Personal Income Tax 2023

PERSONAL INCOME TAX
Instructor: Le Phuong Thao, MBA

School of Business
International University
Objectives
After complete this lecture, you are able to

 Determine the primary authorities for Personal Income Tax
researches
 Understand the nature and factions of the Personal Income
Tax
 Understand the scope of Personal Income Tax
 Understand the tax bases and methods of tax computation for
residents and non-residents
 Understand tax registration, withholding, declaration,
finalization and refund
Legal Documents
on Personal Income Tax
PIT
Law No. 04/2007/QH12,
Law No. 04/2007/QH12 26/2012/QH13, 71/2014/QH13
Decision 65/2013/NĐ-CP, 91/2014/ND-

Decree No. 100/2008/ND-CP CP, 12/2015/NĐ-CP
Circular no. 84/2008/TT-BTC Circular 111/2013/TT-BTC
Circular no. 10/2009/TT-BTC

Circular no. 62/2009/TT-BTC Circular 119/2014/TT-BTC,
151/2014/TT-BTC,
Circular no. 02/2010/TT-BTC 92/2015/TT-BTC
Resolution 954/2020/UBTVQH14
Nature of Personal Income Tax
 Personal Income Tax (PIT) is a direct tax levied

on income of a person for a certain period.
 Contribute to the Government’s revenue
 Contribute to social equity
PIT Taxpayers
Individuals are liable to pay PIT

 Resident individuals
who have incomes earned inside and outside the Vietnamese
territory, regardless of where their incomes are paid and
received.
 Non-resident individuals
who have incomes earned in Vietnam, regardless of where
their incomes are paid and received.
Resident Individuals
A resident individual means a person who satisfies

any of the 2 conditions:
1. Being present in Vietnam for 183 days or more in
a Western calendar year or 12 consecutive months
counting from the first date of his/her presence in
Vietnam, of which the date of arrival is counted as
one day and the date of departure is also counted
as one day.
2. Having a regular residential location in Vietnam

in either of the following two cases:
 Having a residential location for which permanent
residence has been registered pursuant to the law on
residence
 Having a leased residence to stay in Vietnam pursuant to the
law on residential housing, where the lease contract has a
term of 183 days or more within the tax assessment year,
and specifically as follows:
 An individual has a total number of leased days under a

lease contract of 183 days or more within the tax
assessment year shall be deemed to be a resident taxpayer,
including a case where such person leases a number of
residences.
 An individual has regular residential location in VN but
present in VN < 183 days in a tax year and unable to
prove tax residency certificate of another country
 If the individual is resident of a country or a region which has
signed a double taxation avoidance agreement with Vietnam, a
copy of his/her passport could be substituted for the tax
Non-resident individuals
 Non-resident individual means a person not

satisfying the conditions stipulated above
Determine Resident Status
Yes
Residing in VN >= 183 days? Tax resident
No
Providing his resident status in other

country?
No
Having regular resident place; or Yes

Yes Tax resident
renting house in VN >= 183 days?
No
Non-tax resident
Before Jul 1, 2013: renting house in VN >= 90 days?

Illustration
 John is a Canadian citizen. He arrived Ho Chi Minh City on

Mar 2nd 2015, stayed in the city until May 25th 2015. He came
back on Nov1st 2015 and left on Dec 31st 2015. He is:
A. Non-resident individuals
B. Resident individuals
C. Both a & b are correct
D. Not enough information to classify
Taxable Income
1. Business Income
2. Income being salary
3. Income from capital investments
4. Income from capital transfers
5. Income from real property transfers
6. Income being winnings or prizes
7. Income being royalties
8. Income from franchises
9. Income from inheritances
10. Income from receipt of a gift
Taxable Income
1. Business Income
2. Income being salary and wage
3. Income from capital investments
4. Income from capital transfers
5. Income from real property transfers
6. Income being winnings or prizes
7. Income being royalties
8. Income from franchises
9. Income from inheritances
10. Income from receipt of a gift
Business Income
 Business income means income derived from manufacturing

and business activities:
 Income from manufacture and business in goods and services in all
sectors and business lines
 Income from independent practice by individuals in sectors and
business lines with licences or practising certificates
 Income from manufacturing and business activities in agriculture,
forestry, salt mining, aquaculture and fishing which do not satisfy
all the conditions for tax exemption
Income Being Salary
Income being salary means income receivable by employees from employers

