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CONTENT

 1. History
 2. Role of PIT
LECTURE 8  3. Main regulations of PIT in Vietnam

PERSONAL INCOME TAX

1. HISTORY OF PIT 2. ROLES OF PIT

1797 Holand
1799:
TextUK
1887: Japan
1 Create revenue for the State budget

1899: 2 Income distribution and equality

German

Adjust micro economy

More than180 3
countries
apply PIT
Manage people’s income and discover
1903: USA Thailand1939, 4 the illegal income source
Philippines1945,
1916: France Korea1948,
1922: Russia Indonesia 1949,
China1984;
Vietnam 1990

PERCENTAGE OF PIT IN STATE BUDGET AND GDP IN

VIETNAM 3. MAIN REGULATIONS OF PIT IN VIETNAM
• 1990: Ordinance on income tax on high-income earners, came
into effect on April 1, 1991.
• 2007: Personal Income Tax Law No. 04/2007/QH12, came into
effect on July 1st 2009.
• 2012: Personal Income Tax Law No. 26/2012/QH13 Amending
and Supplementing a number of Articles of the Personal Income
Tax Law No. 04/2007/QH12, take effect from 01/07/2013
• 2014: the amendment and supplementation of some articles of
personal income tax law No.04/2007/QH12, law No.
71/2014/QH13take effect from 01/01/2015.

•
Source: Ministry of Finance (2017)

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3. MAIN REGULATIONS OF PIT IN VIETNAM 3. MAIN REGULATIONS OF PIT IN VIETNAM

•Other regulations: 3.1 Taxpayers
- Decree No. 65/2013/ND-CP of the Government detailing a number of articles of the Personal Income
Tax Law and the Law amending and supplementing a number of articles of the Personal Income Tax Law,
take effect from 01/07/2013
- Decree 91/2014/ND-CP dated 1 October 2014 issued by the Government amending the Decree on tax, Personal income taxpayers include:
take effect from 15/11/2014
-Decree 12/2015/ND-CP dated 12/02/2015 issued by the Government guiding the Law amending and
supplementing some articles of the tax law and amending and supplementing some articles of the Decree •Residents who earn taxable incomes specified in (Article
on tax, takes effect from 01/01/2015
- Circular No.111/2013/TT-BTC of the Ministry of Finance guiding the implementation of the Personal
3 of) the Law inside and outside the Vietnamese territory
Income Tax Law, the Law amending and supplementing some articles of the Personal Income Tax Law
and Decree No. 65/2013/ND-CP of the Government detailing some articles of the Law on Personal Income
Tax and the Law amending and supplementing some articles of Personal Income Tax Law, take effect from •Non-residents who earn taxable incomes specified in
01/07/2013
- Circular No. 92/2015 / TT-BTC guiding the implementation of value-added tax and personal income tax
(Article 3 of) the Law inside the Vietnamese territory
for resident individuals conducting business activities, take effect from 30/07/2015
- Circular No. 151/2014 / TT-BTC dated October 10, 2014 of the Ministry of Finance guiding the
implementation of the Government's Decree No. 91/2014/ ND-CP of October 1, 2014 amending and
supplementing some articles in the decree on tax, take effect from 15/11/2014

3.1 TAXPAYERS
Resident means a person who satisfies one of the following conditions: 3.2 TAXABLE INCOME
a/ Being present in Vietnam for 183 days or more in a calendar year or 12 Thu nhập chịu thuế
consecutive months counting from the first date of their presence in Vietnam;
Taxable income

b/ Having a place of habitual residence in Vietnam, which is a registered

place of permanent residence or a rented house for dwelling in Vietnam under
a term rent contract. Thu nhập
Income
Non-resident means a person who does not satisfy any of the above
conditions.
Lao động Kinh doanh Đầu tư Khác
Example: A Japanese businessman came to Vietnam to do business from Employment
15/06/2016-15/08/2016, 1/2/2017 – 30/04/2017, 1/7/2017-1/11/2017 Business Investment Others
Is he resident or non-resident?

3.2 TAXABLE INCOME

3.2 TAXABLE INCOME 14 types of tax-exempt income
10 sources of taxable income:
• Incomes from transfer of residential houses by individuals who
1. Income from business activities possess only one residential house or land plot.
2. Income from employment • Interest earned on deposit from the bank or from life insurance
3. Income from capital investment contracts.
4. Income from capital transfer • Overseas remittance; retirement salary; scholarship.

