exit Suspension Due to Tax Arrears

Dear Clients and Friends,

I hope this message finds you well. Below, you will find an important legal update that may significantly impact your tax management strategy. We have also included clarifications on penalties recently confirmed by the authorities—particularly relevant given the many questions you’ve raised over the last few months.

If you find that controlling incoming cash flows is challenging or you simply wish to ensure you are optimizing your tax position, please do not hesitate to reach out. Our team is on hand to arrange any situation and help mitigate potential risks.

Thank you, as always, for your continued trust in our services.

Yours,

Bao

MEMORANDUM

To: Valued Clients and Partners of PCA

From: PCA Tax and Legal Advisory Team

Subject: Follow-Up on Enhanced PIT Scrutiny & New Decree on Exit Suspension

Date: March 3, 2025

1. Introduction and Context

We refer to our memorandum dated February 28, 2025, in which we highlighted the Vietnamese government’s intensified scrutiny of Personal Income Tax (PIT) compliance and unreported income flows. In a development that underscores the government’s commitment to tighter enforcement, Decree No. 49/2025/ND-CP was published on the very same day our initial memo was circulated—February 28, 2025—formalizing key regulations on exit suspension due to tax arrears.

Although the practices described in the Decree have effectively been applied to Vietnamese citizens for some time, they are now codified into law and explicitly extended to cover broader categories of taxpayers, including foreign individuals. With this follow-up memo, we wish to draw your attention to the new legal provisions and again stress the importance of ensuring your personal and business affairs remain fully compliant, particularly regarding undeclared or untaxed income.

2. Decree No. 49/2025/ND-CP – Exit Suspension Due to Tax Arrears

a. Overview

The Vietnamese government’s recently promulgated Decree No. 49/2025/ND-CP came into force on February 28, 2025, and imposes restrictions on exiting Vietnam for individuals and businesses with outstanding tax debts. Key categories targeted under this Decree include:

1. Individuals and Business Households

• Subject to enforced execution of administrative decisions on tax management;

• Outstanding tax debts exceeding VND 50 million, overdue for more than 120 days.

2. Legal Representatives of Enterprises/Cooperatives

• Subject to enforced execution of administrative decisions on tax management;

• Outstanding tax debts exceeding VND 500 million, overdue for more than 120 days.

3. Vietnamese Citizens, Overseas Vietnamese, and Foreign Nationals

• Possessing outstanding tax debts past the prescribed deadline;

• Failing to fulfill tax obligations before exiting Vietnam.

b. Notification and Cancellation of Exit Suspension

• The relevant tax authority will notify a taxpayer about the exit suspension via their electronic tax transaction account (or, if unavailable, publicly announce the notification on its official website).

• If the taxpayer fails to clear the outstanding liability within 30 days from the date of notification, the tax authority will forward a formal exit suspension decision to the Immigration Department, under the Ministry of Public Security, for enforcement.

• Once full payment is made, the tax authority will promptly issue a notice to lift the exit suspension, directing the Immigration Department to remove the restriction within 24 hours of receiving such confirmation.

By solidifying existing enforcement procedures in a formal decree, Vietnam has expanded and streamlined its mechanisms to ensure timely collection of tax arrears—enabling swift imposition of travel bans until all relevant obligations are met.

3. Alignment with Existing Practices

While these measures are newly codified, it is essential to recognize that Vietnamese authorities have already employed many of these practices—particularly targeting Vietnamese citizens—in their ongoing drive to recover unpaid taxes. The Decree now formally extends these enforcement actions to foreign residents as well.

This evolution in policy aligns seamlessly with the heightened scrutiny of bank records and unreported income that we discussed in our previous memo. The combined effect of these regulations is a clear message:

1. Overdue or undeclared tax liabilities place both Vietnamese and non-Vietnamese residents at serious risk;

2. Travel constraints can and will be imposed to compel compliance; and

3. Receiving untaxed income—whether knowingly or inadvertently—further increases the possibility of enforcement actions.

4. Continuing Emphasis on PIT Compliance

In light of these developments, we cannot emphasize enough the critical importance of monitoring and declaring all income flows. Whether you are a Vietnamese national or a foreign individual residing in Vietnam, the risk of substantial fines, account freezes, reputational harm, and now exit suspension is real and growing.

Further, if you find that the flow of incoming funds cannot be fully controlled—whether due to overseas remittances, business transactions, or personal transfers—it is imperative to implement proper tax optimization strategies. Failing to do so could lead to significant financial repercussions and legal hurdles down the road. Proactive planning can help ensure that each inflow is managed efficiently and in accordance with the law, minimizing exposure to unexpected enforcement actions.

5. How PCA Can Assist

We encourage any client or associate who has questions or concerns about this new decree—or about unreported income and PIT compliance in general—to seek professional guidance. PCA’s Tax and Legal Advisory Team offers:

1. Comprehensive Tax Reviews: Identify and address any discrepancies in your filings before they trigger enforcement actions.

2. Legal Representation: If you or your organization are already subject to a tax audit or enforcement, we can advocate on your behalf and help you reach a resolution.

3. Preventive Strategies & Tax Optimization: Where incoming funds may be difficult to control, we can develop compliant structures and strategies to mitigate risks while ensuring you fulfill your tax obligations.

4. Ongoing Consultancy & Compliance: Regular check-ins and advisory to keep you updated on evolving regulations, ensuring that your financial and operational decisions remain aligned with Vietnamese law.

6. Conclusion and Next Steps

By enacting Decree No. 49/2025/ND-CP so soon after our initial memo, the Vietnamese government has reinforced its commitment to robust tax enforcement measures and extended them in a way that now explicitly encapsulates foreign residents. While these stringent practices had long been applied to Vietnamese citizens, they now carry clear legal force, highlighting the urgent need for all parties—local and foreign alike—to remain vigilant about properly declared income and to seek expert advice should concerns arise.

If you have any doubts about your tax status, your ability to manage incoming funds transparently, or the new exit suspension rules, please contact us at once. We are here to help you navigate these changes, safeguard your interests, and ensure uninterrupted professional and personal activities in Vietnam.

The contents of this memorandum are provided for general information only and do not constitute legal advice.