Taxable income and methods of declaration for foreigners

Danh mục nội dung

Personal income tax is a tax calculated on an individual’s income sources earned from business activities and other sources such as salaries and wages paid by employers, from capital investments, capital transfer, real estate transfer, prize-winning, copyright, and inheritance gifts. Regardless of whether one is Vietnamese or a foreigner, depending on residence status, and income level, an individual may have to pay from 5% to 35% of the income earned,… Among these, income from salary and wages is the most common and also has the most detailed regulations.

Determining resident or non-resident status will be the first legal ground that determines taxable income, tax declaration methods, and different tax obligations. To avoid violations and serious administrative fines, employers shall review and manage each foreign worker’s resident records accurately to identify and prevent risks in advance.

DETERMINATION OF TAXABLE INCOMES IN VIETNAM

Depending on resident or non-resident status, the taxable income of foreigners working in Vietnam is determined according to the following principles:

Taxable incomes earned by residents are the incomes earned within or outside Vietnam’s territory, regardless of location or payment and receipt. This means resident expats shall declare and do annual settlement personal income tax on global incomes, pay tax on progressive rate from 5% to 35%.
Taxable incomes earned by non-residents are the incomes earned within Vietnam’s territory, regardless of the location of payment and receipt. This means resident expats shall declare and pay 20% on any income in Vietnam.

DETERMINATION CASE OF RESIDENTS

A resident is a person who meets one of the following conditions:

He/she has been present in Vietnam for at least 183 days in a calendar year or 12 consecutive months, depending on the certification of the immigration agency on the passport.
He/she has a regular residence in Vietnam demonstrated by:

He/she has a regular residence, based on the permanent residence written in the permanent residence card or the temporary residence when applying for the temporary residence card issued by a competent authority.
He/she rents a house in Vietnam according to regulations of law on housing under a contract that has a term of at least 183 days in the tax year.

Notes:

The rented houses can be hotels, guesthouses, motels, offices, etc,. whether they are rented by the person or their employer.
If the person has a regular residence but his/her actual presence in Vietnam is shorter than 183 days in the tax year, and he/she fails to prove his or her residence in any country, that person will be considered a resident of Vietnam.

Since 2006, VIVA Business Consulting has been supporting thousands of expats to be fully compliant with local tax regulations in optimal ways. Please contact our experts for any queries.

LAWS, DECREES, CIRCULARS GUIDING THE IMPLEMENTATION OF THE LAW ON PERSONAL INCOME TAX EFFECTIVE UNTIL 2024

As of the end of 2024, no new regulations on personal income tax have been added, accordingly, the following regulations will continue to apply:

Personal Income Tax Laws currently effective until 2024:

Law on Personal Income Tax 2007.
Law on Amending Tax Laws 2014.
Law on Amending Personal Income Tax 2012.
Resolution 954/2020/UBTVQH14 on adjusting the family deduction level of personal income tax issued by the Standing Committee of the National Assembly.

Decrees and Circulars guiding the implementation of the Law on Personal Income Tax currently effective until 2024:

Decree 91/2014/ND-CP amending Decrees regulating tax.
Decree 12/2015/ND-CP guiding the Law amending and supplementing a number of articles of the Laws on Taxes and amending and supplementing a number of articles of the Decrees on Taxes.
Decree 65/2013/ND-CP guiding the Law on Personal Income Tax and the Law amending and supplementing a number of articles of the Law on Personal Income Tax.
Circular 92/2015/TT-BTC guiding the implementation of value added tax and personal income tax for resident individuals with business activities; guiding the implementation of a number of amendments and supplements to personal income tax stipulated in the Law amending and supplementing a number of articles of the Laws on Taxes 71/2014/QH13 and Decree 12/2015/ND-CP detailing the implementation of the Law amending and supplementing a number of articles of the Laws on Taxes and amending and supplementing a number of articles of the Decrees on Taxes issued by the Minister of Finance.
Circular 151/2014/TT-BTC guiding the implementation of Decree 91/2014/ND-CP amending and supplementing a number of articles of the Decree on tax issued by the Minister of Finance.
Circular 119/2014/TT-BTC amending Circulars 156/2013/TT-BTC, 111/2013/TT-BTC, 219/2013/TT-BTC, 08/2013/TT-BTC, 85/2011/TT-BTC, 39/2014/TT-BTC and 78/2014/TT-BTC to reform and simplify tax administrative procedures issued by the Minister of Finance.
Circular 111/2013/TT-BTC Guiding the Law on Personal Income Tax and Decree 65/2013/ND-CP issued by the Minister of Finance.
Circular 20/2010/TT-BTC guiding administrative procedures on personal income tax issued by the Ministry of Finance.
Directive 22/2008/CT-TTg implementing the Law on personal income tax issued by the Prime Minister.

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