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 Personal Income Tax in Vietnam

Personal Income Tax (PIT) is a concept familiar to both Vietnamese citizens and expatriates living and working in Vietnam. However, not everyone fully understands the regulations, declaration procedures, and payment methods. Apluslaw will provide you with an overview of personal income tax in Vietnam, from definitions and tax rates to declaration and payment methods as follows.

What’s Personal Income Tax in Vietnam?

Personal income tax (PIT) in Vietnam is a tax levied on the income of individuals. This tax applies to various types of income, including wages, business income, investment income, and other earnings. Both residents and non-residents are subject to PIT, but the rates and scope of taxable income differ.

Personal Income Tax Rates

When it comes to personal income tax rates, it’s not just about how much you earn, but how much you get to keep after the taxman takes his share. The table below will make it easy for you to understand:

Tax residents: Employment income

Tax tier	Annual taxable income (million VND)	Monthly taxable income (million VND)	PIT rate (%)
1	0 to 60	0 to 5	5%
2	Over 60 to 120	Over 5 to 10	10%
3	Over 120 to 216	Over 10 to 18	15%
4	Over 216 to 384	Over 18 to 32	20%
5	Over 384 to 624	Over 32 to 52	25%
6	Over 624 to 960	Over 52 to 80	30%
7	More than 960	More than 80	35%

*The table is based on clause 2 Article 22 of Law on Personal income tax. 

Tax residents: Non-employment income

Type of taxable income	Tax rate (%)
Business income	0.5 to 5 (based on the type of business income)
Interest (but not bank interest)/dividends	5%
Sale of shares	0.1 (of sales proceeds)
Capital assignment	20 (on net gain)
Sale of real estate	2 (of sales proceeds)
Income from franchising/royalties	5%
Income from inheritances/gifts/winning prizes (excluding income from casino winning prizes)	10%

*The table is based on the Law on Personal income tax. 

Tax residents: Business income

Type of taxable income	Tax rate (%)
Distribution and supply of goods	0,5%
Services, construction without provision of raw materials	2%
Leasing of assets includes: Leasing of houses, land, shops, factories, and warehouses, excluding accommodation services; Leasing of transportation vehicles and machinery without operators; Leasing of other assets without accompanying services;	5%
Acting as a lottery agent, insurance agent, or multi-level marketing seller; Compensation for breach of contract and other compensations.	5%
Production, transport, services attached to goods, construction including provision of raw materials	1,5%
Other business operations	1%

*The table is based on clause 4 Article 2 The Law Amending and Supplementing a Number of Articles of the Laws on Taxes and Appendix I promulgating Circular No. 40/2021/TT-BTC.

Tax non-residents

Taxable Income	Tax rate (%)
a) Income from capital investment	5%
b) Income from royalties and franchising	5%
c) Income from winnings	10%
d) Income from inheritance and gifts	10%
đ) Income from capital transfer Income from securities transfer	20% 0,1%
e) Income from real estate transfer	2%

*The table is based on clause 2 Article 23 Law on Personal income tax and Clause 7 Article 2 The Law Amending and Supplementing a Number of Articles of the Laws on Taxes.

In conclusion, understanding the personal income tax rates in Vietnam is essential for effective financial planning, ensuring compliance with regulations, and optimizing your financial outcomes.

Where to declare personal income tax in Vietnam?

According to Clause 8, Article 11 of Decree 126/2020/ND-CP, the location for submitting personal income tax finalization dossiers is determined as follows:

1. Individuals with income from one source: Submit the dossier to the tax authority where tax declarations were made during the year.

2. Individuals with income from multiple sources:

• Submit to the tax authority managing the largest income source.
• If the largest source can’t be determined, the individual can choose to submit it to the tax authority at their place of residence or where the income was paid.

3. Individuals with income from multiple sources (tax withheld at the source):

• Submit to the tax authority where family circumstance deductions were calculated.
• If the individual changed jobs, submit to the tax authority managing the final employer (if family circumstance deductions were calculated).
• If no family circumstance deductions were made, submit to the tax authority at the place of residence.

4. Individuals without a labor contract or with contracts under 3 months: Submit to the tax authority at the place of residence.

