Doing Business

Law On Personal Income Tax in Vietnam

Trường Lăng

November 26, 2019

Doing Business

Law On Personal Income Tax in Vietnam

Trường Lăng

November 26, 2019

Personal tax income (PIT) regulations in Vietnam for foreigners change regularly and quite fast. With many special cases, you one might be paying PIT while it is not necessary! Below is a simple guide to assist foreigners working in Vietnam to understand clearly how they pay their Personal Income Tax in this nation lawfully.
The different cases of PIT for foreigners in Vietnam:

  • Foreigners exempted of PIT
  • Non-resident foreigners subject to PIT
  • Resident foreigners subject to PIT

Foreigners exempted of PIT

According to new directions of the Ministry of Finance of Viet Nam, foreign specialists who work on the Non-Governmental Assistance Programs (NGAPs) in Viet Nam will be entitled to PIT exempt on the incomes related to the work of the NGAPs. If he/she can prove that:

  • he/she is holding a foreign nationality
  • he/she has been accepted as specialists in Viet Nam
  • the programs that he/she is directly working on are legally under laws and regulations of Viet Nam on NGAPs.

Besides, procedures to apply for this preference include:

  • A request of the NGOs for the PIT exempt from the specialist(s).
  • A certificate of the authority proving that he/she is qualified as a specialist.
  • Documents involving the income received PIT exempt.

Foreigners subject to PIT

Resident or non-resident individual ?

Resident Non-resident
  • More than 183 days or more within a consecutive 12-month period from the first date of arrival, or in subsequent calendar years.
  • Less than 183 days in the calendar year or 12-month period from the date presenting in Vietnam.

BUT

  • Have permanent resident registration address as per regulation in the law of residence (that mean have registered accommodation and marked on the permanent or temporary residence card issued by a competent authority of the Police Ministry)

OR

  • Rent house in Vietnam as per regulation on accommodation/ with the duration of the lease from 90 days or more.
  

  • Less than 183 days in the calendar year or 12 consecutive months from the date he/she presents in Vietnam.

AND

  • NOT have permanent accommodation in Vietnam (not have permanent resident registration address in accordance with the law on resident or not rent any house in Vietnam; If rent house in Vietnam, lease term less than 90 days)

 

How is taxable income determined for PIT ?

Taxable income includes regular income and irregular income, except for income as stipulated in the regulations on PIT.
Regular income consists of seven kinds of income being clearly stated in the regulation. They are any kinds of salary, wage, bonus, any income received from participation in business associations, boards of management, management committees, and councils of enterprises
Irregular incomes consist of incomes from technology transferring (excluding gifts or donations), and incomes from lottery or similar kinds of lottery.
Interests received from bank deposits, savings, loans and income/profits from purchases of notes, promissory notes, Government bonds, shares, incomes from investment in shares; gains from trading of shares shall be temporarily exempted from personal income tax.

PIT regulations for each case

Non-resident are elicited for their revenues coming from Vietnam (for more details):

  • Foreign workers not residing in Vietnam only have to pay PIT for the salary that arises in Vietnam (salary arising in abroad will not incur PIT).
  • For the wage arising in Vietnam, PIT is determined by the formula: TAXABLE INCOME OF SALARY / WAGE multiply with (x) 20% TAX RATE
  • PIT from salary/wage of a non-resident is not required for tax settlement.

Residents need to comply for their total revenue (for more details)

  • Foreign employees residing in Vietnam must pay PIT for the salary arising in Vietnam and abroad.
  • PIT income from salary/wage of resident individuals is calculated following the partial progressive pit tariff (see below)
PIT rank Taxable income/year (million VND) Taxable income/month (million VND) PIT tariff (%)
1 To 60 To 5 5
2 Over 60 to 120 Over 5 to 10 10
3 Over 120 to 216 Over 10 to 18 15
4 Over 216 to 384 Over 18 to 32 20
5 Over 384 to 624 Over 32 to 52 25
6 Over 624 to 960 Over 52 to 80 30
7 Over 960 Over 80 35

PIT tariff sheet
Foreigners working in Vietnam when they finish their Labor Contract in Vietnam or before they leave this country must make the Tax Settlement with the tax organization.
Specific cases are exempt from tax settlement, you can refer to Clause 2.3/Section II/ Part D of Circular No. 84/2008/TT-BTC.

Ask our experts if you are unsure of your situation!

Viettonkin Consulting stands by your side with international know-how and local knowledge, all from a single source, allowing you to expand your business successfully in a potential market like Vietnam. If you have any questions, please feel free to contact us via email: info@viettonkin.com.vn or hotline: +84 918 866 858.

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