PERSONAL INCOME TAX

THE SCOPE OF PERSONAL INCOME TAX (PIT)

Individuals liable to PIT (Taxable person)

Resident individual
Non-resident
having income both
individual having
within and outside the
income in Vietnam,
territory of Vietnam,
irrespective of where
irrespective of where the
the income is paid
income is paid.
 THE SCOPE OF PERSONAL INCOME TAX (PIT)

Tax residence of an individual

Resident individual
a.Being present in Vietnam for a period of one hundred and eighty-three (183) days or more within one western
calendar year or for twelve (12) consecutive months from the first date on which such individual is in Vietnam.
An individual who is in Vietnam means the presence of such individual within the territory of Vietnam
b. Having a regular residential location in Vietnam in one of the following cases:
• The person has a regular residence according to legislation on residence:
oVietnamese citizen: the regular residence is the place where that person regularly, stably, and indefinitely lives
and has been registered as permanent residence as prescribed by legislation on residence
oForeigner: the regular residence is the permanent written in the permanent residence card, or the temporary
residence when applying for the temporary residence card issued by competent authorities affiliated to the
Ministry of Public Security
• The person rents a house in Vietnam according to legislation on housing under a contract that lasts 183 days or
longer in the tax year, in particular
o The person has no regular residence but has rented the house for totally 183 days in the tax year is also
considered a resident, even that person rents houses in various areas
oThe rented houses include hotels, guesthouses, motels, offices, etc. whether they are rented by the person or
their employer
 THE SCOPE OF PERSONAL INCOME TAX (PIT)

The difference in the tax treatment of a resident individual and a non-resident

individual.
Resident Non-resident
Taxable income World-wide income Income sourced from Vietnam (regardless
of whether paid in Vietnam or outside
Vietnam)
Deductions (Applied for income being salary) N/A
Compulsory Insurance & voluntarily pension
fund contribution
Charity contribution
Family Deduction (Personal & Dependent
Allowances)
Double tax relief Can claim Cannot claim
Tax rate Progressive tax (for income being salary) Flat rate
Flat rate (for the rest)
 INCOME FROM CAPITAL INVESTMENTS

Taxable income
•Interest receivable from loans provided to organizations, enterprises, business households, groups of business
individuals or individuals under a loan contract (except for interest receivable from deposits with banks and credit
institutions).
• Income and dividends receivable from share capital contribution.
•Income receivable from capital contribution to liability limited companies, partnerships, co-operatives, joint
ventures, business co-operation contracts and other forms of business as stipulated in the Law on Enterprises and
the Law on Co-Operatives.
• Increased portion of the value of the capital contribution share receivable upon dissolution of an enterprise,
conversion of operational model, merger or consolidation of an enterprise or upon withdrawal of capital.
• Income receivable from interest on bonds, debentures and other valuable papers issued by domestic
organizations (including foreign organizations permitted to establish and operate in Vietnam)
• Income receivable from capital investments in other forms, including investment capital contribution in kind, by
reputation, by land use right, or by an invention or discovery.
• Income from shares paid in lieu of dividends.
 INCOME FROM CAPITAL INVESTMENTS

Exempt income

Income being interest on money deposited

at a bank or credit institution, & from life
insurance policies

income from interest on bonds issued by

the Government of Vietnam.
 INCOME FROM CAPITAL INVESTMENTS

Tax calculation
• Assessable income: taxable income receivable by the individual from activities of providing loans to business
or manufacturing establishments, or buying shares or contributing capital for business or manufacture

• Tax rate: flat rate tariff of 5%.

• Tax point: when the income-paying entity pays the income to the taxpayer, except
o Increased portion of the value of the capital contribution share receivable upon dissolution of an
enterprise, conversion of operational model, merger or consolidation of an enterprise or upon withdrawal
of capita: when the individual actually receives the income being the increased portion of the value of the
capital contribution share

o Income from shares paid in lieu of dividends: the time of transfer of the securities.
• Formula: PIT = Assessable income x Tax rate of 5%
• Tax calculation for resident and non-resident is the same
 INCOME FROM CAPITAL TRANSFERS

Taxable income

Income from transfer of a capital contribution share

Income from securities transfer

Income from transfer of capital in other forms.

 INCOME FROM CAPITAL TRANSFERS

Tax calculation for resident

Income from transfer of a capital contribution portion

the price the

Assessable related
of the purchase
income expenses
transfer price
 INCOME FROM CAPITAL TRANSFERS

Tax calculation for resident

Income from transfer of a capital contribution portion

Tax rate flat rate tariff of 20%.

Tax point when the transfer of the capital contribution portion was completed

Method for Personal income tax payable = Assessable tax x Tax rate (20%)
assessing tax
 INCOME FROM CAPITAL TRANSFERS

Tax calculation for resident

Income from transfers of securities
The selling price Tax rate and method of assessing tax

Listed securities: the actual selling price on the 0.1% on the selling price
securities market at the time of the sale.

