QUESTION 01

Fact:
Mr. X is a foreigner dispatched by contractor Y to an oil rig on the
continental shelf of Vietnam. According to the labor contract, the work cycle
of Mr. X on this oil rig is 28 consecutive working days and 28 days off.
Question:
1. The payments made by contractor Y for the air tickets for Mr. X to fly
from his country to Vietnam and vice versa for every time of changing
shift
2. The helicopter that take Mr. X from the mainland to the oil rig and vice
verse
3. The residence expense while Mr. X is waiting for the helicopter
Shall those payments to Mr.X be included in taxable income?
ANSWER 01
In accordance with Circular 111/2013/TT-BTC, Article 02, Point g.9, the
payments paid by the employer for dispatching, reassigning foreign
employees in Vietnam in accordance with labor contracts and international
work schedules of some industries such as petroleum, mineral extraction.
The basis of determination is the labor contract and the payments for air
tickets from Vietnam to the home country of the foreign employee and vice
versa.
So, those payments to Mr.X shall not be included in taxable income.
QUESTION 02
The wages of Mr. A on an ordinary working day is 40,000 VND/hour.
1. When working overtime on an working day, he is paid 60,000 VND/hour, how
much is the tax-free income?
60,000 VND/hour – 40,000 VND/ hour = 20,000 VND/ hour
2. When working overtime on an holiday, he is paid 80,000 VND/hour, how much is
the tax-free income?
80,000 VND/hour – 40,000 VND/ hour = 40,000 VND/ hour
ANSWER 02
In accordance with Circular 111/2013/TT-BTC, Article 03, Point i.1, the tax-free
additional payments for working at night or working overtime is identified based on
the actual total payment for working at night or overtime minus (-) the payment for
an ordinary working day.
The wages of Mr. A on an ordinary working day is 40,000 VND/hour.
1. When working overtime on an working day, he is paid 60,000 VND/hour, the tax-
free income is:
60,000 VND/hour – 40,000 VND/ hour = 20,000 VND/ hour
2. When working overtime on an holiday, he is paid 80,000 VND/hour, the tax-free
income is:
80,000 VND/hour – 40,000 VND/ hour = 40,000 VND/ hour
QUESTION 03

Mr. B is a foreigner who first comes to Vietnam on April 20, 2014. in

2014 up to December 31, Mr. B has stayed in Vietnam for 130 days. In
2015 up to April 19, Mr. B has stayed in Vietnam for 65 days. What is the
first tax and the second period of Mr. B?
ANSWER 03

The first tax period of Mr. B begins on April 20/2014 and ends on April 19,
2015. The second tax period begins on January 01, 2015 and ends on
December 31, 2015.
QUESTION 04

Mrs. C earns an income of 40 VNDm from wages and remuneration in the

month, and pay 7% for social insurance premium, 1.5% for health
insurance premium. Mrs. C has 2 children under the age of 18, and
makes no charitable donations. How much is the preliminary personal
income tax incurred by Mrs. C in the month?
ANSWER 04

Using the abridged method:

