Taxpayers

Tax is imposed based on residency status. Residents are taxed on their total worldwide income, while non-residents are subject to tax on their Vietnam sourced income only. There are different tax rates for residents and non-residents and for various types of income.

Resident taxpayers are those who:

i) Stay in Vietnam for an aggregate of 183 days or more in 12 consecutive months from the first date of arrival or in a calendar year; or

ii) Have a regular residential location in Vietnam (including a permanent/registered residence, or a house lease in Vietnam where the
lease contract has a term of ninety (90) days or more within a tax year)

Pursuant to Official Letter 3473/TCT-TNCN issued by General Department of Taxation on 8th September 2010, an individual who stays in Vietnam for more than ninety (90) days (whether or not maintaining leased accommodation) but less than one hundred and eighty three (183) days in one (1) calendar year or in twelve (12) consecutive months will be considered as tax non-resident in Vietnam for PIT
purposes provided that he/she can prove his/her residency in a country other than Vietnam. The original tax residency certificate is required to be submitted to the Vietnam tax authorities in this case.

Resident taxpayers are subject to PIT on their worldwide income at progressive tax rates regardless of where the income is paid.

Non-resident taxpayers are those who live in Vietnam for either less than ninety (90) days or more than ninety (90) days but less than one hundred and eighty three (183) days in one (1) calendar year or in twelve (12) consecutive months and are tax residents of another country. Tax non-residents are subject to PIT at a flat tax rate of 20% on their employment income in relation to the work performed in Vietnam, and at various rates on their non-employment income. In some cases, the provisions of any applicable DTA could provide some tax relief.

Taxable income

Taxable income includes employment, non-employment and business income. Employment income covers all income received by the employee from their employer in cash or in kind, such as:

i) Salary, wages and remuneration, bonus, allowance and subsidies

ii) Income received from participating in professional and business associations, company’s board of management, management councils, etc.

iii) Benefits-in-kind paid by the employer including, but not limited  to, housing rental, electricity, water charges and other utilities, premiums for non-compulsory insurance, certain membership fees (conditions apply), and other benefits provided in accordance with
applicable laws.

Some items of income that were previously non-taxable are now included in taxable under the new PIT scope including non-employment income, such as income from capital investment, capital transfer, transfer of real property, income from winnings, royalties, commercial franchises, inheritance and gifts.

In addition, business income of individuals which was governed by the Law on CIT is now included under the PIT scope.

Non-taxable income

Non taxable income  includes:

i) Interest on money deposited at banks, credit institutions (in Vietnam) and from life insurance policies

ii) Excess of night shift or overtime salaries/wages over the normal hours stipulated in the Vietnam Labour Code

iii) Compensation payments from life and non-life insurance policies

iv) Pension payments to individuals under applicable social insurance laws

v) Income from property transfers between husband and wife, parents and children

vi) Income from inheritance/gifts between husband and wife, parents and children

vii) One off allowance for relocation to Vietnam

viii) Once per year home leave round trip airfare for expatriate employees

ix) School fee for expatriate employees’ children from primary to high school in Vietnam

x) Training expenses

xi) Mid shift meal (subject to a cap)

xii) Per diem (subject to a cap)

xiii) Payment for uniform/ telephone/ stationery (subject to a cap)

Tax deductions and tax relief

Certain tax deductions and relief are deductible against business income and employment income as follows:

i) Personal relief of VND 9 million per month or VND 108 million per year is automatically granted to the taxpayer.

ii) Dependants’ relief of VND 3.6 million per month per dependant or VND 43.2  million per pear. Dependant relief is subject to certain conditions and is not automatically granted to the taxpayer. Registration form and supporting documentation is required to claim the dependant relief.

iii) Compulsory statutory contributions in accordance with the provisions of the Law.

iv) Contributions to certain charitable, humanitarian and educational promotion funds

Tax rates

The progressive tax rates for resident foreigners and Vietnamese citizens for business income and employment income are as follows:

LevelTaxable income/ annual

(VND million)

Taxable income/ month

(VND million)

Tax rate

(%)

1Up to 60Up to 55
2Above 60 to 120Above 5 to 1010
3Above 120 to 216Above 10 to 1815
4Above 216 to 384Above 18 to 3220
5Above 384 to 624Above 32 to 5225
6Above 624 to 960Above 52 to 8030
7Above 960Above 8035

Other taxable income and the relevant tax rate applicable are as follows:

Tax rate (%)

1.   Income from capital investment5
2.   Income from franchising, royalties (*)5
3.   Income from prize-winnings, inheritances and gifts (*)10
4a. Income from capital transfers

4b. Income from share transfers

20

0.1

5a. Income from real-estate transfers

5b. Income from real-estate transfers where cost value  is unable to be determined

20

2

Non-residents are taxed at 20% of their employment income in relation to the work performed in Vietnam. The following table represents other kinds of taxable income and the tax rates applicable:

ItemsTax rate (%)
1. Income from salary, wages20
2. Income from business activities

–  For business activities in goods

–  For business activities in services

–  For business activities in production, construction, transportation and other activities

 

1

5

2

3. Income from capital investment5
4. Income from franchising, royalties (*)5
5. Income from prize-winnings, inheritances and gifts (*)10
6. Income from capital transfers0.1
7. Income from real-estate transfers2

Note: (*) taxed on part of income exceeding VND 10 million only.

Where the income received is on net basis, it is required to be grossed up to reflect the tax on tax calculation for Vietnam PIT calculation purposes. Formulas for grossing up are provided under Circular 84/2008/TT-BTC.

Administration

Tax code registration

Tax registration is compulsory for income paying bodies and individuals having income subject to PIT. The place for submission of the tax registration form is the tax office directly in charge of the income paying body and/or individual.

An expatriate employee must secure a tax code within 10 days from the date of commencement of his/her assignment in Vietnam.

Tax filing and payment

PIT liability is required to be filed and paid on a monthly basis on the 20th  day of the following month in respect of employment income. The employer is required to withhold tax from the employee’s income, declare and pay tax to the state budget. Monthly PIT payments will be reconciled at the end of each calendar year.

An individual is required to file tax directly with the tax authority if his employment income is paid by overseas organizations and/or individuals. Likewise, non-employment income is required to be declared by the individual separately per each type of taxable income and the applicable tax rate as provided in the regulations.

A foreign resident individual terminating their employment contract in Vietnam is required to submit the tax final return before departure of Vietnam.