Unlisted public company, which has registered trading applied on each occasion
at a securities Trading Centre: actual selling price of
such securities at the Securities Trading Centre.
Other entities: price recorded in the transfer contract or PIT = Price of transfer x Tax rate of 0.1%
the price in the accounting books of the entity holding
such securities at the time of the sale.
Imposed by tax authorities: If there is no transfer price
recorded in the transfer contract or if the transfer price
recorded is inconsistent with the market price.
 INCOME FROM CAPITAL TRANSFERS

Tax calculation for non-resident

• Selling price: same as for resident
• Tax rate and method of assessing tax
o 0.1% on the selling price
o applied on each occasion.
o Personal income tax payable = Price of transfer x Tax rate of 0.1%
 INCOME FROM REAL PROPERTY TRANSFERS

Taxable income

Income from transfer of a Income from transfer of

Income from transfer of a
land use right and assets ownership of or use right
land use right.
attached to the land. to a residential house.

Income from transfer of a Other income receivable

lease right to land or a from a real property
water surface. transfer.
 INCOME FROM REAL PROPERTY TRANSFERS

Exempt income

Income from real property transfers as between husband and wife; as

between parents and children including adoptive parents and
adopted children; as between parents-in-law and children-in-law;
grandparents and grandchildren; between siblings.

Income from transfer of a residential house or right to use residential

land and the assets attached to the land by an individual who has only
one sole residential house [and/or] residential land use right in
Vietnam
 INCOME FROM REAL PROPERTY TRANSFERS

Tax calculation
Price of the transfer

Land use right with attached infrastructure or buildings

Land use right where the land does Transfer of (i) ownership of or use
right to a residential house/ (ii) of
not attach infrastructure or
a lease right to land or a water
buildings surface: similar to the above
 INCOME FROM REAL PROPERTY TRANSFERS

Tax calculation
Tax rates and method of assessing tax

Tax rates: 2% of the price of the transfer.

Tax point: time when the transfer procedures are carried out by transferor in accordance
with law.
If co-owners Tax obligations shall be calculated in respect of each individual.

transfer real
Assessable income of each individual: based on total income from the transfer and the ratio of distributing such
property income between the co-owners
Ratio: based on legal documents such as the initial capital contribution agreement, the will, or decision on
distribution by a court and so forth
Where there are no such legal documents: the ratio of distribution of income is the average to each individual.

Tax calculation for resident and non-resident is the same

 INCOME BEING ROYALTIES

Taxable income
Intellectual property right objects
implemented in accordance with article 3
of the Law on Intellectual Property and Transfer of technical know-how.
relevant guidelines, comprising

Transfer of technical
Industrial property information about
Copyright objects
right objects technology in the
comprising literary,
comprising form of
artistic and Technology transfer
inventions, technological plans,
scientific works; Objects of rights to objects Transfer of
industrial designs, technological
and copyright plant varieties implemented in solutions for
designs of semi- processes, technical
related rights comprising plant accordance with optimizing
conducting solutions, formulae,
objects comprising varieties and article 7 of the Law manufacture and
integrated circuit technical
video recordings, reproductive on Technology renovating
layouts, trade specifications,
broadcast programs materials. Transfer, technology.
secrets, marks, drawings, technical
and satellite signals comprising
trade names and maps, computer
carrying coded
geographical programs and
programmes.
indications. information files.
 INCOME BEING ROYALTIES

Tax calculation
Assessable income
o Part of the income which exceeds ten million (10,000,000) dong pursuant to the transfer contract
o Irrespective of the number of times payment is actually made or received, and as receivable by the taxpayer on
the transfer of, including transfer of use right to, the intellectual or industrial property right object.
o If the one intellectual or industrial property right object is transferred to the same user but in a number of
different contracts, then assessable income shall be the part of the income, which exceeds ten millions dong,
calculated on all of the contracts of assignment.
o If there are co-owners of the one intellectual or industrial property right object, then assessable income shall be
allocated between each individual owner, and the rate of allocation shall be based on the certificate of
ownership or of use right issued by the competent State authority.
 INCOME BEING ROYALTIES

Tax calculation

Tax rate: flat rate tariff at 5%.

Tax point: time when royalties are paid.

Method of assessing tax: Income tax payable = Assessable income x Tax

rate of 5%

Tax calculation for resident and non-resident is the same

 INCOME FROM FRANCHISES

Taxable income

A commercial activity whereby a franchisor

authorizes and requires a franchisee to conduct
on its own behalf the purchase and sale of goods
or provision of services in accordance with the
conditions of the franchisor.
Income receivable by an individual from the
franchise contracts mentioned above, including
sub-franchising in accordance with the law on
franchising.
 INCOME FROM FRANCHISES

Tax calculation
Assessable income
o Part of the income which exceeds ten million
(10,000,000) dong pursuant to the franchise
contract

o Irrespective of the number of times payment is

actually made to, or received by the taxpayer.
o If the one commercial franchise object is
transferred but in a number of different
contracts, then assessable income shall be the
part of the income which exceeds ten million
dong calculated on all of the commercial
franchise contracts.
 INCOME FROM FRANCHISES

Tax calculation

Tax rate: flat rate tariff at 5%.

Tax point: time of payment of the money for the franchise between the
franchisor and franchisee.

