Personal Income Tax (PIT) Guides in Vietnam
Who are PIT payers in Vietnam? How is PIT determined?
All individuals who have income raised in Vietnam are regulated as PIT payers in Vietnam.
PIT is determined on a residency basis. A resident is a person satisfying either:
- physical presence in Vietnam in an aggregate of 183 days or more in a solar year or in a consecutive 12-month period from the first date of arrival; or
- having permanent living registration or having a living house rental contract lasts 183 days or longer in the tax year.
Residents will be subject to PIT on their income worldwide, while non-residents are only levied on their incomes earned within Vietnam’s territory, regardless of the location of payment and receipt.
Taxable income includes:
- business profits of individual enterprises
- salary, wages
- interests, dividends
- capital gains
- gains from the alienation of immovable properties
- other income such as lottery prizes, royalties, inheritance, gifts with a value of more than VND 10 million per gift
The proposed progressive rates applying to income from business activities, salaries, and wages range from 5% to 35% with a 5% interval.
How is the taxable income for PIT determined?
There are two groups of income for tax purposes:
(i) business profit, salary, and wages which will be subject to progressive tax rate; and
(ii) income from investment, transfer of securities, real estates, etc. which is subject to the flat tax rate, comprises of income from:
- Capital investment
- Earnings from the transfer of capital, real estate
- Lottery, promotion, gambling
- Royalty, patent
- Inheritance, gifts in kind of stock, capital in business entities, real estate, etc.
It is noticed that only tax residents’ income is separated in this way. All non-residents’ income is subject to a flat rate, equivalent to each kind of income.
What is a PIT exemption? How does it impact taxpayers?
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 taxpayer might receive (i) personal exemption and (ii) exemption for donation purposes (if any). Personal exemption comprises:
|Items||After 1 July 2013 (VND million/month)|
|Family deduction per dependent||3.6|
Dependents can be immature sons/daughters, over-working-age parents, etc. There is no limit on the number of dependents a taxpayer can claim. However, each dependent should only be claimed by one taxpayer.
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 (%)|
|Copy-right, patent (exceeding VND10 mil/time)||5|
|Lottery, promotion (exceeding VND10 mil/time)||10|
|Heritance, gifts (exceeding VND10 mil/time)||10|
|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 (%)|
|Manufacturing, construction, and other business activities||2|
|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 the PIT?
Employers are required to register income tax payments 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 and 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 the 90th day from the end of the calendar year.
Irregular income is declared and taxed on each separate transaction.
Laws and regulations reference
Personal income tax Law 2014 – Law (compiled legal text) No. 15/VBHN-VPQH dated 11 December November 2014 on personal income tax.