Personal Income Tax for Foreigners in Vietnam (Part 2)

I. Tax period

1. For residents:

–   Annual tax statement: applicable to incomes from business and incomes from wages, remunerations.

The tax period is the calendar year if the person is present in Vietnam for 183 days or more in the calendar year.

If the person has been present in Vietnam for fewer than 183 days in a calendar year, but has been in Vietnam for 183 days for 12 consecutive months from the date of arrival, the first tax period is the 12 consecutive months from the date of arrival. In the second year, the tax period is the calendar year.

–   Declaring tax when an income is earned: applicable to incomes from capital investment, incomes from capital transfer, incomes from real estate transfer, incomes from winning prizes, incomes from royalties, incomes from franchising, incomes from inheritance, and incomes from gifts.

–   Tax on incomes from transferring securities shall be declared annually or when it is incurred.

2. For non-residents:

Non-residents shall declare tax whenever an income is earned.

Where the business person does not have a fixed business location such as a shop or counter, the tax period is similar to that applicable to residents earning incomes from business.

iI. 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 transferring technology if the value is over 15 million VND for each contract, regardless of payment intallments;

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

iI. Tax deduction

1. Family circumstance deduction

–   Family circumstance deduction means a sum of money deductible from pre-tax income from business, salary or wage of a resident taxpayer. Family circumstance deduction consists of the following two parts:

+     Deduction for the taxpayer, which is VND 11 million/month (around US$471).

+     Deduction for each dependant of the taxpayer, which is 4.4 million VND (around $US188).

(Such tax deduction amount is applied from 1st July 2020 according to Resolution No. 954/2020/UBTVQH14 released by the Government)

* Dependants of a taxpayer means persons a taxpayer is responsible for nurturing or taking care of, including:

+     His/her minor children or disabled children who are incapable of working;

–   Individuals who have no income or have incomes not exceeding the prescribed level, including adult children who are studying at a university, college, professional secondary school or job-training establishment; his/her spouse who is incapable of working; his/her parents who are beyond the working age or incapable of working; other supportless persons whom the taxpayer has to directly nurture.

The taxpayer need to register and provide supporting documents to the local tax authority to confirm that the dependant is qualifying for the deduction policy.

2. Donation deduction

Charity or humanitarian donations are deductible from pre-tax income from business, salary or wage of a resident taxpayer, including:

–   Donations to organizations or establishments that care for or nurture children in special plights, disabled people and supportless elderly people.

–   Donations to charity funds, humanitarian funds or study promotion funds.