Types of income are exempt from personal income tax (PIT) in Vietnam

What are the types of income that are exempt from personal income tax according to Vietnamese law?

Tax exempt incomes

The Law on Personal Income Tax 2007, individuals will receive personal income tax deductions in the following cases:

1. Incomes from transfer of real estate between spouses; (Parents and their children;Adoptive parents and their adopted children;Fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law;Grandparents and their grandchildren;Or among blood siblings.)
2.  Incomes from transfer of residential houses, rights to use residential land and assets attached to residential land received by individuals who have only one residential house or land plot each.
3. Incomes from the value of land use rights of individuals who are allocated land by the State.
4. Incomes from receipt of inheritances or gifts that are real estate between spouses, parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.
5. Incomes of households and individuals directly engaged in agricultural or forest production, salt making, aquaculture, fishing and trading of aquatic resources not yet processed into other products or preliminarily processed aquatic products.
6. Incomes from conversion of agricultural land allocated by the State to households and individuals for production.
7. Incomes from interests on deposits at credit institutions or interests from life insurance policies.
8. Incomes from foreign exchange remittances.
9. Wages paid for night shift or overtime work, which are higher than those paid for day shifts or prescribed working hours in accordance with law.
10. Retirement pensions paid by the Social Insurance.
11. Incomes from indemnities paid under life insurance policies, non-life insurance policies, compensations for labor accidents, compensations paid by the State and other compensations as provided for by law.
12. Incomes received from charity funds licensed or recognized by competent state agencies and operating for charity, humanitarian or non-profit purposes.
13. Incomes received from governmental or non-governmental foreign aid for charity or humanitarian purposes approved by competent state agencies.
14. Income from salaries, remunerations of Vietnamese crewmembers working for foreign shipping companies or Vietnamese shipping companies that provide international transport services.
15. Incomes from provision of goods/services directly serving offshore fishing earned by individuals being ship owners, individuals having the right to use ships, and incomes of crewmembers on ships.
16. Incomes from scholarships, including:

• • Scholarships granted from the state budget;
  • Scholarships granted by domestic and foreign organizations under their study promotion programs.

Conditions for paying personal income tax in Vietnam

A resident is a person who meets one of the following conditions specified in Article 2 of the 2007 Personal Income Tax Law:

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.

Note: A non-resident individual is a person who does not meet the conditions specified in Article 2 of the Law on Personal Income 2007. (Meaning that if the above criteria are not met, the individual will be considered a non-resident Taxpayer in Vietnam).

Personal income taxpayers in Vietnam

The Law on Personal Income Tax 2007 provides for taxpayers as follows:

Personal income taxpayers include:

• residents who earn taxable incomes specified in Article 3 of Law on Personal Income Tax 2007 inside and outside the Vietnamese territory and
• non-residents who earn taxable incomes specified in Article 3 of Law on Personal Income Tax 2007 inside the Vietnamese territory.

Personal Income Tax (PIT) rates

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

• Applies to resident taxpayers: