×

Vietnam’s Law on Personal Income Tax recognizes ten different categories of income, with a host of different deductions, tax rates, and exceptions applying to each of them.

A tax resident is defined as someone residing in Vietnam for 183 days or more in either the calendar year or a period of 12 consecutive months from the date of arrival. Tax residents are subject to PIT on their worldwide employment income, regardless of where the income is paid or earned, at progressive rates from five percent to a maximum of 35 percent. Non-resident taxpayers are subject to PIT at a flat rate of 20 percent on their Vietnam-sourced income

Social Insurance

Employers register and pay insurance contributions monthly on behalf of their employees at the provincial Ministry of Labor, Invalids and Social Affairs (MoLISA). Contribution amounts are based on the employees’ monthly salary or wage as stated in the labor contract and are capped at 20 times the legal standard minimum salary.

Social insurance in Vietnam covers compensation for salary lost due to illness, maternity, working accidents,

occupational diseases, retirement, and death.

Social Security Minimum Contribution

 

Social  insurance

Health insurance 

Other projects

Total compulsory contribution

Employer

17.5%

3%

1%

21.5%

Employee

8%

1.5%

1%

10.5%

Total

 

 

 

32%

Taxable Income

There are 10 types of earnings, which are subjected to PIT, including:

  • Incomes from business activities;
  • Wages received from employers;
  • Capital investment;
  • Capital transfer;
  • Property transfer;
  • Prizes;
  • Royalties;
  • Commercial franchising;
  • Inheritances in 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 forms of securities, capital contribution in companies or economic organizations; real estate; and other assets requiring the registration of ownership or use rights.

Note: Following the passage of Circular 59/2015/ TT-BLDTBXH in late 2015, the scope of allowances used to calculate employee wages has been increased to include allowances related to position, seniority, hardship, area, mobility, and attraction.

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 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 government

Personal Income Tax Rates in Vietnam
Tax Bracket Monthly taxable income (million VND) Monthly taxable income (US$) Tax rate
1 Up to 5  Up to 215 5%
2 Over 5 to 10 Over 215 to 430 10%
3 Over 10 to 18 Over 430 to 774 15%
4 Over 18 to 32 Over 774 to 1,377 20%
5 Over 32 to 52 Over 1,377 to 2,237 25%
6 Over 52 to 80 Over 2,237 to 3,442 30%
7 Over 80 Over 3,442 35%

Non-resident taxpayers are subject to PIT at a flat rate of 20 percent on their Vietnam-sourced income.

Tax Exempt Incomes

Incomes exempted from PIT include:

  1. Incomes from transfer of real estate between husbands and wives, natural or adoptive parents and their children or adopted children;
  2. Incomes from transfer of residential houses by individuals who possess only one residential house or land plot;
  3. Inheritances or gifts between husbands and wives, natural/adoptive parents and their children/adopted children;
  4. Interest earned on deposit from the bank or from life insurance contracts;
  5. Overseas remittance, retirement salary, and scholarship;
  6. Incomes from compensation for insurance contracts or from charity funds;
  7. Income from cultivation and husbandry, aquatic and marine products, which have not yet been processed into other products or have been preliminary processed and then sold by producing or fishing organizations or individuals themselves;
  8. Incomes from the value of land use rights of individuals who are allocated land by the government;
  9. Incomes from the conversion of agricultural land allocated by the government to households and individuals for production;
  10. Wages paid for night shift or overtime work, which are higher than those paid for day shifts or prescribed working hours in accordance with the law; and
  11. Incomes received from governmental or non-governmental foreign aid for charity or humanitarian purposes approved by competent state agencies.

Employee Benefits

Foreign individuals can be exempted from taxation for certain benefits such as:

  • One-off relocation allowance for foreigners to relocate to Vietnam. (Based on the amount stipulated in the labor contract or agreement between the employer and the employee.);
  • Round-trip airfares (applicable only for employees) paid once a year by employers for their foreign employees who are on annual leave. (The air ticket should indicate the country where these employees are nationals or where the foreigner’s family lives.); and
  • General education school fee or tuition paid by the employer for the expatriates’ children (from kindergarten through high school) studying in Vietnam (based on the invoice from the school and the labor contract).

Other benefits can be treated as non-taxable incomes if certain conditions are met. These include:

  • Employee housing costs exceeding 15 percent of the total taxable income (excluding housing benefit from employers);
  • Expenses for the means of transportation of a group of employees to and from work are not taxable. Meanwhile, means of transportation used for the transportation of an individual are taxable;
  • Membership fees for gold, tennis, cultural, art/sport or physical training clubs; or charges for other services, such as healthcare, entertainment, sports, recreation, and beauty care are taxable if the membership cards specify the names of cardholders of either individuals or groups of individuals. These are not taxable if they are for common use without specific names of individuals or groups of individuals;
  • Training fee for employees relevant to employees’ professions and/or in accordance with the employers’ plan is not taxable;
  • Mid-shift meal allowances are not accounted as taxable if the employers directly cater such meals for their employees; and
  • Presumptive expenditures for telephone, stationery, per diem, working outfit, etc. are not subject to tax if the amounts are within the levels set out under relevant regulations.

Tax Reduction

Reductions may be taken individually as well as for those under the care of workers subject to PIT under the following allowances:

  • Personal allowance: A maximum of VND 11 million (US$475) per month.
  • Dependent allowance: Pegged at VND 4.4 million (US$192) per month for each dependent. Qualified dependents are children aged below 18 years old, or children over 18 years old but are disabled and incapable of working. In addition, the spouses or the parents of the taxpayers who are unable to work or have low income not exceeding VND 1 million (US$43) are also qualified dependents.

The reduction for each dependent can be claimed by only one person. The dependent allowance is not automatically granted, and the taxpayer needs to register the qualifying dependent and provide the supporting documents to the tax authority.

Tax Payment

Individuals and organizations that are subject to PIT must register with tax offices to obtain the tax identification number (TIN).

Foreign invested enterprises (FIE) have to conduct PIT finalization on behalf of their employees at the beginning of the year for taxable income arising from the previous year. If an employee has more than one source of income and wishes to conduct tax finalization on his/her own, FIEs can issue a certificate of deduction at the request of the employee. If an expatriate’s labor contract in Vietnam expires before the end of a calendar year, they should conduct tax finalization before their departure.

PIT payment is done in the same way as CIT and paid by the taxpayer to the State Treasury in one of two ways: by cash or bank transfer. The taxpayer can pay cash directly to the State Treasury to receive the voucher from the state officials. Otherwise, they can transfer money to a tax office bank account at the State Treasury accredited operations. The deadline for tax payment is the same as tax finalization, meaning no later than 120 days from the end of the calendar year.

Conversion of Taxable Income

If taxable income is received in foreign currency, it must be converted into Vietnamese dong at the average trading exchange rate on the inter-bank foreign currency market published by the State Bank of Vietnam as the date when the income arose.

Download this guide on PDF

Find Other Guides and Magazines:

magazines

Your Insights & Resources Library for Asia

Asiapedia is a collection of resources based on what we have learned about doing business in Asia. It’s the product of more than 300 team members collaborating across 28 offices in Asia, Europe, and North America.

or
Back to top