Individuals are responsible for self-declaration and payment of tax
Residents - Other tax rates on resident individuals
Non-residents - Other tax rates on non-resident individuals
All residents and non-residents are subject to Personal Income Tax in Vietnam. A resident is liable to pay tax on income sourced in Vietnam as well as on the portion of income from foreign sources (except for non-taxable income, including income from real estate transferred between a husband, wife and blood-relations, scholarships, and overseas remittances).
Residence – An individual is resident if he/she: (1) spends 183 days or more in the aggregate in a 12-month period in Vietnam starting from the date the individual arrives in Vietnam; (2) maintains a residence in Vietnam; or (3) has leased a residence for 90 days or more in a tax year.
The definition of taxable employment income is broad and includes all cash remuneration and various benefitsin-kind. However, the following items are not subject to tax:
• Payments for business trips;
• Payments for telephone charges / stationery costs;
• Office clothes (subject to a cap if the office clothes are provided in cash);
• Overtime premium (i.e. the additional payment above the normal wage, not the full amount of the overtime / nightshift payment);
• One-off allowance for relocation - from Vietnam for Vietnamese working overseas - to Vietnam for expatriates working in Vietnam - to Vietnam for Vietnamese residing overseas on a long term basis and returning to Vietnam to work;
• Transportation to and from work;
• Once per year home leave round trip airfare for expatriate employees and Vietnamese working overseas;
• School fees up to high school in Vietnam / overseas for children of expatriates / Vietnamese working overseas;
• Mid-shift meals (subject to a cap if the meals are provided in cash);
• Certain benefits in kind provided on a collective basis (e.g. membership fee, entertainment, healthcare);
• Airfares for employees working on a rotation basis in a number of industries (e.g. petroleum, mining);
• Employer’s contributions to certain local and overseas non-mandatory insurance schemes (e.g. medical insurance, accident insurance); and
• Allowances / benefits for wedding, funeral (subject to a cap).
There are a range of conditions and restrictions applicable to the above exemptions.
Taxable non-employment income includes:
• Business income (including rental income in excess of VND100 million/year);
• Investment income (e.g. interest, dividends);
• Gains on sale of shares;
• Gains on sale of real estate;
• Inheritances in excess of VND10 million;
• Prizes/gifts in excess of VND10 million (excluding income from winnings at casinos);
• Income from copyright / franchising / royalties / receiving gifts in excess of VND10 million.
Non Taxable Income
Non taxable non-employment income includes:
• Interest earned on deposits with credit institutions / banks and on life insurance policies;
• Compensation paid under life / non-life insurance policies;
• Retirement pensions paid under the Social Insurance law (or the foreign equivalent);
• Income from transfer of properties between various direct family members;
• Inheritances / gifts between various direct family members;
• Monthly retirement pensions paid under voluntary insurance schemes;
• Income of Vietnamese vessel crew members working for foreign shipping companies or Vietnam international transportation companies;
• Income from winnings at casinos.
Foreign Tax Credits
In respect of tax residents who have overseas income, PIT paid in a foreign country on the foreign income is creditable.
Tax deductions include:
1. Employee contributions to mandatory social, health and unemployment insurance schemes;
2. Employee contributions to local voluntary pension schemes (subject to a cap);
3. Employee contributions to certain approved charities;
4. Tax allowances:
• Personal allowance: VND9 million/month;
•Dependent allowance: VND3.6 million/month/dependent. The dependent allowance is not automatically granted, and the taxpayer needs to register qualifying dependents and provide supporting documents to the tax authority.
Other taxes on individuals:
Individuals who have taxable income are required to obtain a tax code. Those who have taxable employment income must submit the tax registration file to their employer who will subsequently submit this to the local tax office. Those who have other items of taxable income are required to submit their tax registration file to the district tax office of the locality where they reside.
Tax declarations and payment
For employment income, tax has to be declared and paid provisionally on a monthly or quarterly basis by the 20th day of the following month or by the 30th day of the month following the reporting quarter, respectively. The amounts paid are reconciled to the total tax liability at the year-end. An annual final tax return must be submitted and any additional tax must be paid within 90 days of the year end. Expatriate employees are also required to carry out a PIT finalisation on termination of their Vietnam assignment. Tax refunds are only available to those who have a tax code.
For non-employment income, the individual is required to declare and pay PIT in relation to each type of taxable non-employment income. The PIT regulations require income to be declared and tax paid on a receipts basis.
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