5. Individuals not employed at the time of finalization: Submit to the tax authority at the place of residence.

In summary, the location for submitting personal income tax finalization dossiers depends on the specific circumstances, as outlined in Decree 126/2020/ND-CP.

Forms of personal income tax payment in Vietnam

Taxpayers (NNT) can choose one of the bank branches to pay their personal income tax (PIT) into the state budget revenue account. For example, in Hanoi, the taxpayer pays into the state budget account number 7111 – State Treasury of Hanoi City – Collecting Agency: Hanoi Tax Department:

• Vietnam Joint Stock Commercial Bank for Industry and Trade – Dong Da Branch.
• Joint Stock Commercial Bank for Investment and Development of Vietnam – Transaction Office 1 Branch.
• Joint Stock Commercial Bank for Foreign Trade of Vietnam – Transaction Office Branch.
• Vietnam Bank for Agriculture and Rural Development – Hanoi Branch.
• Military Commercial Joint Stock Bank – Dien Bien Phu Branch.

Method 1: Payment via bank transfer

• For individuals with a deposit account at one of the five banks listed above, online transfers within the same system can be made.
• For individuals without a deposit account at one of the five banks listed above, interbank transfers (excluding 24/7 transfers) can be made.

When transferring, the taxpayer must provide all relevant details in the payment description:

• Choose the beneficiary bank: Select one of the five cooperating bank branches.
• Choose the beneficiary account number: 7111.
• Choose the beneficiary name: Hanoi Tax Department.
• Transfer details: Taxpayer’s name, tax identification number (TIN), PIT finalization year, Program 557, Sub-item 1001, amount, Sub-item 4917 (if late PIT payment is applicable), amount, State Treasury of Hanoi City.

Note: For bank transfers, after payment, the taxpayer can only verify the transaction through the bank (as no payment receipt is provided). Therefore, if a payment receipt is required, the taxpayer must go to the bank for verification.

Method 2: Direct payment at the bank’s counter

For individuals with a deposit account at one of the five cooperating banks: Follow the instructions mentioned above.

For individuals without a deposit account at one of the five cooperating banks: The taxpayer fills out a payment voucher into the state budget according to the bank’s form, with the following details:

• Payer’s name: Taxpayer’s full name.
• Account number: 7111, opened at one of the five bank branches mentioned above (e.g., Account number 7111 opened at the Vietnam Joint Stock Commercial Bank for Industry and Trade – Dong Da Branch).
• Payment details: Taxpayer’s name, TIN, PIT finalization year, Program 557, Sub-item 1001, amount, Sub-item 4917 (if late PIT payment is applicable), amount, State Treasury of Hanoi City.

Method 3: Online PIT payment

For electronic methods, individuals can choose to pay into the state budget account using the following options:

• Via Ebanking;
• Via ATM;
• Via Home Banking or Mobile Banking.

Note on transfer principles:

Each bank may have different interfaces and procedures for electronic banking or online applications, but they must adhere to the following principles:

• Choose a collection-authorized bank from one of the five listed banks.
• Select the transfer account as the state budget account 7111.
• The payment details must include the taxpayer’s information: taxpayer’s name, TIN, PIT 1001, late PIT payment 4917 (if applicable).

Can foreigners get a personal income tax refund in Vietnam?

Foreigners working in Vietnam who are subject to personal income tax (PIT) obligations are categorized into two types: resident individuals and non-resident individuals. If a foreigner is classified as a resident individual according to the personal income tax law, the calculation of tax, tax methods, tax payable, tax finalization, or tax refunds are applied similarly to Vietnamese resident individuals under the personal income tax law.

According to Clause 2, Article 8 of the Law on Personal income tax, individuals are eligible for a PIT refund in the following cases:

• The amount of PIT paid exceeds the amount of tax due.
• The individual has paid PIT but their taxable income does not reach the threshold for tax payment.
• Other cases as determined by the competent state authority.

