Personal Income Tax

Personal Income Tax

While corporate income tax does not recognise tax residency, personal income tax (PIT) does take this concept into consideration.

A tax resident is a person:

  • Residing in Vietnam for 183 days or more in either calendar year or the period of 12 consecutive months from the date of first arrival
  • Having a permanent residence in Vietnam
  • Having a leased house in Vietnam with a lease term of 183 days or more (even when not having a permanent residence in Vietnam, but unable to prove residence in another country)

All tax residents in Vietnam are subject to PIT on their worldwide income regardless of where it is paid or received. Both employment and business income of tax residents is taxed on a progressive tax rate basis, ranging from 5 – 35%.

Tax non-residents, on the other hand, pay PIT on their Vietnam related employment income at a flat tax rate of 20% and any non-employment income is taxed at various other rates. For example, Vietnam-sourced business income would be taxed at 1, 2 or 5%, depending on the business activities Vietnam tax non-residents are engaged in.

Taxable Employment and Non-Employment Income

Employment income constitutes all cash remuneration and benefits-in-kind.

Non-employment income includes business income in excess of 100M VND a year, investment income (e.g. interest, dividends), gains on sale of shares, gains on sale of real estate and inheritances in excess of 10M VND.

Tax Deductions

Similarly as in other countries, Vietnam also allows its tax residents to offset certain expenses against their total taxable income. Expenses that can be used as tax deductions include:

  1. Contributions to mandatory social, health and unemployment insurance schemes
  2. Contributions to local voluntary pension schemes
  3. Contributions to certain approved charities
  4. Tax allowances:
    1. Personal allowance – 9M VND a month
    2. Dependent allowance – 3.6M VND a month (this allowance is not automatically granted, and the taxpayer needs to register qualifying dependents and provide supporting documents to the tax authority)

PIT Rates

Residents – Employment Income
Annual Taxable Income (million VND) Monthly Taxable Income (million VND) Tax Rate
0 – 60 0–5 5%
60 – 120 5 – 10 10%
120 – 216 10 – 18 15%
216 – 384 18 – 32 20%
384 – 624 32 – 52 25%
624 – 960 52 – 80 30%
More than 960 More than 80 35%
Residents – Other Income
Type of Taxable Income Tax Rate
Business income 0.5% – 5% (based on the type of business income)
Interest/dividends 5%
Sale of shares 0.1% of the sales proceeds
Capital assignment 20% of the net gain
Sale of real estate 2% of the sales proceeds
Income from copyright 5%
Income from franchising/royalties 5%s
Income from winning prizes 10%
Income from inheritances/gifts 10%
Non-Residents
Type of Taxable Income Tax Rate
Employment income 20%
Business income 0.5% – 5% (based on type of business income)
Interest/dividends 5%
Sale of shares 0.1% (on sales proceeds)
Sale of real estate 2% of the sales proceeds
Income from royalties/franchising 5%
Income from inheritance/gifts/winning prizes 10%s

Administration

Individuals with taxable income are required to obtain a tax code. Employment income is to be reported and paid either on monthly (by the 20th of the following month) or quarterly basis (by the 30th day following the reporting quarter). Then at the end of the financial year (a calendar year), an annual tax return must be submitted and if there is any outstanding balance, it must be paid within 90 days of the year end.

Conversely, non-employment income tax administration requires PIT reporting and payment to be made in relation to each type of the non-employment income (for example, business income and investment income must be reported separately). Individuals must be, however, reporting this type of income on a regular basis, often each time income is received.

Interactive Associates can assist you with everything related to PIT – from determining your residence status through calculating your rates and deductions to the actual filing. Our reliable accounting services will assure that your personal numbers will always add up and help you achieve a peace of mind by having all tax duties in order.

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Our legal and accounting professionals are ready to discuss your business needs, and answer any questions you may have.