The assessable income in the month 20.4 VNDm is the assessable income
in level 4.
The PIT payable = 20.4 VNDm × 20% - 1.65 VNDm = 2.43 VNDm
QUESTION 05
In 2014, according to the labor contract between Mr. D and company X:
- Mr. D receives a monthly net salary of 31.5 VNDm.
- Apart from that, company X pays for the sports club membership of 1
VNDm/month on behalf of Mr. D.
- Mr. D has to pay 1.5 VNDm/month for compulsory insurance.
- Company X is responsible for paying personal income tax on behalf of
Mr. D.
- In the year Mr. D only has a personal deduction for himself, no
dependents, and does not make charitable donations.
How much is PIT payable of Mr. D?
ANSWER 05
1. Converted income = Actual income + Amounts paid on the employee’s
behalf – Deductions = 31.5 VNDm + 01 VNDm – (09 VNDm + 1.5 VNDm)
= 22 VNDm
2. Assessable income (gross up converted income) = (22 VNDm – 1.65
VNDm)/0.8 = 25.4375 VNDm
3. PIT payable = 25.4375 VNDm × 20% - 1.65 VNDm = 3.4375 VNDm
QUESTION 06
In 2014, according to the labor contract between Mr. D and company X:
- Mr. D receives a monthly net salary of 31.5 VNDm.
- Apart from that, company X pays for the sports club membership of 01
VNDm/month and for house rental of 06 VNDm/month on behalf of Mr. D.
- Mr. D has to pay 1.5 VNDm/month for compulsory insurance.
- Company X is responsible for paying personal income tax on behalf of
Mr. D.
- In the year Mr. D only has a personal deduction for himself, no
dependents, and does not make charitable donations.
How much is PIT payable of Mr. D?
ANSWER 06
Note: If the amounts paid on behalf of the employees include the house
rent, the house rent shall be included in the converted income, but shall not
exceed 15% of the total taxable income incurred at the work place (not
including house rent)
1. Assessable income (excluding house rental) = (22 VNDm – 1.65
VNDm)/0.8 = 25.4375 VNDm
2. Total monthly taxable income (excluding house rental) = Assessable
income + deductions = 25.4375 VNDm + 9 VNDm + 1.5 VNDm = 35.9375
VNDm
3. House rental shall be included in converted income = MIN(Actual
payment, 15% of Taxable income excluding house rental) = MIN(6 VNDm,
15% x 35.9375 VNDm = MIN(6 VNDm, 5.39 VNDm) = 5.39 VNDm
ANSWER 06

