Personal Income Tax (PIT) in Vietnam

With the content of this article, GTax will provide you with an overview of Vietnam’s Personal Income Tax policy.

Because personal income tax (PIT) policy frequently changes, currently (2023) what personal income tax rate is Vietnam applying? or other content you are interested in such as:

  • How many categories of personal income tax are there in Vietnam?
  • What types of income are subject to personal income tax?
  • How are the different deductions, tax rates, and exceptions applicable to each item implemented?
  • Tax residents and non-residents are subject to personal income tax at what tax rate on their Vietnam-sourced income?

Personal Income Tax (PIT) rates

    Income tax is the most common tax that foreigners must pay in Vietnam. The amount of income tax you pay is determined by your tax residency status, which is based on the amount of time you spend in the country. If you are resident in Vietnam, you are obliged to pay income tax on all of your worldwide income, however if you are a non-resident, you are only required to pay tax on income arising in Viet Nam..

    Employment income includes salaries, wages, allowances and subsidies, remuneration in all forms; boards of directors, control boards, management boards and other organizations; and bonuses in any form except those received from the government.

The following is the Personal Income Tax rate table in Vietnam:

Resident taxpayers are subject to PIT at progressive rates from 5% to a maximum of 35%.

Monthly Taxable Income (VND) Monthly Taxable Income (USD) Tax Resident PIT Rates

0 – 5,000,000

Up to 208

5%

5,000,001 – 10,000,000

Over 208 to 415

10%

10,000,001 – 18,000,000

Over 415 to 747

15%

18,000,001 – 32,000,000

Over 747 to 1,328

20%

32,000,001 – 52,000,000

Over 1,328 to 2,158

25%

52,000,001 – 80,000,000

Over 2,158 to 3,318

30%

 Over 80,000,000

Over  3,318

35%

  Non-resident taxpayers are subject to PIT at a flat rate of 20% on their Vietnam-sourced income.

Conclude:

Resident taxpayers are taxable in Vietnam on their worldwide income, whilst Non-Resident Taxpayers are only taxable in Vietnam on their Vietnamese sourced income.

  • Resident taxpayers are subject to PIT at progressive rates from 5% to a maximum of 35%.

A Resident Taxpayer is an individual that satisfies one of the following:

a. Resides in Vietnam for 183 days or more

      •  within 12 consecutive months from the first day
        of arrival, or
      • in a calendar year

b. Holds a temporary or permanent residence card for Vietnam, or
c. Leases a property for a term of 183 days or more in Vietnam in the assessment period.

  • Non-resident taxpayers (If the above criteria are not met, the individual will be considered a non-resident Taxpayer in Vietnam) are subject to PIT at a flat rate of 20% on their Vietnam-sourced income.

However, caution is still needed as there are cases where an individual may still be considered a tax resident in Vietnam if they cannot prove they are a Tax Resident in another country.

Taxable income

What types of income are subject to personal income tax?
That is:

  1. Incomes from business activities;
  2. Prizes;
  3. Capital transfer;
  4. Property transfer;
  5. Royalties;
  6. Wages received from employers;
  7. Capital investment;
  8. Commercial franchising;
  9. Inheritances in forms of securities, capital contribution in companies or economic organizations, real estate, and other assets requiring the registration of ownership or use right
  10. Gifts in forms of securities, capital contribution in companies or economic organizations; real estate; and other assets requiring the registration of ownership or use rights.

Tax exempt incomes

Individuals will receive personal income tax deductions in the following cases:

  • Wages paid for night shift or overtime work, which are higher than those paid for day shifts or prescribed working hours in accordance with the law;
  • Incomes received from governmental or non-governmental foreign aid for charity or humanitarian purposes approved by competent state agencies.
  • Interest earned on deposit from the bank or from life insurance contracts;
  • Overseas remittance, retirement salary, and scholarship;
  • Incomes from compensation for insurance contracts or from charity funds;
  • Incomes from transfer of real estate between husbands and wives, natural or adoptive parents and their children or adopted children;
  • Incomes from transfer of residential houses by individuals who possess only one residential house or land plot;
  • Inheritances or gifts between husbands and wives, natural/adoptive parents and their children/adopted children;
  • Income from cultivation and husbandry, aquatic and marine products, which have not yet been processed into other products or have been preliminary processed and then sold by producing or fishing organizations or individuals themselves;
  • Incomes from the value of land use rights of individuals who are allocated land by the government;
  • Incomes from the conversion of agricultural land allocated by the government to households and individuals for production;

Tax reduction

The deduction can be made individually as well as for those under the care of the employee subject to Personal Income Tax according to the following allowances:

  • Personal allowance: Maximum 11 million VND  per month.
  • Allowance for dependents: Fixed at 4.4 million VND per month per dependent. Eligible dependents are children under 18 years old or children over 18 years old who are disabled and unable to work. In addition, the taxpayer’s spouse or parents who are unable to work or have a low income of no more than 1 million VND are also eligible dependents.
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Tax payment

   Individuals and organizations subject to personal income tax must register with tax authorities to obtain a tax identification number .

   Foreign-invested enterprises must make personal income tax finalization on behalf of employees at the beginning of the year for taxable income arising from the previous year. In case an employee has multiple sources of income and needs to self-finalize taxes, Foreign-invested enterprises can issue a deduction certificate at the employee’s request. If a foreigner’s labor contract in Vietnam expires before the end of the calendar year, tax settlement must be done before leaving the country.

    Payment of personal income tax is made similarly to corporate income tax and is paid by taxpayers to the State Treasury in one of two ways: by cash or transfer. Taxpayers can pay directly in cash to the State Treasury to receive documents from state agencies. On the contrary, they can transfer money to the tax authority’s bank account at a place recognized by the State Treasury to operate. The tax payment deadline is the same as the tax finalization deadline, which is no later than 120 days from the end of the calendar year.

How can we help you?

   Many foreigners face the complexity and inconsistency of tax policy in Vietnam. Especially related to personal income tax policy.

   This may be due to not filing on time, preparing personal income tax finalization documents in an amateurish manner, or misunderstanding tax rate policy.

   GTax understands the basic needs of each business as well as the complexities related to tax policy. With a team of skilled experts and extensive industry experience in each department, GTax will help you solve any obstacles you may encounter, thereby providing the best service experience.

Source: VietnamBriefing & Internet – Compiled by GTax

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