5. Income from transferring the real estate • Incomes from compensation for insurance contracts or from

6. Income from winnings or prizes

charity funds.
• Wages paid for night shift or overtime work, which are higher than
7. Income from copyright
those paid for day shifts or prescribed working hours in accordance
8. Income from franchising
with law.
9. Income from inheritance • Incomes received from governmental or non-governmental foreign
10. Income from gifts aid for charity or humanitarian purposes approved by competent
state agencies.
……..

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FOR RESIDENTS:
3.3 CALCULATION OF PIT IN VIETNAM 3.3.1. INCOME FROM EMPLOYMENT AND BUSINESS
3.1 Income from business and employment
Payable income Taxable + Taxable - Tax
from business, income from income from allowance
employment = business employment

Taxable income Taxable revenue Reasonable

= from - costs
from business
business

3.3.1. INCOME FROM EMPLOYMENT AND BUSINESS

Tax Allowances
- Personal allowance: 9 million VND/month
- Dependent allowance: 3.6 million VND/month/dependent
The dedendent allowance is not automatically granted, the
3.3.1. INCOME FROM EMPLOYMENT AND BUSINESS
Tax allowances
- Contributions to mandatory social, health and unemployment
insurance schemes
- Contributions to local voluntary pension schemes

tax payer needs to register qualifying dependents and - Contributions to certain approved charities
- Severances allowance, redundancy compensation, interest
provide sufficient documents to tax authorities earned on bank deposits, life/non-life insurance compensation,
retirement pensions...

TAX RATES FOR EMPLOYMENT AND BUSINESS INCOME

3.4 TAX RATES
Annual payable Monthly payable Rate
income income %
Tax Rates (Millions VND) (Millions VND)
-Tax residents employment and business income 0 – 60 0–5 5%
60 – 120 5 – 10 10%
120 – 216 10 – 18 15%
other incomes
216 – 384 18 – 32 20%
- Non - residents 384 – 624 32 – 52 25%
624 – 960 52 – 80 30%
More than 960 More than 80 35%

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TAX RATES FOR OTHER INCOMES TAX RATES FOR NON - RESIDENTS
Other paxable income Rate % Other taxable income Rate %

Interests/dividends 5% Employment income 20%

Net gain share transfer, capital 20% Business income 1-5%
assignment Interest/dividends 5%
The proceeds of share transfer 0,1% The proceeds of share transfer 0,1%
Net gain sale of real estate 25% The proceeds of real estate transfer 2%
The proceeds of sale of real estate 2% Copyright, franchising, royalities 5%
Copyright, franchising, royalities 5% income
income Winning prizes, inheritances/gifts 10%
Winning prizes, inheritances/gifts 10% income
income

EXERCISES EXERCISES
The expatriate employee’s annual net income is 1.08 billion For a tax payer who has 2 children as his dependants, if he
VND. No housing is provided by the employer. The earns 20 millions VND/month.
expatriate employee has one dependant. 1) Calculate the taxable income that he has to pay?
1) Calculate the gross monthly taxable income? 2) If he doesn’t have any dependent, please calculate the
2) Total monthly PIT payable? PIT that he has to pay?
3) Annual PIT payable? 3) In the case that foreigner is classified as non residents in
Vietnam, please calculate the tax that he has to pay?

3.5 TAX DECLARATION AND PAYMENT 3.6 TAX REFUND

 Income-paying organizations and individuals shall make Individuals are entitled to tax refund in the following cases:
tax declaration, withhold and remit tax into the state  Their paid tax amounts are larger than payable tax amounts;
budget, and make tax finalization for all kinds of taxable  They have paid tax but their taxed incomes do not reach a tax-

income they pay to taxpayers; liable level;

 Other cases decided by competent state agencies.
 Individuals who have taxable incomes shall make tax
declaration, pay tax into the state budget and make tax
finalization for all their incomes in accordance with the
law on tax administration.

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3.7 TAX COMPLIANCE

- Tax payers are required to submit tax registration to tax authorities

to obtain the tax code
- For employee income, tax return has to submit and paid on the
monthly basis by the 20th days of the following month or on
quartly basis by the 30th day of the following quarter. The annual
return has to submit and paid any additional tax liability within 90
days from year end
- For non-employee income, the tax return has to submit and paid
on regular basis when income is received