4. Assessable income (gross-up based on net income including house

rental) = [(22 VNDm + 5.39 VNDm) - 3.25 VNDm)]/0.75 = 32.187 VNDm
5. PIT payable = 32.187 VNDm × 25% - 3.25 VNDm = 4.797 VNDm/month
6. Monthly taxable income = 31.5 VNDm + 1 VNDm + 5.390 VNDm + 4.797
VNDm = 42.687 VNDm
QUESTION 07
In 2014, according to the labor contract between Mr. D and company X:
- Mr. D receives a monthly net salary of 31.5 VNDm.
- Apart from that, company X pays for the sports club membership of 01 VNDm/month
and for house rental of 06 VNDm/month on behalf of Mr. D.
- Mr. D has to pay 1.5 VNDm/month for compulsory insurance.
- Company X is responsible for paying personal income tax on behalf of Mr. D.
- In the year Mr. D only has a personal deduction for himself, no dependents, and does
not make charitable donations.
- Mr. D has a contract and earn an monthly income of 12 VNDm at company Y from
January 2014 to May 2014 apart from the incomes earned at company X. Company Y
also pays personal income tax on behalf of Mr. D.
How much is finalized personal income tax incurred by Mr. D in 2014?
ANSWER 07
1. Taxable income in the year earned by Mr. D at company X:
42.687 VNDm x 12 months = 512.244 VNDm
2. At company Y:
2.1. Monthly assessable income converted = (12 VNDm – 0.75 VNDm)/0.85 = 13.235
VNDm
2.2. Taxable income in the year earned at company Y = 13.235 VNDm x 5 months = 66.175
VNDm
3. Total taxable income earned by Mr. D in 2014 = 512.244 VNDm + 66.175 VNDm =
578.419 VNDm
4. Monthly assessable income = 578.419 VNDm/12 months - (9 VNDm + 1.5 VNDm) =
37.702 VNDm
5. Annual personal income tax payable = (37.702 VNDm × 25% - 3.25 VNDm) × 12 months
= 74.105 VNDm.
QUESTION 08
Mr. K is a shareholder of joint-stock company X (listed at the Stock
Exchange). In 2011, Mr. K receives 5,000 shares paid as dividend by
company X (the face value of a share is 10,000 VND). In February 2014, Mr.
K transfers 2,000 shares of company X at a price of 30,000 VND per share.
In August 2014, Mr. K transfers 7,000 shares at a price of 20,000 VND per
share.
When making the transfer, Mr. K has to pay personal income tax on the
income from capital investment and the income from transferring securities.
How much is PIT payable of Mr. K for each transfer?
ANSWER 08
1. For the transfer in February 2014:
- The personal income tax on the income from capital investment:
(2,000 shares × 10,000 VND) × 5% = 1,000,000 VND
- The personal income tax (preliminary) on income from transferring
securities:
(2,000 shares × 30,000 VND) × 0.1% = 60,000 VND
2. For the transfer in August 2014:
- The personal income tax on the income from capital investment:
(5,000 shares – 2,000 shares) × 10,000 VND × 5% = 1.500,000 VND
- The personal income tax (preliminary) on income from transferring
securities:
(7,000 shares × 20,000 VND) × 0.1% = 140,000 VND
QUESTION 09
Mr. S is a foreign who first comes to Vietnam and works under a labor
contract from June 01, 2014 to May 31, 2016. In 2014, Mr. S has been
present in Vietnam for 80 days and earned 134 VNDm in wages. In 2015,
Mr. S is present in Vietnam for 110 days during the period from January 01,
2015 until the end of May 31, 2015, and earns 106 VNDm in wages. From
June 01, 2015 to December 31, 2015, Mr. S has been in Vietnam for 105
days and earned 122 VNDm in wages. Mr. S does not apply for deductions
for dependants and does not pay insurance premiums or make charitable
donations.
How much is the PIT payable by Mr. S?
ANSWER 09
In 2014, Mr. S is a non-resident, but for the period of 12 consecutive
months from June 01, 2014 to the end of May 31, 2015, Mr. S has been
present in Vietnam for totally 190 days (80 days + 110 days). Thus Mr. S is a
resident in Vietnam.
In the first tax year from June 01, 2014 to May 31, 2015:
1. Total taxable income in the first tax year= 134 VNDm + 106 VNDm = 240
VNDm
2. Personal deduction: 9 VNDm x 12 = 108 VNDm
3. Assessable income: 240 VNDm - 108 VNDm = 132 VNDm
4. Personal income tax payable in the first tax year = 60 VNDm × 5% + (120
VNDm - 60 VNDm) × 10% + (132 VNDm - 120 VNDm) × 15% = 10.8 VNDm
ANSWER 09
In the second tax year (from January 01, 2015 to the end of December 31,
2015), Mr. S has been present in Vietnam for 215 days (110 days + 105 days)
and is considered a resident in Vietnam.
1. Taxable income earned in 2015 = 106 VNDm + 122 VNDm = 228 VNDm
2. Personal deduction: 9 VNDm x 12 = 108 VNDm
3. Assessable income in 2015 = 228 VNDm - 108 VNDm = 120 VNDm
4. Personal income tax payable in the 2015 = (60 VNDm × 5%) + (120 VNDm
– 60 VNDm) × 10% = 9 VNDm
5. When settling tax in 2015, tax is duplicated in 5 months (from Jan to May)
5.1. Deductible duplicated tax = (10.8 VNDm/12 months) x 5 months = 4.5
VNDm.
5.2. Personal income tax payable in the 2015 = 9 VNDm - 4.5 VNDm = 4.5
VNDm
QUESTION 10
Mr Quang Phan, a 35-year-old Vietnamese tax resident, works for Hash Vina, a foreign
invested company in Vietnam. He was relocated back to Vietnam on 1 January 2018 after a
three-year secondment to Hash Australia, a sister company of Hash Vina. In 2018, Mr
Quang received VND200 million monthly gross salary plus a performance bonus equivalent
to VND360 million for his work in Australia. During 2018 Hash Vina also paid for two return
airfare tickets costing VND46 million in total for Mr Quang to visit his 35-year-old wife and
16-year-old son who live in Australia.

Base salary (per month) for social insurance, health insurance and unemployment
insurance, etc. for the year 2018 = VND 27,800,000
Note: For simplicity, you should assume that this rate is applicable for the whole of the year
2018.

What is Mr Quang Phan’s annual personal income tax (PIT) liability (in VND millions – to be
rounded only in the final PIT calculations) in the year 2018?
ANSWER 10

Return tickets to Australia are fully taxable as Mr Quang Phan is

Vietnamese. His performance bonus in Australia is also fully taxable.