Method of assessing tax: Income tax payable = Assessable income x Tax

rate of 5%

Tax calculation for resident and non-resident is the same

 INCOME BEING WINNINGS OR PRIZES

Taxable income

Lottery winnings comprising winning lotteries issued by lottery companies.

Winning of all forms of promotional prizes when participating in the sale and purchase of goods or
services.

Winnings from all forms of betting permitted by law.

Winnings from all forms of casino permitted by law.

Winnings from games and competitions with prizes and other forms of winnings
 INCOME BEING WINNINGS OR PRIZES

Tax calculation
Assessable income
o Part of the value of the prize which exceeds ten million (10,000,000) dong as receivable by the taxpayer on
each occasion of winning a prize
o Irrespective of the number of times payment is actually received.
o If a number of people win (share) the one prize, then assessable income shall be allocated to each prize-winner
who must present evidence of the win
o Specific cases
▪ Lottery winnings
▪ Winning a promotional prize in kind
▪ Winnings in all forms of betting and casino
▪ Winnings from games and competitions with prizes
 INCOME BEING WINNINGS OR PRIZES

Tax calculation

Tax rate: flat rate at 10%.

Tax point: when the entity pays the prize to the winner.

Method of assessing tax: Income tax payable = Assessable income x Tax

rate of 10%

Tax calculation for resident and non-resident is the same

 INCOME FROM INHERITANCES/ GIFT

Taxable income

Securities and comprising

Receivable by an individual
as a gift or under a will or in
accordance with the law on
inherited assets,
share certificates, bonds,
debentures, fund certificates
and other types of securities
stipulated in the Law on
Securities.
Capital share in an economic
organization or business
establishment

Real property such as a land Other assets for which

use right, right to use land
with assets attached to it,
ownership right of a house or
apartment, or right to lease a
land or water surface.
ownership or use rights must
be registered with State
administrative authorities
such as cars, motorbikes,
ships or boats.
 INCOME FROM INHERITANCES/ GIFT

Exempt income

Income being receipt of an inheritance or

gift of real property as between husband
and wife; parents and children including
adoptive parents and adopted children;
parents-in-law and children-in-law;
grandparents and grandchildren; siblings.
 INCOME FROM INHERITANCES/ GIFT

Tax calculation
Assessable income
• Part of the value of the inherited or donated assets which exceeds ten million (10,000,000) dong on each occasion
of receipt.

• Special cases:
o real property:
o motor vehicle, motorbike or boat; based on the list of prices for calculating registration fees issued by the
provincial people's committee at the time the asset is receivable by the taxpayer.
o capital contribution portion in an economic organization or business establishment
o Securities
 INCOME FROM INHERITANCES/ GIFT

Tax calculation

Tax rate: flat rate tariff at 10%.

Tax point: when the taxpayer receiving the inheritance/gift conducts

procedures for transfer of ownership or transfer of the right to use the
asset. .

Method of assessing tax: Income tax payable = Assessable income x Tax

rate of 10%

Tax calculation for resident and non-resident is the same

 BUSINESS INCOME

Taxable income
Income derived from manufacturing and
business activities in the following sectors:

Income from manufacture and business in goods

and services in all sectors and business lines
permitted by law

Income from independent practice by

individuals in sectors and business lines for
which licences or practising certificates are
issued in accordance with law

Income from manufacturing and business

activities in agriculture, forestry, salt mining,
aquaculture and fishing which do not satisfy all
the conditions for tax exemption
 BUSINESS INCOME