The regulations on tax refunds are clearly outlined in Point c, Clause 2, Article 26 of Circular 111/2013/TT-BTC, as amended and supplemented by Article 12 of Circular 151/2014/TT-BTC regarding PIT declaration:

“c) Resident individuals with income from salaries, wages, or business activities are required to finalize taxes if they have additional tax payable or if they have overpaid tax and request a refund or offset the excess tax against the next tax declaration period…”

Thus, a foreign resident individual is eligible for a PIT refund if they meet the following conditions:

• The individual falls under the circumstances that qualify for a tax refund as per the above regulations.
• The individual submits a request for a tax refund.

If the individual qualifies for a tax refund but does not submit a request, the excess amount will be carried forward and offset against the next tax declaration period (carried forward to the following year).

Personal tax consulting lawyer service

Navigating the complexities of income tax in Vietnam for foreigners can be challenging, especially for those new to the country. At Apluslaw, we aim to simplify the process by providing clear guidance on tax in Vietnam for expats, including the personal income tax rate in Vietnam, how to calculate your taxes, and what steps to take for compliance.

Resident vs. Non-Resident Status

The first step in understanding tax in Vietnam for foreigners is determining whether you are classified as a resident or non-resident. This distinction is crucial because it directly affects your expat tax in Vietnam. Resident individuals are subject to taxation on their worldwide income, while non-residents are only taxed on income sourced within Vietnam.

Personal Income Tax Rate in Vietnam

For resident expatriates, the personal income tax rate in Vietnam is progressive, ranging from 5% to 35%, depending on your income bracket. This salary tax in Vietnam applies to various forms of income, including wages, bonuses, and other earnings. Non-residents, on the other hand, are typically subject to a flat tax rate of 20% on their income sourced within the country.

How to Calculate Personal Income Tax in Vietnam

Understanding how to calculate personal income tax in Vietnam is essential for ensuring compliance. The process involves determining your gross income, applying any eligible deductions, and then calculating the applicable tax rate based on your income bracket. For expats in Vietnam, certain deductions and allowances may be available, further reducing the amount of tax owed.

Tax Refunds and Compliance

If you’ve paid more personal tax in Vietnam than required, you may be eligible for a refund. However, it’s important to note that you must submit a formal request to the tax authorities to receive this refund. If no request is made, any excess tax paid will be carried forward and offset against future tax obligations.

Common Questions About Tax in Vietnam

Many expatriates wonder how much is tax in Vietnam and whether they are compliant with local laws. At APLUS Law, we frequently address questions like how to calculate tax in Vietnam for expats and explain the intricacies of tax in Vietnamese. We ensure that our clients are well-informed about their obligations and can confidently navigate the tax landscape.

Final Thoughts

Understanding tax in Vietnam for expats can seem daunting, but with the right guidance, it becomes much more manageable. Apluslaw is here to assist you with all aspects of income tax in Vietnam for expats, ensuring that you remain compliant while maximizing any available benefits. Whether you’re dealing with salary tax in Vietnam or other forms of income, our team is ready to help you every step of the way.

For personalized assistance with your personal income tax in Vietnam or any other tax-related queries, don’t hesitate to reach out to Apluslaw.

A+ lawyers provide tax legal advice

With a team of experienced, talented, enthusiastic and dedicated lawyers, A+ Law is proud to be the leading unit in consulting and resolving tax issues for foreign investors including the following services:

• Consulting on determining tax obligations: tax amount payable, tax exemption, tax reduction, tax deduction, tax calculation price, tax rate.
• Consulting on procedures: registration, declaration, tax payment, tax settlement, inspection and handling of violations, tax complaints.
• Consulting on accounting regimes: accounting standards, invoices, documents.
• Consulting on cooperation and business plans: forecasting arising tax obligations
• Authorized representative to carry out tax procedures.

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In summary, personal income tax in Vietnam for foreigners is determined by whether an individual is classified as a resident or non-resident. Residents are taxed on their worldwide income at progressive rates, while non-residents are taxed at a flat rate on income sourced within Vietnam. Understanding the tax obligations, including how to calculate the tax and the eligibility for refunds, is crucial for compliance. If you still have any questions related to this issue, please contact lawyer A+ via email: contact@apluslaw.vn or via phone number: 0899511010 for support and advice.