Personal Income Tax ("PIT") for foreigners in Viet nam

The PIT payers in Viet Nam

Foreigners having to pay PIT in Viet Nam include:

  • persons who are not Vietnamese citizents, but reside time-unlimitedly in Viet Nam and earn income,

  • persons working in Viet Nam for corporations; economic, cultural, social organisations; representative offices; brands in Viet Nam of foreign corporations;

  • persons working independently in Viet Nam

How the PIT is determined

PIT is determined on the residency basis.

  • Foreigners residing in Vietnam for an aggregate of 183 days or more within a consecutive 12-month period from the first date of arrival, or in subsequent calendar years, will be treated as tax residents in Vietnam. These tax residents are subject to Vietnamese PIT on their worldwide income and on a progressive tax rate basis regardless of where the income is paid.

  • Foreigners who spend, in aggregate, less than 183 days (the arrival and departure days together count as one day) in a consecutive 12-month period following the first date of arrival, or in subsequent calendar years, will be considered as non-tax residents in Vietnam. Non-residents are subject to PIT at a flat tax rate of 25% on their Vietnam-sourced income.

How the taxable income for PIT is determined

Taxable income includes (i) regular income and (ii) irregular income, except for income as stipulated in the regulations on PIT.

  • Regular income consists of seven kinds of income being clearly stated in the regulation. They are any kinds of salary, wage, bonus, any income received from participation in business associations, boards of management, management committees, and councils of enterprises

  • Irregular incomes consist of incomes from transfering technology (excluding gifts or donations), and incomes from lottery or similar kinds of lottery.

  • Interests received from bank deposits, savings, loans and income/profits from purchases of notes, promissory notes, Government bonds, shares, incomes from investment in shares; gains from trading of shares shall be temporarily exempted from personal income tax.

The tax rates

1. PIT rates for Resident expatriate employees (regular incomes)

 

Gross Monthly Taxable Income (GTI)

Progressive

Income Tax

Exceeding (VND)

Not exceeding (VND)

Tax Rate (%)

Liability (VND)

NIL

8,000,000

NIL

NIL

8,000,000

20,000,000

10

GTI x 10% – 800,000

20,000,000

50,000,000

20

GTI x 20% – 2,800,000

50,000,000

80,000,000

30

GTI x 30% – 7,800,000

80,000,000

upwards

40

GTI x 40% – 15,800,000

2. PIT on irregular income based on the total income:

  • The rate is 5% on income from transfering technology if the value is over 15 millions VND for each contract, regardless of payment intalments;

  • The rate is 10% on income from lottery or similar kinds of lottery if the value is over 15 millions VND for each prize

People who do not have to pay PIT

According to new directions of the Ministry of Finance of Viet Nam, foreign specialists who work on the Non Gorvernmental Assistance Programs (NGAPs) in Viet Nam will be entitled to PIT exempt on the incomes related to the work of the NGAPs. if he/she can prove that:

  • he/she is holding a foreign nationality,

  • he/she has been accepted as specialists in Viet Nam,

  • the programs that he/she is directly working on are legally under laws and regulations of Viet Nam on NGAPs.

Procedures to apply for this preference include:

  • A request of the NGOs for the PIT exempt on the specialist(s);

  • A certificate of the authority proving that he/she is qualified as a specialist;

  • Documents involving the income received PIT exempt.

This regulation has come into effect.