You have to pay your taxes because you live in Vietnam…And another one:
No, it’s totally wrong, you have no connection with Vietnam, so you don’t have to pay anything…These kinds of approximate questions/answers flood the perspective on forums with discussion and mislead those who want to know the right answer according to their personal situation. As a foreigner working in Vietnam, you need to decode some things to determine if the Personal Income Tax is applicable to you. In this article, we list down everything you need to do to avoid problems as a foreigner paying taxes in Vietnam. This article will therefore cover the different situations:
- You are a young expat working in Vietnam (for a local or foreign company)
- You are an entrepreneur or freelancer for a foreign company living in Vietnam
- You are retired: married or single but staying several months a year in Vietnam
Types of Foreign Workers in VietnamThere are two types of foreigners living in Vietnam: tax resident and non-resident. The type of worker you are will dictate how much Personal Income Tax you will pay. Before we go into furthers details of how to know whether you are a resident or non-resident, we will first clear up when your days of stay starts. You should note that your arrival and departure days are counted as one day. There are also no de-minus days. If you arrive in Vietnam before your assignment starts, you will be asked to file your taxes from the first month of arrival but only if you are considered as a resident.
Non-residentSomeone who lives in Vietnam for less than 183 days in a year (12 consecutive months) as a non-resident based on Section I, Part A of Circular No. 84/2008/TT-BTC. The individual also has to not have permanent accommodation (lease contract is 90 days and below).
Taxable incomeAs a non-resident, the only income that will get taxed are income that you earned in Vietnam. This means that income that non-residents acquired abroad will not be subject to PIT. Non-residents are subject to pay a flat rate of 20% of their personal income that is paid in Vietnam.
ResidentsYou are considered as a Vietnamese resident if you stay in Vietnam for more than 183 days a year in a period of 12 consecutive months. It is recomended to be registered to the Consultat as an Expat Living in Vietnam to be sure you are propelly there and won’t face potential taxes from your home country. They should also have a permanent address which is written in their temporary or permanent residence card. Given that the duration of their lease is 90 days or more in a tax year. Those who do not possess a residence card but live in Vietnam for more than 183 days are still considered as residents.
Taxable incomeAs a resident, you will be asked to pay taxes on any income that you acquire regardless of whether you received the income in Vietnam or abroad. Similar to other taxation systems, residents will be asked to pay a tiered taxation scheme from 5 percent to as much as 35 percent.
Taxation Scheme Residents
|Average yearly income (in VND)||Average monthly income (in VND)||Tax rate (in percent)|
|60,000,000 and below||5,000,001 to 10,000,000||5%|
|60,000,001 to 120,000,000||10,000,001 to 18,000,000||10%|
|120,000,001 to 216,000,000||18,000,001 to 32,000,000||15%|
|216,000,001 to 384,000,000||32,000,001 to 52,000,000||20%|
|384,000,001 to 624,000,000||32,000,001 to 52,000,000||25%|
|624,000,001 to 926,000,000||52,000,001 to 82,000,000||30%|
|926,000,001 and above||82,000,001 and above||35%|
Tax issues in Vietnam may be difficult to handle alone especially if you are living in Vietnam for a few months only. Feel free to download the copy of our e-book covering other subjects relating to living as an expat in Vietnam.Click here to get your copy of our e-book for expats
Other Taxable Income
- Income from capital investments and divends – These are treated as non-employment income and are taxed at 5% for both residents and non-residents. However, residents do not need to pay PIT from this if they are a sole proprietor.
- Income from the capital assignment – Residents are taxed 20% of net gains while non-residents are taxed 0.1% of the gross sales.
- Rental income – Income acquired through renting property is considered as a business income and are taxed the same way as those.
- Income from property transfer – These are taxed at 25% on gross gain or 2.0% on gross sales for both residents and non-residents.
- Income from lottery winnings – Lottery winnings from 10 million VND are taxed at 10% for both residents and non-residents.
- Inheritance and gifts – Gifts from employers to employees are considered part of your employment income and are therefore taxed with your whole income for each according to the taxation scheme. Inheritance, on the other hand, are taxed 10% of the value for both residents and non-residents.
Tax ExemptionsOf course, not all of your income is subject to tax. Whether you are a resident or a non-resident, there are tax exemptions for you.
- Income from real estate transfer between husband and wife; father and mother with biological children; adoptive father and adoptive mother with adopted children; and other first degree relations. Note that transfers are different from inheritance.
- If you are an expat who relocated to Vietnam through their company, you might have received a relocation allowance to help you during your move. This allowance is tax exempted along with round-trip airline tickets that your company may have paid for you as part of your relocation benefits.
- Most expats also receive tuition fee assistance or even have the full tuition fee paid for their children by their company. This benefit is also tax exempted.
- Training fees are also non-taxable as long as the training is relevant to the expat’s line of work.
- Do you receive lunch or midday allowance from your employer? This amount is also exempted from being taxed.
- Allowances you get for telephone/mobile phone subscription, stationary, and work uniform is also exempted as long as they fall under the regulated per diem amount stipulated by state laws.
- The income you receive for overtime work or working the night shift is also tax-exempt given that the amount is higher than the normal working hour salary.
Tax DeductionsSimilar to what you have in your home country, you also get tax deductions depending on the number of dependents you have.
Who are considered as dependents?
- Your children who are 18 years old and below
- Children who are older than 18 years old but are low-income (not earning more than $21 or VND 500,000 per month)
- Your parents who are unable to work
- Spouses who are also unable to work or not working