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.
ABOUT VIVA BUSINESS CONSULTING
The local expert for local business procedures in Vietnam since 2006
VIVA is the famous expert in Vietnam market entry procedures, tax management, employment relations, corporate finance and local business procedures at local competent state agencies.
VIVA focuses on business compliance, since 2006, we keep supporting local and FDI enterprises in fully complying with local business laws and regulations, in effective and optimal ways, identifying and preventing most of the common risks in advance.
VIVA BUSINESS CONSULTING, the one-stop solution for foreign investors and experts in Vietnam about the required business compliance procedures, based on our unique combination of local expertise and global experiences. Our staying power is thanks to our deep insights, and consistent backgrounds and practice in local business laws and regulations.
VIVA is proudly a 100% Vietnamese consulting company and has been chosen by thousands of investors and FDI companies as their confident partner and successful business in Vietnam. We are still here, since 2006 because of our thousands of satisfied clients and our employees. Our staying power is a testament to the professional resources, and so much more.
VIVA not only manage business required procedures by laws but firstly places client’s compliance and good standing, in the optimal methods when offering any solution, and integrated with our intensive resources that allow us to prevent most of the risks in advance, create more benefits, advantages and business inspiration for entrepreneurs.
The insights and consistent backgrounds in Business Laws – Accounting and Corporate Finance – Tax Management – Labor Relations and Payroll – Serectarial and consistent with our exclusive standard operation processes, consisting of consultation – implementation – pratice operation help us fully protect client interests as one-stop solution.
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- An appointment with our experts
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Read more:
- Personal income tax in Vietnam – Comprehensive guide to finalization procedures 2023
- Personal income tax 2023 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