PIT payables = [((200*12 + 360 + 46)/12 months) – 9 – 3·6 –

(27·8*10·5%))*35% – 9·85]*12 months = 799 million
QUESTION 11
In February 2018, Mr May and Ms Man, two Vietnamese tax residents, were
the equal co-winners of a promotion prize, a car which had a market value
of VND990 million, inclusive of 10% VAT, from a real estate company.

What is the amount (in VND million, rounded by one decimal) of Ms Man’s
personal income tax (PIT) liability on the above promotion prize?
ANSWER 11
According to Article 15.1 (b) of Circular 111/2013, the taxable income of a
promotion prize is the total market value of the item (inclusive of VAT) in
excess of VND10 million. The deduction of VND10 million is per item,
not per person.

PIT payable = ((990 million – 10 million)/2 persons*10%) = 49 million

QUESTION 12
Mr Jung Nam-Oh is a Korean citizen employed by EPR KR, a company in
Korea. From March 2018 to June 2018, Jung was assigned to work in
Vietnam on a short-term project for EPR VN Co, a subsidiary of EPR KR.
During that time Jung was present in Vietnam for 98 days. EPR Group
cannot separate his income attributable to the project in Vietnam from his
total employment income from EPR KR. In 2018, Jung’s annual gross
employment income from EPR KR was USD400,000 and EPR VN Co also
paid for a golf course membership at a cost of VND100 million for his use
whilst in Vietnam. In 2018, Mr Jung Nam-Oh had two dependants in Korea.

What is the total personal income tax (PIT) liability (rounded to VND millions)
in Vietnam for Mr Jung Nam-Oh in the year 2018? (Assume that USD 1 =
VND 23,500)
ANSWER 12
A non-resident in Vietnam is subject to the 20% tax rate on employment
income by proportioning days present in Vietnam over 365 days. Other
income received in Vietnam, such as the golf course membership, is
taxable in full. No dependent relief is available (Article 18 of Circular
111/2013).

PIT payable = ((400,000*98/365)*23,500 + 100 million)*20% = 525 million

QUESTION 13
In 2017, Ms Mai Pham, a Vietnamese citizen, purchased 100,000 shares in
TBC Bank in 2017 when the price per share was VND30,000 (three times
par value). The shares were listed on the official stock exchange and in
2018, TBC Bank announced a 20% dividend per share, of which half would
be paid in cash and half in the form of bonus shares. The market price of
the shares at the time of announcement was VND50,000 per share. Ms Mai
Pham had no intention of selling these shares in 2018.

What is Ms Mai Pham’s Vietnamese personal income tax (PIT) liability (in
VND million) in the year 2018 in relation to the dividend?
ANSWER 13
According to Article 10 (point 3.c of Circular 111/2013 as amended by
Circular 92/2015), only the dividend paid in cash is subject to PIT at the
time of receipt. The dividend payment rate would be calculated based on
par value (VND10,000 per share), not market price.

PIT payable = 100,000 shares*10,000 par value*10% dividend rate in

cash*5% tax rate
QUESTION 14
Mr Tony Phan, previously resident in Vietnam, is 38 years old and holds Australian citizenship. From 1 April 2018, he
was employed as chief executive officer (CEO) of NSV Co, the Vietnamese subsidiary of Next Start Co, a company in
Australia. Tony’s gross remuneration for his employment with NSV Co is as follows: Monthly salary: USD30,000; Fixed
bonus: USD60,000 for 12-months’ employment or pro-rata; Variable bonus: up to USD120,000, depending on group
and NSV Co’s performance, to be determined and paid in 2019. At the commencement of his employment, NSV Co
also gave Tony the company’s executive well-being fitness membership card. This cost NSV Co an amount of
USD120,000 for a period of 18 months. In Tony’s leisure time he develops artificial intelligence (AI) systems. In 2018,
Tony completed one AI system, in his own time, which could significantly boost the operational efficiency of both NSV
Co and Next Start Co. Next Start Co wants to pay Tony, via NSV Co, an amount of USD10 million for acquiring the
licence to use and further develop his AI system.

