Introduction to Personal Income Tax in Vietnam

Posted by Reading Time: 5 minutes

By: Dezan Shira & Associates

Editor’s Note: This article was first published on October 13, 2013, and has been updated as of November 18, 2016

Vietnam’s National Assembly issued the Law on Personal Income Tax (PIT) on November 21, 2007, which came into effect on January 1, 2009 and was subsequently amended in 2012 and 2014. The law in its current form applies to individuals earning income, including those doing business who were previously included under corporate income tax.

According to the PIT Law, PIT is levied on the worldwide income of Vietnam residents and on Vietnam-sourced income of non-residents, irrespective of where the income is paid. The tax calculation and finalization procedure for Vietnamese locals and expatriates is the same, but different for residents and non-residents.

Professional Service_CB icons_2015RELATED: Dezan Shira & Associates’ International Tax Planning Services
Tax resident

A tax resident is an individual satisfying one of the following conditions:

  • Is staying in Vietnam for an aggregate of 183 days or more within one calendar year or a consecutive 12-month period from the first date of arrival;
  • Has a permanent residence that has been registered pursuant to the Law on Residence; or
  • Has a leased residence to stay in Vietnam where the lease contract has a term of 183 days or more within the tax assessment year. Leased residences include hotels, boarding houses, rest houses, lodgings, and working offices.

If an individual stays in Vietnam for more than 90 days but fewer than 183 days in a tax year, or they can prove that they are a tax resident of another country in the 12 consecutive months following the date of arrival in Vietnam, that individual will be treated as a non-resident in Vietnam for tax purposes. If they cannot prove that they are a tax resident of another country, they will be treated as a tax resident of Vietnam.

Taxable income

There are 10 types of earnings which are subject to PIT, as follows:

  • Income from business activities;
  • Wages received from employers;
  • Capital investment;
  • Capital transfer;
  • Property transfer;
  • Prizes;
  • Royalties;
  • Commercial franchising;
  • Inheritances in the forms of securities, capital contribution in companies or economic organizations, real estate, and other assets requiring the registration of ownership or use right; and
  • Gifts in the forms of securities, capital contribution in companies or economic organizations, real estate, and other assets requiring the registration of ownership or use right.
Related-Reading-Icon-Asean LinkRELATED: How Foreign Contractors are Taxed in Vietnam
PIT rates for employment

Resident taxpayers are subject to PIT on their worldwide employment income, irrespective of where the income is paid or earned, at progressive rates ranging from five percent to a maximum of 35 percent. Employment income includes salaries, wages, allowances and subsidies, remuneration in all forms, benefits earned for participation in business associations, boards of directors, control boards, management boards and other organizations, premiums, and bonuses in any form except those received from the State.

Income Tax Rates Vietnam

Non-resident taxpayers are subject to PIT at a flat rate of 20 percent on their Vietnam-sourced income. Other incomes are subject to PIT with different rates for residents and non-residents.

Taxable Income Streams Vietnam

 Related reading

Portions of this article were taken from Vietnam Briefing’s Doing Business in Vietnam technical guide. This guide aims to assist foreign investors in understanding the business environment of Vietnam, including reasons to invest and challenges for which to prepare for. This publication is available as a PDF download in the Asia Briefing Bookstore.

More information on areas of taxation relevant for investment can be found in the articles listed below:

Special Consumption Tax in Vietnam

Business License Tax in Vietnam

Valued-added Tax in Vietnam: Filing, Payment and Refund

Calculating Value-added Tax in Vietnam

Vietnam Issues New VAT Regulations

Vietnam’s Taxes on Business

How Foreign Contractors are Taxed in Vietnam

For further details or to contact the firm, please email vietnam@dezshira.com, visit www.dezshira.com, or download the company brochure.

 


About
 Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

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