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What is PIT exemption? How does it impact to tax payers?

 

PIT exemption is the amount deducted from taxable income before calculating the tax amount. It is applied for business income, salary, and wages for residents only.

A tax payer might receive (i) personal exemption and (ii) exemption for donation purposes (if any). Personal exemption comprises of:

Before 1 July 2013

(VND million/month)

After 1 July 2013

(VND million/month)

Standard deduction

4

9

Family deduction per dependent

1.6

3.6

Dependents can be immature sons/daughters, over-working-age parents, etc. There is no limit in number of dependents a tax payer can claim. However, each dependent should only be claimed for one tax payer.

Exemption for donation purposes is the amount donated to charity funds, children or elder care organizations, etc.

 
What are the tax rates applicable to residents and non-residents?

 

Progressive PIT rates for residents

Level

Taxable

income/year

(VND million)

Taxable

income/month

(VND million)

Tax rate

(%)

1

Up to 60

Up to 5

5

2

From 60 to 120

From 5 to 10

10

3

From 120 to 216

From 10 to 18

15

4

From 216 to 384

From 18 to 32

20

5

From 384 to 624

From 32 to 52

25

6

From 624 to 960

From 52 to 80

30

7

Over 960

Over 80

35

Flat PIT rates for residents

Taxable income from

Tax rate (%)

Capital investment

5

Copy-right, patent (exceeding VND10 mil/time)

5

Lottery, promotion (exceeding VND10 mil/time)

10

Heritance, gifts (exceeding VND10 mil/time)

10

Capital transfer

20

Securities transfer

0.5

Real estate transfer (1)

25

Real estate transfer (2)

2

(1) Charged on the transfer price less purchase price

(2) When unable to determine the purchase price, charged on the transfer price

Flat PIT rate for non-residents

Taxable income

Tax rate (%)

Business earnings

v Trading activities

1

v Service rendering

5

v Manufacturing, construction and other business activities

2

Salary, wages

20

Capital investment

5

Capital transfer

0.1

Real estate transfer

2

Copy right, patents (exceeding VND10 mil/time)

5

Inheritance, gifts, promotion (exceeding VND10 mil/time)

10

 

 
What are the requirements for registration and declaration of PIT?

 

Employers are required to register income tax payment for employees with the local tax office once a year in January of each calendar year or the first month in which the employee has taxable income. On a monthly basis, employers are required to withhold tax from the income of the employees, declare and pay tax (provisionally) to the State Treasury by no later than the twentieth day of the subsequent month. At year end, a final tax return must be submitted to the tax authorities by 30 March of the subsequent year.

Irregular income is declared and taxed on each separate transaction.

 
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