in monetary or non-monetary forms (benefits in kind), including
1. Salary and wages, and items in the nature of salary and wages.
2. Allowances and subsidies including living allowances receivable by
employees
3. Remuneration receivable in all forms such as brokerage commission,
payment for participation in a scientific or technological research project;
payment for participation in a plan or project; royalties for writing books or
newspaper articles or for translating documents; payment for participation in
teaching activities; cultural and artistic performances, sports and games; and
payment receivable from advertising and other services.
4. Payments receivable as a result of participation in professional and business
associations, on corporate boards of management and inspection committees,
on project management boards, on management and corporate councils and
Income Being Salary
5. Other monetary or non-monetary benefits other than salary to which an

employee is entitled and which are paid to or on behalf of an employee by the
employer as follows:
 Residential housing rent, and payments for power and water and associated
services.
 If an individual stays in a working office, then taxable income shall be based these above
expenses allocated at a ratio between the area used by the individual over the total area of
the working office.
 Accumulated fees for life insurance, other non-compulsory insurance
contributions, and accumulated fees for voluntary pension funds purchased by
the employer or contributed for employees will be taxable when paid to the
employee upon expiry of the insurance period
Income Being Salary
 Membership fees for individuals such as membership cards of gold clubs,

tennis courts and cultural, artistic and sports clubs.
 Other services for individuals in healthcare activities, entertainment, sports
and aesthetics.
6. Other benefits which an employer pays for employees such as expenses for
holidays including public holidays, expenses for use of consultancy services
and tax declaration services; expenses for domestic workers such as drivers,
cooks and people doing other domestic work pursuant to a contract, but
excluding expenses for stationery and telephone, working expenses and
uniforms.
Income Being Salary
7. Monetary or non-monetary bonuses such as monthly, quarterly, annual or

one-off bonuses or thirteenth month Tet bonus (including bonuses in the form
of securities) Where employees are entitled to bonuses in the form of share
certificates, market value shall be determined as the amount of the bonus
recorded in the books of account of the entity paying the bonus.
8. Uniform allowance paid in cash and/or in kind exceed VND 5,000,000 per
employee per year
Non-taxable income
Allowances and subsidies which are deductible from salary when

determining taxable income
 Allowances for people having contributed to the revolutionary cause in
accordance with the law on preferential treatment for such people
 National defence and security allowances as stipulated by law.
 Allowances as stipulated in the Labour Code, comprising
 Allowances for toxicity and danger applicable to trades, lines of business or
jobs at workplaces involving toxic or dangerous elements.
 Attraction allowances for new economic zones, economic establishments and
remote islands with specially difficult living conditions.
 Regional allowances as stipulated by law for people working in remote or
unfrequented areas with an unfavourable climate.
Non-taxable income
 Allowances as stipulated in the Law on Social Insurance and

Labour Code
 Subsidies for one-off difficulties, subsidies for labour
accidents and occupational diseases.
 One-off subsidies on the birth or adoption of a child.
 Subsidies due to reduction in ability to work.
 One-off subsidy on retirement, monthly widow's subsidies.
 Unemployment subsidies.
 Other subsidies paid by the Social Insurance Fund.
Non-taxable income
 Allowances to resolve social evils in accordance with law.

 Bonuses which shall be deductible upon calculating taxable income
from salary:
 Monetary awards attached to titles bestowed by the State
 Monetary awards attached to national and international awards
recognized by the State of Vietnam.
 Monetary awards for technical improvements, inventions and
innovations recognized by competent State authorities.
 Monetary awards for detecting and reporting breaches of law to
competent State authorities.
Non-taxable income
1. Presumptive expenditures for stationery, working mission allowances,

telephone charges and working outfits shall not be accounted as taxable
incomes if they are compliant with the State's current regulations.
2. One-off region transfer allowances for foreign employees moving to
work in Vietnam and Vietnamese employees moving to work oversea.
3. Round trip air fares paid once a year for foreign employees who are on
annual leave from Vietnam to countries of which these employees are
nationals or where their families live, and back.
4. Round trip air fares paid once a year for Vietnamese employees
working overseas for the annual home leave.
5. Schooling fees from kinder garden to high school level for children of
foreign employees studying in Vietnam and for children of Vietnamese
employees studying overseas (in the country they work)
Non-taxable income
Other benefits enjoyable by employees shall be accounted

as taxable incomes only when beneficiaries are specified.
These benefits will not be accounted as personal taxable
incomes when beneficiaries are unspecified.
 House rents paid by employers for their employees: These

rents shall be accounted as taxable incomes according to
actually paid amounts but must not exceed 15% of total
taxable incomes (exclusive of house rents).
 Expenses for vehicles to transport a collective of employees
to work
Non-taxable income
 Expenses paid for membership cards without specific names of any