Since the commencement of his employment with NSV Co in April 2018, Tony has been present in Vietnam along with
his wife, Huyen Tran, a 30-year-old Vietnamese tax resident, and their two children: a five-year-old boy and a two-year-
old girl. Throughout that time the family has been living in a villa which Huyen inherited from her parents. As this
resulted in a saving of accommodation costs for NSV Co, the company paid Tony and Huyen a monthly home
allowance of USD6,000 in cash. Tony used half of this allowance to pay for kindergarten fees for their children.
Note: You should ignore any social, health or unemployment insurance contributions which may be applicable. Assume
that USD 1 = VND 23,500

(a) Calculate the taxable income and personal income tax (PIT) liability of Mr Tony Phan in Vietnam in 2018.
(b) Briefly discuss the treatment for PIT purposes of the amount of USD10 million which Next Start Co may pay Tony to
acquire the artificial intelligence licence, assuming the licence is acquired during Tony’s employment with NSV Co in
Vietnam.
ANSWER 14
ANSWER 14
(b) Possible tax treatments of licence fee

The licence fee which may be received by Tony during his presence in
Vietnam would be subject to personal income tax (PIT) in Vietnam in his
hands.

By nature and as it is developed using Tony’s own personal time, the

licence fee should be viewed as a form of franchise fees/royalty fees which
would be subject to tax at 5% for the amount in excess of VND10 million

However, since the licence fee is paid by Tony’s employer, there would be a
risk that tax authorities in Vietnam may view this as part of employment
income (subject to a much higher tax rate of 35%).
QUESTION 14
Mr Tony Phan, previously resident in Vietnam, is 38 years old and holds Australian citizenship. From 1 April 2018, he
was employed as chief executive officer (CEO) of NSV Co, the Vietnamese subsidiary of Next Start Co, a company in
Australia. Tony’s gross remuneration for his employment with NSV Co is as follows: Monthly salary: USD30,000; Fixed
bonus: USD60,000 for 12-months’ employment or pro-rata; Variable bonus: up to USD120,000, depending on group
and NSV Co’s performance, to be determined and paid in 2019. At the commencement of his employment, NSV Co
also gave Tony the company’s executive well-being fitness membership card. This cost NSV Co an amount of
USD120,000 for a period of 18 months. In Tony’s leisure time he develops artificial intelligence (AI) systems. In 2018,
Tony completed one AI system, in his own time, which could significantly boost the operational efficiency of both NSV
Co and Next Start Co. Next Start Co wants to pay Tony, via NSV Co, an amount of USD10 million for acquiring the
licence to use and further develop his AI system.

Since the commencement of his employment with NSV Co in April 2018, Tony has been present in Vietnam along with
his wife, Huyen Tran, a 30-year-old Vietnamese tax resident, and their two children: a five-year-old boy and a two-year-
old girl. Throughout that time the family has been living in a villa which Huyen inherited from her parents. As this
resulted in a saving of accommodation costs for NSV Co, the company paid Tony and Huyen a monthly home
allowance of USD6,000 in cash. Tony used half of this allowance to pay for kindergarten fees for their children.
Note: You should ignore any social, health or unemployment insurance contributions which may be applicable. Assume
that USD 1 = VND 23,500

(a) Calculate the taxable income and personal income tax (PIT) liability of Mr Tony Phan in Vietnam in 2018.
(b) Briefly discuss the treatment for PIT purposes of the amount of USD10 million which Next Start Co may pay Tony to
acquire the artificial intelligence licence, assuming the licence is acquired during Tony’s employment with NSV Co in
Vietnam.
QUESTION 15
ZLC Co employs four Vietnamese employees in its Ho Chi Minh City office. Their annual gross remuneration and
number of dependants for 2018 is summarised below:

Salary Allowance Performance OT Uniform Number of

bonus allowance dependants
A 360 120 180 100 15 2
B 600 180 300 150 20 3
C 144 72 36 40 8 2
D 240 78 80 0 5 2

