As you may observe from Part 5 of personal income tax series, there are some benefits in cash or not in cash apart from wages paid to the taxpayer by the employer which will be considered as taxable income. This Part of the series will focus on such incomes.
i. Payments for housing, electricity, water supply and associated services
Such payments will not include benefits in terms of housing, electricity, water supply, and associated services (if any) of housing built by the employer for serving employees in industrial parks free of charge; housing built by the employer in disadvantaged areas and extremely disadvantaged areas that are provided free of charge for employees working therein.
If the person stays at the workplace, the taxable income depends on the house rent or depreciation expense, payments for electricity, water supply, and other services according to the ratio of area that person uses to the total area of the workplace.
The house rent, payment for electricity and water supply, and payment for associated services (if any) paid by the employer on behalf of the employee shall be included in taxable income according to the actual amount paid on behalf of employees. Nevertheless, the amount must not exceed 15% of the total taxable income (excluding house rent, payment for electricity, water supply, and associated services (if any)) earned at the workplace regardless of income payer.
ii. The life insurance premiums, premiums of other optional insurance with accrual of premiums, voluntary pension insurance premiums or contributions to the voluntary pension fund paid on the worker’s behalf
If the employer buys optional insurance without accrual of premiums for employees (including insurance of insurers that are not established under Vietnam’s law but permitted to sell insurance in Vietnam), such premiums shall not be included in taxable income of employees. Optional insurance without accrual of premiums are insurance products such as: health insurance, death insurance (except for death insurance with refund policy), etc. from which policyholders do not receive the accrued amount of premiums apart from the insurance payout or indemnities paid by the insurer under insurance policies.
iii. Membership fees and other expenditure on services serving individuals such as: healthcare, entertainments, sports, recreation
Such payments include the followings:
– Membership fees (such as membership card of golf course, tennis course, cultural, artistic, sports clubs, etc.) – if the card specifies the user or group of users. If the card is shared without specific users, the fees are not included in taxable incomes.
– Expenditures on other services individuals such as: healthcare, entertainments, sports, recreation, etc. – if the names of the recipients are specified. If the recipient is the collective of employees, not any specific person, it is not included in taxable income.
iv. Flat expenditures on stationery, business trips, phone calls, costumes, etc. that are in excess of the limits prescribed by the State
Flat expenditures are not included in taxable income in the cases below:
– For the officials and employees in public service agencies, communist party’s agencies, associations: the flat expenditure shall apply guiding documents promulgated by the Ministry of Finance.
– For the employees working in businesses and representative offices: the flat expenditure shall conform to the income that incurs corporate income tax and guiding documents of the Law on Enterprise income tax.
– For the employees in international organizations and representative offices of foreign organizations: the flat expenditure shall comply with regulations of such international organizations and representative offices of foreign organizations.
v. The expenditure on shuttling employees
Such payment is not included in taxable incomes of employees according to rules and regulations of the employer
vi. The payments for refresher courses for employees
The payments for refresher courses for employees which suit their professions or accords with plans of the employer, shall not be included in the incomes earned by employees.
vi. Other benefits
Other paid to employees by the employers such as: payments during leave period or public holidays; payment for counseling, tax statement services for a particular person or group of people; payment for domestic servants such as driver, cook, and other domestic servants that work under contracts, etc.
If you want to find more information on personal income tax applied to wages or benefits, you can check the following pieces of legislation:
– Circular No. 111/2013/TT-BTC on the implementation of the law on personal income tax, the law on the amendments to the law on personal income tax, and the Government’s Decree No. 65/2013/ND-CP elaborating a number of articles of the law on personal income tax and the law on the amendments to the law on personal income tax.
– Circular No. 92/2015/TT-BTC on guidelines for VAT and personal income tax incurred by residents doing business, amendments to some articles on personal income tax of the Law No. 71/2014/QH13 on the amendments to tax laws, and the Government’s Decree No. 12/2015/ND-CP dated February 12, 2015.
– Circular No. 156/2013/TT-BTC guidance on some articles of the law on tax administration, the law on the amendments to the law on tax administration, and the Government’s Decree No. 83/2013/ND-CP.