PERSONAL INCOME TAX

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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.

Amounts deducted from the taxable income of the person before calculating taxable income from wages, remunerations, and business.

PERSONAL DEDUCTIONS

1) Personal deduction

Personal deduction is the amount of money deducted from the taxable income before calculating tax on incomes from business, or wages earned by the resident taxpayer. If the resident earns income from both business and wages, one deduction from the total income from business and wages shall be made.

2) Levels of personal deductions

• Deduction for the taxpayer: 9 million VND/month, 108 million VND/year.
• Deduction for each dependents: 3.6 million VND/month.

3) Calculating deduction

• Personal deduction for the taxpayer.
• Deduction for dependents.

4) Dependents include

• Children, legitimate adopted children, illegitimate children, stepchildren, in particular
• The taxpayer’s spouse that meet the conditions.
• The taxpayer’s parents, parents-in-law, stepparents, legitimate adoptive parents that meet the conditions.
• Other dependents that the taxpayer has to provide for, who meet the conditions, including.

DEDUCTIONS FOR INSURANCE PREMIUMS AND CONTRIBUTIONS TO THE VOLUNTARY PENSION FUND

a) Insurance premiums

Insurance premiums include premiums for social insurance, health insurance, unemployment insurance and professional liability insurance, which is compulsory for some professions.

b) Contributions

Contributions to the voluntary pension fund. The contributions to the voluntary pension fund are deducted from the taxable income, but the deduction shall not exceed 01 million VND/month (12 million VND/year) when the worker participates in voluntary pension plans guided by the Ministry of Finance, even the worker participates in multiple pension funds. The basis for determining deductible income is photocopies of payment bills given by the voluntary pension fund.

c) Where the foreigner being a resident

Where the foreigner being a resident in Vietnam, the Vietnamese person being a resident but works overseas earns incomes from business or wages overseas and pay compulsory insurance premiums required by the country where the person holds the nationality or works that are similar to that in Vietnam such as social insurance, health insurance, unemployment insurance, professional liability insurance, and other compulsory insurance, such insurance premiums may be deducted from the taxable income from business and wages when calculating personal income tax. Foreigners and Vietnamese people who pay the aforesaid insurance premiums overseas shall have them provisionally deducted from the income in the year (if supporting documents are provided). Deductions shall be officially made when they settle tax. If no supporting documents are provided for immediate deduction, a lump-sum deduction shall be made when settling tax.

d) Insurance premiums and contributions

Insurance premiums and contributions to the voluntary pension fund in the year shall be deducted from the taxable income earned in that year.

e) The documents proving the aforesaid

The documents proving the aforesaid deductible insurance premiums are photocopies of payment receipts issued by the insurers or written certification made by the income payer that the insurance premiums are withheld or paid (if they are paid by the income payer on behalf of the worker).

DEDUCTIBLE CHARITABLE DONATIONS

The charitable donations

The charitable donations shall be deducted from the taxable income from business and wages before calculating the tax incurred by a resident taxpayer.

The charitable donations made

The charitable donations made in a tax year shall be deducted from the taxable income earned in that tax year. The donations that are not completely deducted shall be deducted from the taxable income earned in the next tax year. The maximum deduction shall not exceed the assessable income from wages and business earned in the tax year in which the charitable donations are made.

 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:

Directive 22/2008/CT-TTg implementing the Law on personal income tax issued by the Prime Minister.

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.

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