Note: The overtime represents both the normal pay rate (100%) and the excess rate (100%). ZLC Co withholds, at the
set rates, the employees’ contributions of social, health and unemployment insurance from their remuneration. In a
recent written reply received from the Vietnamese tax authority to a query raised by ZLC Co, it was confirmed that
overtime and uniform allowance would NOT be in the list of items to be excluded in determining income which is
subject to social, health and unemployment insurance contributions.
Base salary (per month) for social insurance, health insurance and unemployment insurance, etc. for the year 2018 =
VND 27,800,000
(a) Calculate the monthly personal income tax (PIT) liability of each of the four employees of ZLC Co.
(b) Briefly explain the treatment of the social, health and unemployment insurance contributions for PIT purposes.
ANSWER 15
1. Overtime: only 50% is taxable.
2. Uniform: only the excess over VND5 million is taxable.
3. Personal deductions: self-relief VND9 million plus dependant relief VND3·6 million per
dependant.
4. SHUI (social, health, unemployment insurance): calculated at 10·5% (8% + 1·5% + 1%)
on the lower of (salary + allowance + overtime + uniform)/12, or VND27·8 million
Note: The calculation for that is based on the actual remuneration because it is lower than
VND27·8 million per month.

Salary Allowan Perform Taxable Taxable Monthly SHUI Circums Assessa

ce ance OT uniform taxable tances ble
bonus allowan income deducti income
ce on
A 360 120 180 50 10 60 2.9 16.2 40.9
B 600 180 300 75 15 97.5 2.9 19.8 74.8
C 144 72 36 20 3 22.9 2.4 16.2 4.3
D 240 78 80 0 0 33.2 2.9 16.2 14.1
QUESTION 16
Ms Dung Nguyen is a Vietnamese citizen with three registered
dependants. During 2017, she received a gross monthly salary of VND96
million, plus a bonus equal to two months’ salary in April 2017, relating to
her work performance in 2016. Her employer also paid rent for a car for
her to travel from home to work and vice versa at an annual cost of
VNDm 240. Dung is responsible for her own social, health and
unemployment insurance.
What is Ms Dung Nguyen’s annual personal income tax (PIT) liability in
the year 2017?
ANSWER 16

[((96*14 months/12 months – 9) – (26*(8% + 1·5% + 1%))*35%) – 9·85]*12

months = VND303 million
QUESTION 17
On 1 September 2016, Mr Mohammad Taqi, a Singaporean citizen,
commenced a secondment in the Vietnamese representative office of AFC
Co, a company headquartered in Singapore. He received gross
employment income of USD10,000 per month from AFC Co relating to his
secondment. He resided in Vietnam from 1 September 2016 until his
employment was terminated on 15 February 2017 by AFC Co, and he left
Vietnam on the same date. He has no dependants.
What is the amount of Mr Mohammad Taqi’s personal income tax (PIT)
liability for the first tax year in Vietnam in respect of his secondment
(assuming he was not subject to social, health and unemployment
insurance in Vietnam and USD 1 = VND 22,800)?
ANSWER 17

USD10,000*22,800*20%*5·5 months = 250·8 million

Mr Mohammad Taqi spent only 5·5 months in Vietnam for the first tax
year (12 months from first arrival) and therefore was non-resident –
accordingly he would be subject to 20% flat rate on the Vietnam-sourced
income (i.e. income from secondment).
QUESTION 18
In January 2017, Mr Chris Beath, a 50-year-old Australian citizen, started
his employment in Vietnam for VF Co, a Vietnamese company. In March
2017, his wife Allanda, also a 50-year-old Australian citizen, suffered an
accident in Australia. She was not handicapped, but had to move to
Vietnam to live with Chris from April 2017 to the end of the 2017 year. She
had no income in 2017. VF Co provided Chris with cash support of VND120
million towards medical care expenses for Allanda in Vietnam during 2017.
What is the total personal deduction/relief (ignoring social, health and
unemployment insurance) Mr Chris Beath can claim in the year 2017
relating to his personal income tax (PIT)?
ANSWER 18

[(9 million self-relief*12 months) = VND108 million

Note: Ms Allanda Beath is 50 years old and would not qualify for the
dependant deduction. The cash support is taxable income in this case,
but not a deduction. Cash support for fatal diseases is non-taxable;
however, in this case cash support is taxable because it is not for a fatal
disease.
QUESTION 19
Mr Minh Phan, a Vietnamese citizen, was assigned to work in the United
States (US) representative office of FTP Co, a company headquartered in
Vietnam. In 2017, he received monthly gross income of USD10,000, plus an
annual tuition fee of USD30,000 for Quang Phan, his ten-year-old son, for
studying at a school in the US. The tuition fee was paid directly by the
representative office of FTP Co to the school.
What is the amount of Mr. Minh Phan’s Vietnamese monthly personal
income tax (PIT) liability in the year 2017 (before deducting any foreign tax
credit)? (Assuming that Mr. Minh Phan is not subject to any compulsory
insurance in Vietnam and USD 1 = VND 22,800)
ANSWER 19