Exempt income
Income of a family household or individual directly engaged in agricultural production, forestry, salt mining, raising
animals, cultivating crops, fishing or aquaculture where the produce has not yet been processed into other products
or has only been preliminarily processed
o Family households and individuals directly engaged in
▪ Have a legal use or lease right of the land or water surface for production and they directly participate as
workers in the agricultural production, forestry, salt mining, raising animals, cultivating crops, fishing or
aquaculture.
▪ If they sub-lease the land or water service from another entity, then there must be a written lease of the
land or water service as required by law.
▪ Family households and individuals engaged in fishing or aquaculture must own or have the right to use a
boat or fishing facility and must directly participate in the fishing or aquaculture.
Reside in the locality where such agricultural production, forestry, salt mining, raising animals, cultivating crops,
fishing or aquaculture takes place. In the case of fishing or agriculture, the taxpayer concerned need not reside in the
locality
 BUSINESS INCOME
Tax calculation for resident
Tax calculation methods applied by businesspeople paying flat tax
Principles
• If the revenue subject to personal income
tax (PIT) earned by the businessperson
who pays flat tax in the year is VND 100
million/year or lower, the person shall not
pay VAT and PIT.
• 100 millions is prorated if individual does
not do the business for the whole year.
• Businesspeople who do business as a group
or household and earns a revenue of VND
100 million/year or lower considered that
the revenue is earned by only 01
representative of the group or household in
the tax year.
• In case a businessperson fails to determine
the revenue or the revenue is not practical,
the tax authority is entitled to impose
Tax rate Determination of tax payable
• Distribution, provision of goods shall incur • VAT payable = Revenue
1% VAT and 0.5% PIT. subject to VAT x VAT rate
• Service provisions and construction • PIT payable = Revenue
exclusive of building materials shall incur subject to PIT x PIT rate
5% VAT and 2% PIT.
• Manufacture, transport, provision of
services associated with goods,
construction inclusive of building materials
shall incur 3% VAT and 1.5% PIT.
• Other business lines shall incur 2% VAT
and 1% PIT. The business person who
involves in multiple business lines shall
declare and calculate tax according to the
rates applied to each of the business lines.
If cannot then tax authority can impose
revenue for each of the business line
 BUSINESS INCOME
Tax calculation for resident
Tax calculation methods applied by businesspeople paying tax on occasion
Principles
• include: residents who earn revenue
outside Vietnam’s territory; persons who
do casual business and do not have
permanent business premises; persons
who engages in business cooperation with
other organizations in a way that their
personal revenues can be determined.
• If the total revenue from business in the
calendar year earned by a businessperson
who pays tax whenever it is incurred is
VND 100 million or lower, such
businessperson shall not pay VAT and PIT.
Tax rate Determination of tax payable
• Distribution, provision of goods shall incur • VAT payable = Revenue
1% VAT and 0.5% PIT. subject to VAT x VAT rate
• Service provisions and construction • PIT payable = Revenue
exclusive of building materials shall incur subject to PIT x PIT rate
5% VAT and 2% PIT.
• Manufacture, transport, provision of
services associated with goods,
construction inclusive of building materials
shall incur 3% VAT and 1.5% PIT.
• Other business lines shall incur 2% VAT
and 1% PIT. The business person who
involves in multiple business lines shall
declare and calculate tax according to the
rates applied to each of the business lines.
If cannot then tax authority can impose
revenue for each of the business line
 BUSINESS INCOME

Tax calculation for resident

Tax calculation methods applied by businesspeople paying tax on occasion
Principles Tax rate Determination of tax payable
• Persons leasing property) are those who earn revenue from the • VAT rate on • VAT payable = Revenue
lease of their property, including: housing, premises, stores, property lease is 5% subject to VAT x rate
workshops, warehouses, depots exclusive of accommodation • PIT rate on property • PIT payable = Revenue
services; lease of means of transport, machinery and equipment lease is 5% subject to PIT x rate
without operators; lease of other property without associated
services.
• If the total revenue from lease contracts earned in the calendar
year is VND 100 million or lower, the lessor shall not pay VAT and
PIT. If the lessee pays a lump-sum of rent in advance for many
years, the taxpayer shall not pay VAT and PIT if the annual
revenue, which equals (=) lump-sum revenue divided by (:) the
number years, is VND 100 million or lower. Businesspeople who
have a co-ownership of a piece of property for lease and earn a
revenue of VND 100 million/year or lower: considered that the
revenue is earned by only 01 representative of the group or
household in the tax year.
 BUSINESS INCOME

Tax calculation for resident

Tax calculation methods applied by businesspeople paying tax on occasion
Principles Tax rate
• The person who directly signs the lottery, insurance, or multi-level marketing • PIT rate Rate of PIT
agent contract is the person who directly signs an agent contract with the incurred by lottery
lottery company, insurer, or multi-level marketing company to sell agents, insurance agents,
goods/services at prices fixed by the company and receive commission and multi-level
• If the total commission, bonuses in any shape or form, subsidies and other marketing agents is 5%.
revenues received by the agent in the year is VND 100 million or lower, the • PIT payable = Revenue
person shall not pay PIT. subject to PIT x 5% PIT
 BUSINESS INCOME

Tax calculation for non-resident

The rate of personal income tax on incomes from business earned by a non-resident equals the revenue from
business multiplied by (x) the tax rate.

The rates of personal income tax on incomes from business earned by non-residents in each field and industry:
• 1% for goods sale.
• 5% for service provision.
• 2% for production, construction, construction, and other businesses.
Where the non-resident earns revenues from various fields but fails to separate the revenue from each field, the
highest tax rate shall apply to the total revenue.
 INCOME BEING SALARY

Taxable income
Type of incomes

Receivable by employees Salary and wages, and items Allowances and subsidies
from employers in monetary in the nature of salary and (except for allowances for
or non-monetary forms, wages. wedding, funerals)

Payments receivable as a
Remuneration receivable in Other monetary or non-
result of participation in
all forms. monetary benefits other
professional and business
than salary
associations,

