Personal Income Tax for Foreigners in Vietnam (Part 7)

Part 5 of the series have discussed the types of incomes from wages and remunerations, in which, incomes from wages and remunerations are incomes paid to employees from employers. However, the Law on Personal Income Tax and Circular No. 111/2013/TT-BTC also stipulates some incomes paid from employers to employees will be not included in taxable incomes. Such incomes consist of the following ones:

1. Supports provided by the employer for medical examination and treatment of fatal diseases suffered by employees and their families.

– Family of the employee in this case include: children, legitimate adopted children, illegitimate children, stepchildren, spouse, parents, parents-in-law; stepparents, legitimate adoptive parents.

– The support that is not included in taxable income is the actual paid amount according to hospital bills, but must not exceed the hospital fee paid by the employee and his or her family after deducted the amount paid by the insurer.

– The employer that provide supports shall keep the copies of the hospital bills that are certified by the employer (if the employee and his or her family pay for the remaining amount after the insurer directly pay the medical facility), the copies of the health insurance payment certified by the employer (if the employee and his or her family pays the entire hospital fee and then receive insurance money from the insurer) together with the papers proving the provision of supports for employees and their families who suffer from fatal diseases.

2. The amount received according to regulations on using vehicles of state agencies, public service agencies, communist party’s organizations, and associations.

3. The amount received according to the regulations on public housing.

4. Other payments received, apart from wages, for participation in consultation, appraisal, and inspection of legislative documents, Resolutions, political reports, inspectorates, serving votes, citizens; for costumes and other tasks directly serving the operation of the Office of the National Assembly, the Ethnic Communities Council, committees of the National Assembly, the delegations of the National Assembly, the Central Office, the departments of the Communist Party, City/Province Committees and their departments.

5. Payment for mid-shift meals, lunch of employees provided by employers that provide mid-shift meals, lunch for their employees in the form of cooking, buying catering services, giving luncheon vouchers.

If the employer pays cash for their employees’ meals instead of providing mid-shift meals or lunch, such money is not included in the taxable income if it is conformable with the guidance of the Ministry of Labor, War Invalids and Social Affairs. If the payment is higher than the limit imposed by the Ministry of Labor, War Invalids and Social Affairs, the excess shall be included in taxable incomes.

The expenditures of state-owned enterprises, public service agencies, communist party’s agencies, associations shall not exceed the limits imposed by the Ministry of Labor, War Invalids and Social Affairs. For non-public enterprises and organizations, the expenditures shall be decided by the head and the union president, and shall not exceed the limits imposed on state-owned enterprises.

6. The payment for round-trip air tickets made by the employer for foreign employees in Vietnam or Vietnamese employees overseas to go home once a year.

The basis for determining the payment for air tickets is the labor contracts and the prices of air tickets from Vietnam to the other country and vice versa.

7. The tuition fees for children of foreign employees in Vietnam to study in Vietnam, for children of Vietnamese employees overseas to study overseas from preschool to high school, which is paid by the employer on their behalf.

8. The amounts received from sponsors are not included in the taxable income if the sponsorship beneficiary is a member of the sponsoring organization; the sponsorship is funded by government budget or managed in accordance with regulations of the State; from composting literary and artistic works, scientific research, accomplishment of political objectives of the State, or other activities that conforms with their charters.

9. The payments paid by the employer for dispatching, reassigning foreign employees in Vietnam in accordance with labor contracts and international work schedules of some industries such as petroleum, mineral extraction.

The basis of determination is the labor contract and the payments for air tickets from Vietnam to the home country of the foreign employee and vice versa.

If you want to find more information on personal income tax applied to wages and remunerations, you can find our previous post of such matter, including:

– Personal Income Tax for Foreigners in Vietnam (Part 5);

– Personal Income Tax for Foreigners in Vietnam (Part 6).

The following pieces of legislation may also be useful in case of the same purpose:

– The 2007 Law on Personal Income Tax.

– 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.