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 Vietnamese or foreigners, depending on residence status, and income level, an individual may have to pay from 5% to 35% of the income earned… Among them, income from salary and wages is the most common and also has the most detailed regulations.
WHO SHOULD DIRECTLY DECLARE TAX TO TAX AUTHORITIES?
- Some of your staff may not join your company full 12 months in a calendar year or have more income from wages/salary from other entities. In this case, these staffs are not allowed to request income payers to settle tax on their behalf but directly declare tax at tax authorities.
- To make the declaration, they must prepare a letter of income confirmation from the previous income payer + a certificate of tax withheld at source on the income (withheld receipt).
- Based on current income from your company and other incomes with the withheld receipts, they should prepare the annual settlement sheet and declare it directly to the tax department.
- This procedure is not the employer’s obligation but a personal matter of every staff, which means, the annual final settlement sheets of the company will not be including their sheets.
WHO WILL PAY TAX ON THE PROGRESSIVE METHOD OR APPLY THE FIXED RATE?
- To verify a proper method of personal income tax (PIT) declaration for expats, please prepare full pages to copy of your passport + Labor contract/appointment letter/tax withheld receipts.
- Upon you are resident or nonresident in Vietnam in a calendar year, you should declare and settlement of PIT for the incomes inside Vietnam or global income. Taxable amount/tax rates of resident and no resident are completely different.
NOTES ON TAX FROM GLOBAL INCOMES FOR EXPATS WHO ARE RESIDENT IN VIETNAM
- In case you are a resident of Vietnam, you shall declare global incomes and pay personal income with progressive tax rates from 5% to 35%
- In case you are a no-resident in Vietnam, you just pay 20% personal income tax for what you earn in Vietnam.
- To avoid special inspection on global incomes in Vietnam and any income from countries that have tax agreements with Vietnam, the foreign experts who work in Vietnam shall declare reasonable global incomes, which must be fair with:
- The position, and job requirement
- Professional profile and working history
- Actual expenditures and living conditions
- The GDP of their nation
- The reputation of the employer
- Your present days in Vietnam
The tax agencies in Vietnam also have a management system that they can detect unfair declarations from taxpayers. In case you keep submitting tax reports showing that there are foreigners working in Vietnam without reasonable tax payment, there will be special inspection procedures and you going to pay the tax and penalties.
Failure to apply properly declaration of PIT will lead to serious violations with more and more penalties from the tax department in coming years.
VIVA teams will support you to manage standard employee profiles/legal requirement records as well as compliance reports/declarations. We wish to go your files right thing the first time, clean and clear today and for the next 3 or 5 years.
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.
Read more:
- Personal income tax in Vietnam – Annual final procedures
- Personal income tax for foreign investors – managers – experts in Vietnam
- Foreign direct investment in Vietnam: What you need to know
- Condition for personal income tax exemption & non-taxable (Part 1)
- Condition for personal income tax exemption & non-taxable (Part 2)
- Personal income tax and payroll services in Vietnam
- Managing labor relations for EXPATS in Vietnam
- Personal income tax for foreign employees: Methods of declaration and payable amount
- Taxable incomes from wages and remunerations for expats in Vietnam
- Foreign investor, legal rep and chief rep in Vietnam: The local procedures in Vietnam
- Doing business in Vietnam: internal salary and wages policy
- Taxable incomes from wages and remunerations
- Expats working in Vietnam: What you shall keep in mind
- Annual Personal Income Tax for Foreign Employees in Vietnam
- Personal income tax in Vietnam – 10 types of taxable income and tax rates
