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.
Taxable incomes including: Wages, remunerations, and the other amounts paid as wages or remunerations in cash or not in cash; Allowances and benefits; Remunerations; Payments for participation in business associations, Boards of Directors, Control Boards, project management boards, management councils, professional associations, and other organizations; Rewards in cash or not in cash.
TAXABLE INCOMES FROM WAGES AND REMUNERATIONS (HEREINAFTER REFERRED TO AS WAGES) ARE INCOMES PAID TO EMPLOYEES FROM EMPLOYERS, INCLUDING
1. Wages, remunerations, and the other amounts paid as wages or remunerations in cash or not in cash
2. Allowances and benefits, except for:
- Monthly benefits, lump-sum benefits and allowances according to regulations of law on incentives for contributors.
- Monthly allowances and lump-sump allowances for the persons that participate in the resistance movements, national defense, fulfillment of international tasks, and discharged volunteers.
- Benefits for national defense and security; subsidies for the armed forces.
- Benefits for dangerous or harmful works.
- Benefits for employees in disadvantaged areas.
- Irregular allowances for difficulties, occupational accident benefits, occupational illness benefits, lump-sum allowances for childbirth or adoption, maternity leave benefits, post-maternity recovery benefits, benefits for reduction in working ability, lump-sum pension, monthly widow’s pension, severance pay, redundancy pay, unemployment benefits, and other benefits according to the Labor Code and the Law on Social insurance.
- Benefits for beneficiaries of social security.
- Benefits for senior officers.
- Lump-sum benefits for the persons reassigned to the areas facing extreme economic and social difficulties, lump-sum supports for officers working for sovereignty over sea and islands as prescribed by law. Lump-sum moving allowances for foreigners that move and reside in Vietnam and Vietnamese people that go to work abroad.
- Benefits for medical employees in villages.
- Occupational benefits.
- The allowances and benefits that are not included in taxable incomes as guided must be defined by competent authorities.
- If the documents on the levels of allowances and benefits are applicable to the public sector, other economic sectors and businesses shall make calculate allowances and benefits based on such documents.
- If the actual benefits and allowances received are in excess of the levels stated above, the excess shall be included in taxable incomes.
- Lump-sum moving allowances for foreigners that reside in Vietnam and Vietnamese people working overseas shall be deducted in accordance with the labor contract or collective bargaining agreement.
3. Remunerations in the forms of agent commission, brokerage commission, payments for participation in science and technology researches, payments for participation in projects and schemes, royalties according to regulations of law on royalties, payments for teaching, payments for participation in artistic performance, sports, payments for advertising, payments for other services, and other remunerations.
4. Payments for participation in business associations, Boards of Directors, Control Boards, project management boards, management councils, professional associations, and other organizations:
- Other benefits in cash or not in cash apart from wages paid to the taxpayer by the employer in any shape or form: Payments for housing, electricity, water supply and ancillary services (if any). If the person stays at the workplace, the taxable income depends on the house rent or depreciation expense, payments for electricity, water supply, and other services according to the ratio of the area that person uses to the total area of the workplace. The house rent paid by the employer on behalf of the employee shall be included in the taxable income according to the actual amount, which must not exceed 15% of the total taxable income (excluding house rent) earned at the workplace.
- The life insurance premiums, other optional insurance premiums, contributions to the voluntary pension fund paid or made by the employer on the employee’s behalf.
- Membership fees and other expenditure on services serving individuals such as healthcare, entertainment, sports, recreation, in particular: Membership fees (such as membership card of golf course, tennis course, cultural, artistic, sports clubs, etc.) – if the card specifies the user or group of users. If the card is shared without specific users, the fees are not included in taxable incomes. Expenditures on other services individuals such as healthcare, entertainments, sports, recreation, etc. – if the names of the recipients are specified. If the recipient is the collective of employees, not any specific person, it is not included in taxable income.
- Flat expenditures on stationery, business trips, phone calls, costumes, etc. that are in excess of the limits prescribed by the State. Flat expenditures are not included in taxable income in the cases below: For the officials and employees in public service agencies, communist party’s agencies, associations: the flat expenditure shall apply guiding documents promulgated by the Ministry of Finance. For the employees working in businesses and representative offices: the flat expenditure shall conform to the income that incurs corporate income tax and guiding documents of the Law on Enterprise income tax. For the employees in international organizations and representative offices of foreign organizations: the flat expenditure shall comply with regulations of such international organizations and representative offices of foreign organizations. The expenditure on shuttling employees is not included in taxable incomes earned by employees; if the person is shuttled personally, it shall be included in the taxable incomes earned by the shuttled person. The payments for refresher courses for employees, which suit their professions or accords with plans of the employer, shall not be included in the incomes earned by employees.