Monetary or non-monetary
bonuses
 INCOME BEING SALARY

Taxable income
Tax point

Tax point for determination of taxable income: time

when the employer pays such salary to the employee
 INCOME BEING SALARY
Exempt income
Several key non-taxable incomes (income being salary)
No. Benefit
1 Subsidy for intensive disease
2 Special allowances for state
officer/employees
3 Airfare for home leave, one per year for
expatriates working in Vietnam or
Vietnamese working overseas
4 Children’s school fees: for foreigner
children in Vietnam or Vietnamese
children in overseas
Conditions
For employees or their relatives;
The amount shall be based on actual expenses but not exceeding the hospital
fee less the fees covered by insurance company
There are sufficient supporting document in place.
Transportation allowance/office residential in accordance with the
regulations.
For employee only.
Specify in the labour contract
Invoice under the name of employer
Routine must be between VN from/to home country (by nationality or
residency registration); or working country to Vietnam.
Specified in the labour contract
From kindergarten up to high school
Invoice under the name of employer
 INCOME BEING SALARY
Exempt income
Several key non-taxable incomes (income being salary)
No. Benefit
5 One-time relocation allowance
6 Other allowances (travel member
fee, entertainment; office supply;
tax declaration services; car
allowance etc.)
7 Mobilization allowance of
foreigners
Conditions
To the particularly economic difficult areas or island.
For foreigners/Vietnamese who is a long-term resident of overseas to
Vietnam and Vietnamese to overseas
Must be specified under labor contract or collective labor agreement.
Where applicable, these allowances must be in line with state
regulations or corporate regulations.
Normally not taxable if the allowance is not specifically referred to
name of beneficiary or group of beneficiaries.
In accordance with the principle in petroleum or mineral exploration
industry.
Provided in labor contract
Supported by air-ticket.
 INCOME BEING SALARY

Exempt income
Special-treatment income (income being salary)
1 Housing allowances Allowance in cash: fully taxable.
Allowance in kind (paid by employer under employer name): taxable
income is capped at the lower of actual housing allowance and 15%
total other taxable incomes. Housing provided free of charge by the
employer to the employee in industrial zones, economic zones,
difficult/especially difficult socio-economic areas.
2 Meal shift allowance: exempt but 1. Allowance in kind (Employer pay directly to the vendor with
subject to cap. proper supporting): no cap;
2. Allowance in cash: capped at VND7300K/month.
3 Per diem Allowance in cash: in state boby 200k/day. Other organisation:
according to to intenral policy
4 Overtime/ Night-shift allowance The first 100% payment as per the normal working hour is still
taxable.
Exempt for extra payment following overtime.
 INCOME BEING SALARY

Tax calculation for resident

Assessable income

Compulsory Insurance premium, professional indemnity insurance and

voluntarily pension fund (subject to Cap).

Deductions for personal and independent

Deductions for contributions to charitable, humanitarian or study

promotional funds.
 INCOME BEING SALARY

Tax calculation for resident

Tax rate - Tax rate applicable for gross income

Gross assessable income (million VND) Tax Rate

Tax Bracket (%) Tax
Annual Monthly
1 Up to 60 Up to 5 5 T = 0·05G

2 Over 60 to 120 Over 5 to 10 10 T = 0·1G – 250,000

3 Over 120 to 216 Over 10 to 18 15 T = 0·15G – 750,000

4 Over 216 to 384 Over 18 to 32 20 T = 0·2G – 1,650,000

5 Over 384 to 624 Over 32 to 52 25 T = 0·25G – 3,250,000

6 Over 624 to 960 Over 52 to 80 30 T = 0·3G – 5,850,000

7 Over 960 Over 80 35 T = 0·35G – 9,850,000
 INCOME BEING SALARY

Tax calculation for resident

Tax rate - Gross up table (from NET to GROSS income)
NET INCOME (million VND)
GROSS UP (million dong) (applicable
No
Annual Monthly for monthly income)

1 To 57 To 4,75 NET/0,95
2 from above 57 to 111 from above 4,75 to 9,25 (NET-0,25)/0,9
3 from above 111 to 192,6 from above 9,25 to 16,05 (NET-0,75)/0,85

4 from above 192,6 to 327 from above 16,05 to (NET-1,65)/0,8

27,25
5 from above 327 to 507 from above 27,25 to (NET-3,25)/0,75
42,25
6 from above 507 to 742,2 from above 42,25 to (NET-5,85)/0,7
61,85
7 from above 742,2 from above 61,85 (NET-9,85)/0,65
 INCOME BEING SALARY

Tax calculation for resident

Step for calculation – Gross salary

Calculate other
Identify other taxable Determine self-relief
Determine gross deductions
allowances and actual and qualified
salary (insurance, donation
housing allowance. dependent relief
and charity)

Calculate taxable
Compute taxable housing allowance Compute Compute monthly PIT
income and 15% of (lower of 15% taxable monthly/yearly
income and actual and annual PIT.
taxable income assessable income.
housing allowance).
 INCOME BEING SALARY

Tax calculation for resident

Step for calculation – Net salary

Determine Net Income

excluding housing allowance:
Net Salary + Taxable
Allowances – Deduction (family
relief, insurance, donation).
Add back Deductions to
GROSS UP to compute Gross Identify the lower of 15% total
determine Total Taxable
Income before housing taxable income and actual
income before Housing
allowance. housing allowance
Allowance

Determine Net Income

including housing allowance:
Net Salary + Taxable GROSS UP to determine Gross Compute monthly PIT and
Allowances – Deduction (family assessable income yearly PIT liability.
relief, insurance, donation) +
Taxable housing allowance.
 INCOME BEING SALARY

