Introduction to Personal Income Tax in Vietnam

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Oct. 25 – Vietnam’s National Assembly issued the Law on Personal Income Tax (PIT) on November 21, 2007, which came into effect on January 1, 2009. The law applies to individuals earning income, including individuals 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.

Tax Resident

A 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.

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