- Other benefits paid to employees by the employers such as payments during leave period or public holidays; payment for counseling, tax statement services for a particular person or group of people; payment for domestic servants such as driver, cook, and other domestic servants that work under contracts, etc.
5. Rewards in cash or not in cash in any shape or form, including rewards in the form of securities, except for:
- Prize money associated with the titles awarded by the State, including the prize money associated with honorary titles as prescribed by law:
- Prize money associated with honorary titles awarded by Ministries, central and provincial agencies and associations, excellent employee titles.
- Prize money associated with the awards.
- Prize money associated with the titles awarded by the State.
- Prize money associated with the awards presented by associations and organizations belonging to central and local political organizations, socio-political organizations, social organizations, social organizations that conform with their charters and the Law on Emulation and commendation.
- Prize money associated with the Ho Chi Minh Prize and National Prize.
- Prize money associated with medals or badges.
- Prize money associated with certificates of merit
- The powers to decide the commendation and prize money associated with the titles and awards above must be conformable with the Law on Emulation and commendation.
- Prize money associated with national prizes and international prizes recognized by Vietnam.
- Rewards for technical innovations and inventions recognized by competent authorities.
- Rewards for reporting violations of law to competent authorities.
THE INCOMES BELOW ARE NOT INCLUDED IN TAXABLE INCOMES
- Supports provided by the employer for medical examination and treatment of fatal diseases suffered by employees and their families.
- The amount received according to regulations on using vehicles of state agencies, public service agencies, communist party’s organizations, and associations.
- The amount received according to the regulations on public housing.
- Other payments received, apart from wages, for participation in consultation, appraisal, and inspection of legislative documents, Resolutions, political reports, inspectorates, serving votes, citizens; for costumes and other tasks directly serving the operation of the Office of the National Assembly, the Ethnic Communities Council, committees of the National Assembly, the delegations of the National Assembly, the Central Office, the departments of the Communist Party, City/Province Committees and their departments.
- Payment for mid-shift meals, lunch of employees provided by employers that provide mid-shift meals, lunch for their employees in the form of cooking, buying catering services, giving luncheon vouchers. If the employer pays cash for their employees’ meals instead of providing mid-shift meals or lunch, such money is not included in the taxable income if it is conformable with the guidance of the Ministry of Labor, War Invalids and Social Affairs. If the payment is higher than the limit imposed by the Ministry of Labor, War Invalids and Social Affairs, the excess shall be included in taxable incomes. The expenditures of state-owned enterprises, public service agencies, communist party’s agencies, associations shall not exceed the limits imposed by the Ministry of Labor, War Invalids and Social Affairs. For non-public enterprises and organizations, the expenditures shall be decided by the head and the union president, and shall not exceed the limits imposed on state-owned enterprises.
- The payment for round-trip air tickets made by the employer for foreign employees in Vietnam or Vietnamese employees overseas to go home once a year. The basis for determining the payment for air tickets is the labor contracts and the prices of air tickets from Vietnam to the other country and vice versa.
- 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.
- The amounts received from sponsors are not included in the taxable income if the sponsorship beneficiary is a member of the sponsoring organization; the sponsorship is funded by government budget or managed in accordance with regulations of the State; from composting literary and artistic works, scientific research, accomplishment of political objectives of the State, or other activities that conform with their charters.
- 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.
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.
- An email and a phone call from us
- A copy of our Confidentiality Commitment
- An appointment with our experts
- A suitable solution for your concern
“If you ask any successful businessperson, they will always have had a great mentor at some point along the road.”
Read more:
- 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
- Save your money and time with a “full package service for personal income tax of foreigner”
- Personal income tax for foreign employees: Methods of declaration and payable amount
- Foreign investor, legal rep and chief rep in Vietnam: The local procedures in Vietnam
- Optimize payable amount of personal income tax in Vietnam
- Personal income tax (PIT): Annual pit settlement key notes
- The proactive management of wage labor compliance procedure
- Doing business in Vietnam: internal salary and wages policy
- The annual licensing fees
- Important notices regarding the methods of personal income tax declaration in Vietnam
- Personal income tax (PIT): annual pit settlement key notes
- Investment in Vietnam: incentives on corporate income tax (CIT)
- Tax compliance procedures for year-end: exclusive notices for CEO
