1. Who is required to pay personal income tax?
According to the law, personal income tax (PIT) applies to both resident and non-resident individuals in Vietnam, with differences in the scope of income for which taxation begins.
- Individuals residing in VietnamIndividuals who are present in Vietnam for 183 days or more in a calendar year or who have a permanent residence are required to pay tax on all income, regardless of source, including salary, business, investments, etc.
- Individuals who are not residents of VietnamIndividuals who do not meet the residency criteria are only required to pay tax on income earned in Vietnam, such as income from employment or business activities here.
The primary legal basis includes the 2019 Tax Administration Law, Decree 126/2020/ND-CP, and Circular 80/2021/TT-BTC, most recently updated in 2025, reflecting current regulations. However, it should be noted that Law 56/2024/QH15, effective from January 1, 2025, has amended several provisions related to personal income tax, and you should check for the latest updates from the General Department of Taxation.
2. How to Calculate Personal Income Tax
The method for calculating personal income tax depends on the type of income and residency status. Below is a detailed guide:
2.1. For individuals residing in Vietnam
Global income: Individuals residing in Vietnam must pay tax on all income, regardless of where it is paid or received.
Income from salary and employment: Individuals residing in Vietnam are subject to a progressive tax system, with tax rates ranging from 5% to 35%:
|
Annual taxable income (million VND) |
Monthly taxable income (million VND) |
Tax level (%) |
|
0 to 60 |
0 to 5 |
5 |
|
60 to 120 |
5 to 10 |
10 |
|
120 to 216 |
10 to 18 |
15 |
|
216 to 384 |
18 to 32 |
20 |
|
384 to 624 |
32 to 52 |
25 |
|
624 to 960 |
52 to 80 |
30 |
|
On 960 |
On 80 |
35 |
Non-employment income
Non-employment income, such as interest, dividends, stock sales, capital gains, and real estate sales, has specific tax rates:
|
Taxable income |
Tax rate (%) |
|
Business income |
0,5 to 5 |
|
Interest (non-bank)/dividend |
5 |
|
Sell shares |
0,1 (on revenue) |
|
Capital transfer |
20 (on net profit) |
|
Real estate for sale |
2 (on revenue) |
|
Income from franchising/royalty taxes |
5 |
|
Income from inheritance, gifts, and prizes (excluding casino income) |
10 |
In addition, business income is subject to specific tax rates depending on the type of business, as follows:
|
Type of business income |
Tax rate (%) |
|
Distribution and supply of goods |
0,5 |
|
Construction services do not supply materials. |
2,0 |
|
Property for rent |
5,0 |
|
Production, transportation, services related to goods, and construction that utilize raw materials. |
1,5 |
|
Other business activities |
1,0 |
Important noteIndividuals with business income under 100 million VND per year will not have to pay personal income tax on this income, an important point for individuals running small-scale self-employment businesses.
Before applying the tax rate, taxable income must be calculated by subtracting deductions from gross income. Deductions include:
- Personal deductions11 million VND/month.
- Dependent deductionVND 4,4 million/person/month, if registered.
- Mandatory insurance contributionsSocial insurance (8%), health insurance (1,5%), and unemployment insurance (1%) are deducted from salary and are not subject to tax.
- Other itemsCharitable contributions, voluntary retirement funds, etc.
Công thức tinh:
Taxable Income = Net Income − VND 11 million − (Number of Dependents × VND 4,4 million) − Other Deductions
For example:
Let's assume you have a net salary of 20 million VND/month, no dependents, and total insurance contributions of 2,1 million VND.
- Taxable income = 20 – 11 – 2,1 = 6,9 million VND.
- Apply the tariff schedule:
- First 5 million: 5% = 250.000 VND
- The next 1,9 million: 10% = 190.000 VND
- Total tax: 250.000 + 190.000 = 440.000 VND.
Accordingly, a noteworthy detail is that there are tax-exempt items, such as interest on bank deposits, gifts between relatives, and pensions from the Social Insurance Fund, which help reduce tax obligations.
2.2. For individuals not residing in Vietnam
Income from employment
Non-resident individuals in Vietnam are subject to a fixed tax of 20% on income earned from employment in Vietnam, with no deductions.
Example: If your income is 20 million VND/month, the tax = 20% * 20 = 4 million VND.
Non-employment income
Non-employment income, such as business income, interest, dividends, stock sales, etc., has the same tax rates as resident individuals, for example:
- Business income: 1% to 5%.
- Non-bank interest rate and dividends: 5%.
- Selling shares: 0,1% of revenue.
- Real estate sales: 2% of revenue.
Double Taxation Agreement (DTA)
For individuals not residing in Vietnam, it is necessary to consider the Debit-Target Agreements (DTAs) that Vietnam has signed with other countries, such as the US, Japan, or EU countries, to avoid double taxation on the same income. For example, if an American works in Vietnam, a DTA between Vietnam and the US may reduce taxes in Vietnam on certain types of income.
3. At what salary level do I have to pay taxes?
The taxable salary threshold depends on deductions.
- For single individuals with no dependents: If the gross salary exceeds VND 11 million/month (after deducting insurance), the taxable income will be positive, resulting in the need to pay taxes.
- For individuals with dependents: The threshold is increased by VND 4,4 million for each dependent. For example, with 1 dependent and an insurance premium of VND 2,1 million, the threshold is VND 17,5 million.
Careful consideration is needed, as the threshold varies depending on individual circumstances, and this is an important point to note to avoid confusion.
4. Personal Income Tax Settlement Procedure
Personal income tax finalization is the process of comparing the taxes paid during the year with the actual tax liability, and can be carried out by organizations or individuals.
4.1. Who is responsible for final settlement?
- The payroll organization must settle accounts on behalf of its authorized employees, in accordance with Article 8 of Decree 126/2020/ND-CP.
- Individuals with multiple sources of income, those requesting a tax refund, or those who do not authorize an organization to handle their tax return must file their own tax return.
4.2. Time Limit
- Deadline: No later than March 31st of the calendar year.
- Individuals: The deadline is April 30th at the latest. If it coincides with a holiday, it will be postponed to the next working day (for example, in 2024, it will be postponed to May 2nd).
4.3. Online Settlement
Individuals can settle their accounts themselves through the system at canhan.gdt.gov.vn, with the following steps:
- Log in using your tax identification number.
- Select “Tax Settlement” and “Online Filing”.
- Fill in the information according to form 02/QTT-TNCN, as per Circular 80/2021/TT-BTC.
- Submit the form and enter the OTP code to confirm.
- Please attach supporting documents such as tax deduction certificates.
The processing time for tax refunds ranges from 6 to 40 days, depending on the case (Article 75, Law on Tax Administration 2019). Penalties for failure to submit documents if tax is overdue: from VND 2 to 25 million for individuals, VND 4 to 50 million for organizations (Decree 125/2020/ND-CP).
5. Conclusion
Understanding how to calculate and settle personal income tax helps you comply with the law and optimize your tax obligations. This article provides detailed guidance, but please note that Law 56/2024/QH15, effective from January 1, 2025, may have amended some provisions.
Therefore, please check for the latest updates from the General Department of Taxation, or if you need further assistance or have any questions, Contact Expertis' tax experts today for quick, effective, and completely free advice!