(10,000*22,800/10^6 – 9 – 3·6)*35% – 9·85 = VND65·54 million

According to Article 2.2.g.7 of Circular 111/2013 as amended by Circular

92/2015, ) the tuition fees for children of foreign employees in Vietnam to
study in Vietnam, for children of Vietnamese employees overseas to study
overseas from preschool to high school, which is paid by the employer on
their behalf would be exempt from personal income tax (PIT).
 QUESTION 20
Mr Dung Tien is 22 years old and is a Vietnamese football player. He plays for the TH Football Club (THFC) in Vietnam and the
national youth team of Vietnam. He entered into a two-year term labour contract with the THFC management company from
the beginning of January 2017 and received the following remuneration package for his first year of service under the contract:
– Salary: VND45 million per month;
– Performance incentives: based on six months’ salary if THFC is the champion of the league, or three months’ salary in other
cases; and
– One-off sign-on payment of VND2,400 million for his two-year contract of services (payment to be made at the time the
contract is signed).
The remuneration stated in the contract is gross of personal income tax (PIT). Dung is responsible for his share of insurance
contribution expenses. THFC was ranked second in the league in 2017, which lasted from January to September 2017. From
October to December 2017, Dung played for the national youth team where, in addition to his THFC salary, he received a
gross monthly allowance of VND15 million, which was paid to THFC who then paid it to Dung. By late 2017, the national youth
team had made an historic achievement in an Asian football competition. For his excellent contribution towards this
achievement, Dung received: a cash prize of VND1,320 million, accompanied by a certificate of reward issued by the
government authorities in charge of sports in Vietnam; a car with a market value of VND800 million from a car assembling
company; and 3. free-of-charge flights for one year up to a value of VND500 million from VNA, an airline in Vietnam.
Dung was single in 2017. He lived with his father who is 65 years old, and his mother who is 60 years old. Neither of his
parents had any income in 2017. According to a recent ruling issued by the tax authorities, the contractual one-off sign-on
payment shall be taxed in the same manner as employment income.
Required:
(a) Briefly explain the tax treatment for each of the three prizes received by Mr Dung Tien during 2017.
(b) Calculate Mr Dung Tien’s taxable employment income, and his total personal income tax (PIT) liability from all income
sources for the year 2017
Assuming that base salary (per month) for social insurance, health insurance and unemployment insurance, etc for the year
2017 = VND 26,000,000
ANSWER 20
(a) Tax treatments of prize
According to Article 2.2.e.1.7 of Circular 111/2013 as amended by Circular
92/2015: A prize in cash accompanied by a certificate of reward granted by
the Government shall be free of personal income tax (PIT).
The prizes in kind can be treated as prizes/gifts. According to Article 2.10 of
the Circular 111 above: prizes/gifts shall be taxable if these are securities,
capital contribution, real estate or registrable assets such as a car.
Accordingly, the car would be subject to PIT (at 10% of the excess over
VND10 million) while the free-of-charge flights would be non-taxable.
 ANSWER 20
Taxable income (VNDm)
Salary (45*12) 540
Performance incentive (45*3) 135
Allowances (15*3) 45
Sign-on payment 2,400
Total taxable employment income 3,120
Monthly taxable income (3,120/12 months) 260
Self-deduction (VND9 million) (9)
Dependent deduction (VND3·6 million*2 parents) (7.2)
Compulsory insurance [VND26 million*(8% + 1·5% + 1%)] (2.7)
Monthly assessable income 241.1
Monthly tax liability (241·1*35% – 9·85) 74.5
Annual employment tax liability [74·5*12 months] 894
Prize from car (800 million – 10 million)*10% 79
Total tax liabilities from all sources 973