Tax calculation for resident

Determining deductions - Personal and Family (Dependant) Deductions

Level of deduction

• For taxpayer shall be 9,000,000 dong/month and 108,000,000 dong/year until 30/6/2020 and then

11,000,000/month

• For each dependant whom a taxpayer is responsible to rear or care for, shall be 3.600,000 dong/ month as from

the month when such responsibility arises until 30/6/2020 and them 4,400,000/month

• For 2020 tax finalisation the deduction of 11,000,000/month and 4,400,000/month is applicable for whole year
 INCOME BEING SALARY

Tax calculation for resident

Determining deductions - Personal and Family (Dependant) Deductions
Principles for assessing deductibility for a dependant
• Each dependant may only be assessed for deduction once in respect of one taxpayer within the tax assessment
year.
• If a taxpayer has a dependant in common with other taxpayers, then all such taxpayers must agree on
registration of the dependant of only one taxpayer.
• A taxpayer shall be responsible to declare the number of his or her dependants, and shall be legally liable for the
accuracy of the declaration.
• taxpayer has applied for tax registration and been issued with the tax code
• When registering deductions for dependants, the taxpayer shall be issued with tax codes for dependants
 INCOME BEING SALARY

Tax calculation for resident

Determining deductions - Personal and Family (Dependant) Deductions
Dependants shall comprise:
Children, legitimate adopted children, illegitimate children, stepchildren, in particular:
• Children under the age of 18 years (counting the full number of months).
• A child over 18 years of age who is handicapped and unable to work.
• Children studying in Vietnam or overseas in universities, college, vocational schools, including children from 18
years of age and over in high schools that have no income or the average monthly income in the year from all
sources ≤ 1,000,000 VND
A spouse of the taxpayer: with condition (i);
A parent or parent-in-law, stepparents, legitimate adoptive parents of the taxpayer with condition (i).
Any other person whom the taxpayer must directly rear or care for with condition (i),
Condition (i): is (a) out of the working age, or (b) still of working age but who is handicapped, unable to
work, and (c) does not have income or has income which does not exceed the threshold (currently,
VND1m/month).
 INCOME BEING SALARY

Tax calculation for resident

Determining deductions - Compulsory insurance premiums and contribution to the voluntary
pension fund
• Compulsory insurance premiums deductible when assessing taxable income shall be compulsory insurance
premiums payable pursuant to the Labour Code, the Law on Social Insurance and the Law on Medical Health
Insurance. Other insurance items shall not be deductible from taxable income.
• Contributions to the voluntary pension fund are deducted from the taxable income, but the deduction shall not
exceed 01 million VND/month (12 million VND/year) when the worker participates in voluntary pension plans
guided by the Ministry of Finance, even the worker participates in multiple pension funds
• Where the foreigner being a resident in Vietnam, the Vietnamese person being a resident but works overseas
earns incomes from business or wages overseas and pay compulsory insurance premiums required by the
country where the person holds the nationality or works that are similar to that in Vietnam
 INCOME BEING SALARY

Tax calculation for resident

Determining deductions - Deductions for charity donation

Donations to the establishments that take care of disadvantaged children, the disabled, and the homeless elderly
people to the organisation established and operated in accordance with the relevant Government's regulation

The contributions to charitable, humanitarian and study encouragement funds established and operated in
accordance with the relevant Government's regulation.

Contributions to charitable funds arising in any one year shall be deductible from taxable income of that same
year,

The maximum amount of deductions shall not exceed tax assessable income from business income and income
being salary of the year in which such contributions were made
 INCOME BEING SALARY

Tax calculation for non-resident

The rate of personal income tax on incomes from wages

earned by a non-resident equals the taxable income from
wages multiplied by (x) 20% tax.
 OTHER EXEMPT INCOMES

Income from the value of a land use right of an individual to whom the State
allocated such land without payment of, or with reduced land use fees in
accordance with law

Income from conversion of agricultural land by a family household or

individual to whom the State allocated such land for production

Income being foreign currency remitted by overseas Vietnamese

Income being pensions paid by the Social Insurance Fund pursuant to the
Law on Social Insurance
 OTHER EXEMPT INCOMES

Income being scholarships

Income being compensation payments from life and non-life insurance contracts,
compensation for labour accidents, State compensation payments and other
compensation payments payable pursuant to law

Income receivable from charitable funds which the State authorities permit to be
established or which they recognize, and which are for charitable, humanitarian, or
study encouragement purposes and not for profit-making purposes

Income receivable from foreign aid sources for charitable or humanitarian purposes in
both Government and non-Government forms and approved by State authorities
 DOUBLE TAX TREATIES

Resident Establishment
• Double tax treaties are applied to subjects which are tax residents/resident establishments of Vietnam or of the
Contracting State to an Agreement concluded with Vietnam or of both
• Under the Agreements, the term “a resident of the Contracting State” means any person who, under the laws of
that state, is liable to tax therein
• If a foreign company/individual is the “tax resident”/’resident establishment’ in both Vietnam and the foreign
country, they may / will be taxed on income in both countries (i.e. Double Tax)
• However, sometimes both countries would agree to use some measures to avoid that Double Taxation. The
agreement will also cover how the tax is allocated between 2 counties (i.e. which country has the right to collect
tax, and which country must give an exemption/credit). Such an agreement is called Double Tax Treaties.
 DOUBLE TAX TREATIES

