ANNUAL PERSONAL INCOME TAX

FOR FOREIGN EMPLOYEES IN VIETNAM

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.

One stop solution on personal income tax for foreigners who are working in Vietnam that to avoid and prevent violations in advance, keep their good standing in optimal manners.

PERSONAL TAXABLE INCOMES FROM WAGES AND TAX RATES

Upon resident or non -resident status in Vietnam in a calendar year, an expat should declare and settlement of personal income tax for global incomes or incomes earned within Vietnam’s territory, regardless of the location of payment and receipt. Taxable amount / tax rates methods of declaration for resident and no resident are completely different.

For residents, incomes earned in Vietnam any other countries:

1. Wages, remunerations, and the other amounts paid as wages or remunerations in cash or not in cash.
2. Allowances and benefits in accordance with positions in labor contracts.
3. Remunerations in the forms of agent commission, brokerage commission, payments for participation in science and technology research, 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.
5. Rewards in cash or not in cash in any shape or form, including rewards in the form of securities.

The resident that earns an income overseas and has pay personal income tax on that income overseas shall have the tax paid overseas deducted. The amount of tax deducted shall not exceed the tax payable on the income earned overseas according to Vietnam’s tax table. The ratio is based on the ratio of income earned overseas to the total taxable income.

The residents in Vietnam shall declare global incomes and pay personal income with progressive tax rates on each level of income from 5% to 35%:

For non -residents:

1. Non-residents shall declare tax whenever an income is earned in Vietnam only.
2. In case an expat is no-resident in Vietnam, he or she just pays 20% personal income tax for what they earnt in Vietnam.

PERSONAL INCOME TAX STATEMENT AND SETTLEMENT

The payer of taxable incomes and the person that earns taxable incomes shall declare tax and settle tax in accordance with the procedure provided in guiding documents on tax administration. Rules for declaring tax in some cases:

Tax statements made by payers of taxable income:

1. The income payers that withhold personal income tax shall declare tax monthly or quarterly. The income payer might not declare tax if no personal income tax is withheld in the month or in the quarter.
2. The monthly or quarterly tax statement shall be made from the first month in which tax is withheld and is applicable to the whole tax year.
3. The income payer that withholds personal income tax on 50 million VND or more in a month in at least one declaration of shall declare tax monthly.
4. The payer of taxable income shall declare and settle tax on behalf of the authorizing person, whether or not tax is withheld.

Tax statements made by residents that directly declare tax at tax authorities:

1. The residents that earn incomes from wages paid by international organizations, embassies, and consulates in Vietnam without withholding tax shall directly declare tax quarterly at tax authority.
2. The residents that earn incomes from wages paid by overseas organizations and individuals shall directly declare tax quarterly at tax authorities.

Tax settlement dates:

1. No later than the last day of the third month from the end of the calendar year or fiscal year for annual tax settlement dossiers; no later than the last day of the first month of the calendar year or fiscal year for annual tax declaration dossiers.
2. No later than the last day of the fourth month from the end of the calendar year for personal income tax settlement dossiers of individuals directly settling taxes.
3. No later than December 15 of the previous year for lump-sum tax declaration dossiers of business households and business individuals paying tax by the lump-sum method; In the case of new business households and individuals, the deadline for submitting lump-sum tax declaration dossiers is no later than 10 days from the date of commencement of business.

In particular, the deadline for annual personal income tax settlement is stipulated as follows:

1. No later than March 31 for annual tax settlement dossiers.
2. No later than May 4 for personal income tax settlement dossiers of individuals directly settling taxes.

PERSONAL INCOME TAX REFUND

1. The refund of personal income tax applies to the persons that have registered and obtain tax codes when they submit the tax settlement form.
2. If the person that has delegated the income payer to settle tax, tax refund shall be made via the income payer. The income payer shall offset the overpaid and underpaid tax. After offsetting, the overpaid tax shall be offset against the tax in the next period or refunded on request.
3. The person that declares tax directly may choose to claim a tax refund or offset it against the tax in the next period at the same tax authority.
4. Person eligible for the refund of personal income tax that submits the tax settlement behind schedule is exempt from fines for overdue tax statement.

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 for Foreign Employee in Vietnam – One Stop Solution for the Compliances
• Personal Income Tax for Foreign Employee in Vietnam – 10 Types of Taxable Income and Tax Rates
• Personal Income Tax for Foreign Employee in Vietnam – Comprehensive Guide to Finalization Procedures
• Personal Income Tax for Foreign Employee in Vietnam – Non-taxable – Condition for Tax Exemption and Non-taxable (part 1)
• Personal Income Tax for Foreign Employee in Vietnam – Non-taxable – Condition for Tax Exemption and Non-taxable (part 2)
• Personal Income Tax for Foreign Employee in Vietnam – Taxable Income and Methods of Declaration
• Personal Income Tax for Foreign Employee in Vietnam – Taxable Incomes from Wages and Remunerations
• Foreign Employee in Vietnam – Notes On Annual Personal Income Tax Settlement
• Foreign Employee in Vietnam – Personal Income Tax for Investors – Managers – Experts