Labours’ salaries or wages must pay personal income tax (PIT) according to regulations. Accordingly, the tax law in Vietnam is calculated as follows:
Tax law in Vietnam for resident labour
According to the tax law in Vietnam, resident employees earning incomes from salaries and wages inside and outside Vietnam must pay PIT in accordance with the law:
In which, according to Article 2 of Law on Personal Income Tax 2007, resident worker is a person who meets one of the following conditions:
+ Being present in Vietnam for 183 days or more in a calendar year or counted for 12 consecutive months from the date of arrival in Vietnam;
+ Having a place of habitual residence in Vietnam, including a registered place of permanent residence or a house rented to live in Vietnam under a term lease.
The payable PIT amount of resident individuals is calculated as follows:
Labor contracts of 3 months or more according to tax law in Vietnam
Tax calculation formula
According to the tax law in Vietnam, PIT payable on income from salaries and wages is calculated on taxable income and tax rate, specifically as follows:
PIT payable = Taxable income x Tax rate
(1) Taxable income is determined as follows:
Taxable Income = Income subject to PIT – Deductions
– Income tax is determined as follows:
Income Tax = Total Income – Exempt PIT
+ Total income is determined according to Clause 2 Article 2 of Circular 111/2013 / TT-BTC and Clauses 1, 2, 3, 4, 5 Article 11 of Circular 92/2015 / TT-BTC.
+ Tax-exempt incomes are those from wages, night work or overtime paid higher than wages, daytime or overtime wages as prescribed by law. the law. (See details at Point i, Clause 1, Article 3 Circular 111/2013 / TT-BTC).
– The deductions include:
+ Family deductions:
++ For taxpayers: 11 million dong / month, 132 million dong / year.
++ For dependents: 4.4 million VND / person / month.
+ Insurance premiums and voluntary retirement funds under the guidance in Clause 2, Article 9 Circular 111/2013 / TT-BTC.
+ Charity, humanitarian and study promotion contributions under the guidance in Clause 3, Article 9 Circular 111/2013 / TT-BTC.
(2) PIT rate
|Tax bracket||Taxable income per year (million VND)||Taxable income per month (million VND)||Tax (%)|
|1||Upto 60||Upto 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 calculation method according to tax law in Vietnam
According to the tax law in Vietnam, PIT on income from salaries and wages is the total tax calculated by each income level. The tax amount calculated for each income level is equal to the taxed income of the income level multiplied (×) by the corresponding tax rate of that income level.
The progressive tax calculation method for each part is concretized according to the summary tax calculation table as follows:
|Level||Taxable income per month (million VND)||Tax (%)||Tax payable|
|Formula 1||Formula 2|
|1||Upto 5||5||0 mil + 5% IBT||5% IBT|
|2||Over 5 to 10||10||0,25 mil + 10% IBT over 5 mil||10% IBT – 0,25 mil|
|3||Over 10 to 18||15||0,75 mil + 15% IBT over 10 mil||15% IBT – 0,75 mil|
|4||Over 18 to 32||20||1,95 IBT + 20% IBT over 18 mil||20% IBT – 1,65 mil|
|5||Over 32 to 52||25||4,75 IBT + 25% IBT over 32 mil||25% IBT – 3,25 mil|
|6||Over 52 to 80||30||9,75 IBT + 30% IBT over 52 mil||30% IBT – 5,85 mil|
|7||Over 80||35||18,15 IBT + 35% IBT over 80 mil||35% IBT – 9,85 mil|
Non – labor contract or less than 3 months labor contract (Point i, Clause 1, Article 25 Circular 111/2013 / TT-BTC)
According to the tax law in Vietnam, organizations and individuals that pay wages, remuneration and other payments to resident individuals who do not sign labor contracts (under the guidance at Points c, d, Clause 2, Article 2 of Circular 113) or sign contracts The labor contract of less than three (03) months with a total income payment of two million (2,000,000) VND / time or more must deduct tax at the rate of 10% of the income before paying to the individual.
In which, wages, remuneration and other payments to individuals include:
– Commissions for goods sale agents, brokerage commissions; money for participation in scientific and technical research; money for participation in projects, schemes; royalties in accordance with the law on royalties; money for participation in teaching activities; money for participation in cultural, art, physical training and sports performance; money for advertising services; other service fees, other remuneration.
– Money received from participation in business associations, business boards of directors, enterprise control boards, project management boards, management boards, associations, professional associations and other organizations.
Thus, the PIT in this case will be calculated as follows:
Deductible PIT = Income taxable PIT x 10% tax rate
*Note: In case the individual has only income subject to tax withholding according to the above rate but estimated that his total taxable income after deduction of family circumstances has not reached the taxable level, he If you have income, you commit to send the income payer to the income payer as a temporary basis for PIT not to be deducted. Individuals making commitments under the guidance at this point must register tax and have tax code at the time of commitment.
For non-resident labour (Article 18 Circular 111/2013 / TT-BTC)
Non-resident individuals (who do not meet the conditions to be identified as resident individuals specified in Article 2 of the 2007 Personal Income Tax Law) have income from salaries or wages arising in the territory. Vietnam must pay PIT according to regulations.
The PIT payable on income from salaries and wages of non-resident individuals is determined as follows:
PIT payable = Taxable Income x Tax rate of 20%
In which, taxable income from salaries and wages of non-resident individuals is determined as income subject to PIT from salaries and wages of resident individuals.
Above are some notable points in tax and payroll in Vietnam. We hope that this will give you a basic idea of the tax and salary regulations in Vietnam. If you have any difficulty, please do not hesitate to contact us via our contact!