Principles for Application of Domestic Laws and Double Tax Treaties

• In cases where there are disparities between the

provisions of the Agreements and those of domestic laws,
the provisions of the Agreements shall apply.
• The Agreements shall not create new tax obligations or
tax obligations that are different from or heavier than
those prescribed by the domestic tax laws.
 DOUBLE TAX TREATIES

Vietnam’s right to tax Personal Income Tax

Income for working in Vietnam earned by a resident individual of a foreign country
having DTA with Vietnam: Vietnam has the right to tax.

However, The individual is present in Vietnam for less than 183 days in 12 months
Vietnam will which starts or ends in the tax year in question
exempt for the
individual’s The employer is not resident taxpayer in Vietnam (regardless whether
salary if he/she the salary is paid directly by the employer or a representative)
satisfies all the
following The salary is not borne/paid by a P/E of the employer in Vietnam
conditions:
 DOUBLE TAX TREATIES

Measures for Double Tax Avoidance

Tax credit method
If a tax resident in Vietnam paid tax in a foreign country having DTA with Vietnam, the income received overseas
will be included in the taxable income of that tax resident in Vietnam, but the tax paid overseas will be credited
against tax payable in Vietnam.

The tax credit should not exceed the tax liability in Vietnam (if any) applicable to that income

Example:
Mr. Antoine, a tax resident in Vietnam, has no dependent has the following income in Vietnam in year 2020:
Salary for working in France (in July – October) equivalent VND120,000,000

Salary for working in Vietnam (for other months in the year) received in Vietnam VND300,000,000
Tax on individual income in France is 20%.
Required: calculate final tax liabilities of Mr. Antoine in Vietnam
 DOUBLE TAX TREATIES

Measures for Double Tax Avoidance

Tax credit method
Answer:
As a resident, Mr. Antoine will be subject to tax on global income (120m for working overseas + 300m for working
in Vietnam, regardless of where to receive).
Average taxable income = 420m / 12 months = 35m / month
Average Assessable income = 35m – 9m = 26 m VND
Range of income (VND) Taxable (VND) Tax rate Tax liabilities (VND)

0-5,000,000 5,000,000 5.00% 250,000

5-10,000,000 5,000,000 10.00% 500,000

10-18,000,000 8,000,000 15.00% 1,200,000

18-26,000,000 8,000,000 20.00% 1,600,000

Total 26,000,000 3,550,000

 DOUBLE TAX TREATIES

Measures for Double Tax Avoidance

Tax credit method
Annual tax liabilities = 3,550,000 * 12 months = 42,600,000
Tax paid overseas:

On employment income (120m * 20%) VND24,000,000

The tax paid overseas for employment income will be creditable to tax liabilities of Mr Antoine up to the
Vietnamese tax on that income.

Vietnamese tax on employment income:

= Total Vietnamese tax on total income * Overseas income/Total income
= 42,600,000 * (120,000,000 /420,000,000) = VND12,171,429
Tax credit = Min(24,000,000 and 12,171,429) = 12,171,429
Mr. Antoine’s tax liabilities = 42,600,000 – 12,171,429 = VND30,428,571
 SUMMARY
Business income
Income being Salary
Income from Capital Investments
Income from Capital Transfers
Income from Real Property
Transfers
Income from Royalties and
Income from Franchises
Income from Winnings or Prizes,
and from Receipt of an
Inheritance or Gift
Resident
see session: Business income
see session: Salary income
Flat tax rate of 5%
income from transfer of a capital contribution:
Flat tax rate of 20% on income
Income from transfers of securities: flat rate of
0.1% on transfer price
Flat rate of 2% on transfer price
Flat tax rate of 5% (after deduction of VND10m
over a contract)
Flat tax rate of 10% (after deduction of
VND10m/ each time)
Non-resident
1% - business in goods;
5% - business in services;
2%- manufacturing, construction,
transportation and other business activities.
flat tax rate of 20%.
Flat tax rate of 5%
Flat tax rate of 0.1% on transfer price
Flat tax rate of 2% on transfer price
Flat tax rate of 5%
(after deduction of VND10m over a contract)
Flat tax rate of 10%
(after deduction of VND10m/ each time)
 TAX ASSESSMENT PERIOD

Applicable to taxpayers being resident individuals

Assessment period Type of income

Annual Business income & income being salary

Each occasion (transaction) All except for most of Business income, income
being salary.
 TAX ASSESSMENT PERIOD

Applicable to taxpayers being non-resident individuals

On each occasion when income arises for all taxable income

unless having fixed business location (a store or counter) the
same tax assessment period shall apply as applies to a
resident individual with income from business.
 TAX ADMINISTRATION

Tax Registration
Tax registration objects
Income-paying entities:
Economic organizations, business households and business individuals including branches and subsidiary entities.

All level State administrative bodies.

Political organizations, socio-political organizations and socio-occupational organizations.

