Personal Income Tax (“PIT”)

Tax Residency Residents are those individuals meeting one of the following criteria:
·       residing in Vietnam for 183 days or more in either the calendar year or the period of 12 consecutive months from the date of first arrival;·       having a permanent residence in Vietnam (including a registered residence which is recorded on the permanent/temporary residence card in case of foreigners);·       having a leased house in Vietnam with a term of 183 days or more in a tax year and unable to prove tax residence in another country. Tax residents are subject to Vietnamese PIT on their worldwide taxable income, wherever it is paid or received. Employment is taxed on a progressive tax rates basis. Other income is taxed at a variety of different rates.
 Individuals not meeting the conditions for being tax resident are considered tax non-residents. Non-residents are subject to PIT at a flat tax rate of 20% on the Vietnam related employment income, and at various other rates on their non-employment income. However, this will need to be considered in light of the provisions of any DTA that might apply.
 Tax Year The Vietnamese tax year is the calendar year. However, where in the calendar year of first arrival an individual is present in Vietnam for less than 183 days, his/her first tax year is the 12 month period from the date of arrival. Subsequently, the tax year is the calendar year.
 Employment Income The definition of taxable employment income is broad and includes all cash remuneration and benefits-in-kind. However, the following items are not subject to tax:
 ·       Payments for business trips (subject to a cap);·       Payments for telephone charges (subject to a cap);·       Payments for uniform/stationery costs (subject to a cap);·       Overtime premium (i.e. the additional payment above the normal wage, not the full amount of the overtime/nightshift payment);·       One-off allowance for relocation to Vietnam for expatriates and from Vietnam for Vietnamese working overseas;·       Once per year home leave round trip airfare for expatriates and Vietnamese working overseas;·       School fees up to high school in Vietnam/overseas for children of expatriates/Vietnamese working overseas;·       Training;·       Mid-shift meals (subject to a cap if the meals are paid in cash);·       Certain benefits in kind provided on a collective basis (e.g. membership fee, entertainment, healthcare, transportation to and from work) and;·       Airfares for employees working on a rotation basis in a number of industries such as petroleum or mining. There are a range of conditions and restrictions applicable to the above exemptions.Non-employment Income Taxable non-employment income includes:
 ·       Business income (including rental income) in excess of VND100 million/year;·       Investment income (e.g. interest, dividends);·       Gains on sale of shares;·       Gains on sale of real estate;·       Inheritances in excess of VND10 million.
   Non Taxable Income Non taxable income includes:
 ·       Interest earned on deposits with credit institutions/banks and on life insurance policies;·       Compensation paid under life/non-life insurance policies;·       Retirement pensions paid under the Social Insurance law (or the foreign equivalent);·       Income from transfer of properties between various direct family members;·       Inheritances/gifts between various direct family members;·       Monthly retirement pensions paid under voluntary insurance schemes;·       Income of Vietnamese vessel crew members working for foreign shipping companies or Vietnamese international transportation companies;·       Income from winnings at casinos. Foreign Tax Credits In respect of tax residents who have overseas income, PIT paid in a foreign country is creditable.
 Tax Deductions Tax deductions include:
 1.      Contributions to mandatory social, health and unemployment insurance schemes;2.     Contributions to local voluntary pension schemes (subject to a cap);3.     Contributions to certain approved charities;4.     Tax allowances:·       Personal allowance: VND9 million/month;·       Dependent allowance: VND3.6 million/month/dependent. The dependent 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%
Income from winning prizes	10%
Income from inheritances/gifts	10%

   * With effect from 1 January 2015, income from sale of shares and real estate are subject to PIT at deemed rates of 0.1% and 2% respectively, on sales proceeds. The former option to declare PIT based on the net profit has been abolished.
 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% (on sales proceeds)
Income from royalties / franchising	5%
Income from inheritance / gifts / winning prizes	10%

 Administration Tax codes Individuals who have taxable income are required to obtain a tax code. Those who have taxable employment income must submit the tax registration file to their employer who will subsequently submit this to the local tax office. Those who have other items of taxable income are required to submit their tax registration file to the district tax office of the locality where they reside.
 Tax declarations and payment For employment income, tax has to be declared and paid provisionally on a monthly basis by the 20th day of the following month or on a quarterly basis by the 30th day following the reporting quarter. The amounts paid are reconciled to the total tax liability at the year-end. An annual final tax return must be submitted and any additional tax must be paid within 90 days of the year end. Expatriate employees are also required to carry out a PIT finalisation on termination of their Vietnamese assignments before exiting Vietnam. Tax refunds due to excess tax payments are only available to those who have a tax code.
 For non-employment income, the individual is required to declare and pay PIT in relation to each type of taxable non employment income. The PIT regulations require income to be declared and tax paid on a regular basis, often each time income is received.

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