Professional units.

International and foreign organizations.

Project management boards, and representative offices of foreign organizations.

Other income-paying units.

 TAX ADMINISTRATION

Tax Registration
Tax registration objects

Individuals with taxable income:

Individuals with income from manufacturing and business

Individuals with income being salary.

Individuals with other taxable income (if it arises regularly).

 TAX ADMINISTRATION

Tax Registration
Location for filing tax registration
• Enterprises established and operating pursuant to the Law on Enterprises and to business individuals including
independent practitioners : where business is managed
• Administrative bodies, professional entities, mass organizations, and political, social and occupational
organizations

• An individual with taxable income being salary: with the income-paying entity or with the tax office directly
managing such entity.
• Individuals with other taxable income: with the Tax Division where they reside.
• Individuals with a number of income sources: may select the place to lodge their files for tax registration either
at the income-paying entity or body, or at the Tax Division in the locality where they conduct business.
 TAX ADMINISTRATION

Tax Withholding
Types of income from which withholding must be made

Income of non-resident individuals, including where they do not have a

presence in Vietnam.

Income of Income being salary;

resident Income from capital investments;
individuals: Income from capital transfers and from transfers of securities;
Income from all types of prizes;
Income from copyright [royalties]
Income from franchising.
 TAX ADMINISTRATION

Tax Withholding
Types of income from which withholding must be made
Specific cases:
o income being salary of an individual with a labour contract and who was employed on a long term (from 3
month or longer) and stable basis:
▪ Tax shall be withheld on a monthly basis.
▪ on the basis of the amount of salary and salary nature & family circumstances
▪ Apply progressive tax rate
▪ Specifically for expatriates, 183 days cap should be considered to temporarily withhold PIT applying
residence or non-residence tax method.
▪ An income-paying entity which pays salary, remuneration or other sums to an individual providing
services with labour contract (less than three months) or without a labour contract where the total
income to be paid is two millions dong or more on each occasion, then such income-paying entity must
deduct personal income tax (10% of the income) before paying such sums to the individual.
 TAX ADMINISTRATION

Tax declaration & finalisation

Income-paying entities - Quarterly or monthly tax declaration
• income paying entities is responsible for withhold and prepare
tax declaration for income being salaries, income from capital
investments, transfers of securities, copyright, franchising or
winnings, also for non-resident individuals with income being
salary, business income

• Deadline: the 20th day of the following month for monthly tax
filing. 30 days of the next quarter for the quarterly tax filling
• Monthly: if withholding tax in a month for at least 1 tax
declaration type from 50 million or above unless VAT declaration
by quarterly
• Quarterly: the remaining case
 TAX ADMINISTRATION
Tax declaration & finalisation
Income-paying entities
Tax finalization
• All income-paying entities
which pay income subject to
withholding must provide a
declaration of personal
income tax finalization using
the templates provided by
the tax authorities on behalf
of authorised employees.
• Deadline for tax finalization
filling: end of the 3rd month
after the end of the calendar
year.
Deadline for tax
Place for tax filling Other cases payment
• Income paying entity: with • central bodies, and bodies • same deadlines as with the
the tax office directly under ministries, branches filing date
managing such entity and provincial people's
committees, and provincial
level bodies: Tax
Department
• bodies belonging to district
level people's committees,
and district level bodies: Tax
Division
• diplomatic bodies,
international organizations
and representative offices of
foreign organizations: Tax
Department
 TAX ADMINISTRATION

Tax declaration & finalisation

Resident individuals with income being salary – Quarterly tax declaration
o Applicable to
▪ An individual receiving income being salary paid by an entity from overseas.
▪ A Vietnamese individual with income being salary paid by an international organization, embassy or
consulate in Vietnam.
Note: Individuals with income from salary but not falling within the above-mentioned categories are required to make
monthly tax declarations.

o The file on monthly tax declaration: using the template

o Place for tax filling: Tax Division in the locality where the individual resides
o Deadline for tax filling: 30th day of the following month.
 TAX ADMINISTRATION

Tax declaration & finalisation

Resident individuals with income being salary – Declaration of tax finalization
o Have to make a declaration of tax finalization in the following cases:
▪ The amount of tax payable in the year is greater than the amount already deducted or provisionally paid in
the year, or tax obligations arise throughout the year for which deductions or provisional payments have
not yet been made.

▪ The taxpayer requests a tax refund or an offset of tax into the following period.
▪ A resident individual being a foreigner must conduct tax finalization on termination of his or her contract to
work in Vietnam and before departing from Vietnam or authorised to others, who will be fully responsible
for amount to be paid, to finalised within 45 days from the date of departure

o Other cases, tax finalization is not required.

 TAX ADMINISTRATION

Tax declaration & finalisation

Resident individuals with income being salary – Declaration of tax finalization

Deadline for filing: end of 4th month after the end of the calendar year.

Place for filing: tax office directly managing the income-paying entity.

If an individual with income being salary directly makes a monthly tax declaration,
then he or she shall lodge the tax finalization file at the same place where such
monthly tax declaration was lodged (Tax Division).