individuals or groups of individuals
 Charges for other services for individuals in healthcare,
entertainment, sports, recreation and beauty care activities without
specific names of any individuals or groups of individuals
 Expenses paid by employers for their employees for skills training
courses relevant to employees" professions or under employers"
plans
 Mid-shift meal if employers directly cater mid-shift meals for their
employees. If meals are paid in cash, it is subject to cap at the level
guided by the Ministry of Labor
Illustration
Ms. Lan Anh is a manager of JetBlue Co. The

company purchased California Fitness center
membership for her under her name. The purchase
price of the membership is
A. Not the income of Ms. Lan Anh
B. Ms. Lan Anh’s income subject to PIT
C. Ms. Lan Anh’s income but not subject to PIT
D. None of these above
Tax Exempt Income
 Income from real property transfers as between husband and wife; as between parents
and children including adoptive parents and adopted children; as between parents-in-
law and children-in-law; as between grandparents and grandchildren; and as between
siblings
 Income from transfer of a residential house or right to use residential land and the assets
attached to the land by an individual who has only one sole residential house [and/or]
residential land use right in Vietnam
 Income from the value of a land use right of an individual to whom the State allocated
such land without payment of, or with reduced land use fees in accordance with law
 Income being receipt of an inheritance or gift of real property as between husband and
wife; as between parents and children including adoptive parents and adopted children;
as between parents-in-law and children-in-law; as between grandparents and
grandchildren; and as between siblings
 Income from conversion of agricultural land by a family household or individual to
whom the State allocated such land for production
Tax Exempt Income
 Income of a family household or individual directly engaged in

agricultural production, forestry, salt mining, raising animals,
cultivating crops, fishing or aquaculture where the produce has not yet
been processed into other products or has only been preliminarily
processed
 Income being interest on money deposited at a bank or credit
institution, and income being interest from life insurance policies
 Income being foreign currency remitted by overseas Vietnamese
 Income being that part of night shift or overtime salary payable which
is higher than the day shift or normal working hours salary stipulated
by the Labour Code
Tax Exempt Income
 Income being pensions paid by the Social Insurance Fund pursuant to the Law
on Social Insurance
 Income being scholarships
 Income being compensation payments from life and non-life insurance
contracts, compensation for labour accidents, State compensation payments
and other compensation payments payable pursuant to law shall be tax exempt
income
 Income receivable from charitable funds which the State authorities permit to
be established or which they recognize, and which are for charitable,
humanitarian, or study encouragement purposes and not for profit-making
purposes
 Income receivable from foreign aid sources for charitable or humanitarian
purposes in both Government and non-Government forms and approved by
Determining Deductions
1. Deductions for family circumstances.

2. Compulsory insurance contributions and
voluntary pension fund contributions;
3. Contributions to charity funds, humanitarian
funds and study promotion funds
Deductions for Family Circumstances
 Deduction for family circumstances means the

amount deductible from taxable income prior to
assessing tax payable on business income and
income from salary of a resident individual
Noted: this deduction shall be made once time

from the aggregate total of both business income
and income from salary
Level of deduction
 Personal deduction: 9,000,000 VND per month and 108,000,000 VND

per year
 The level of 9 million dong per month is an average for the whole year
and used to estimate monthly
 The level of 108 million dong per year is used in year end
finalization
 Dependent deduction: 3,600,000VND per month per dependent from
the month when caring responsibility arises or ends
From 1 Jul 2020

 Personal deduction: 11,000,000 VND per month and 132,000,000 VND
per year
 Dependent deduction: 4,400,000VND per month per dependent
Level of deduction
 Illustration
 Ms. Anh is a single person. Assume she does not have any
dependent. She was unemployed in the first 6 months of
2014. From July 1st 2014, she earned 20mil per month. Each
month, her employer calculate her monthly assessable
income as 20mil – 9mil = 11mil
 But at the end of 2014, she finalized her PIT with yearly
assessable income
= 20mil x 6months – 108 mil = 12 mil
Level of deduction
 Illustration
 Ms. Ngoc Anh gave birth to her son on 31st Mar 2013
and registered her son as her dependent in Apr 2013.
The dependent deduction for her son is calculated for
10 months (including March)
Principles for Assessing Deductibility for a
Dependant
 Each dependant may only be assessed for deduction once in respect of

one taxpayer within the tax assessment year.
 If a taxpayer has a dependant in common with other taxpayers, then all

such taxpayers must agree on registration of the dependant of only one
taxpayer.
 A taxpayer shall be responsible to declare the number of his or her

dependants, and shall be legally liable for the accuracy of the declaration.
 Qualifying dependents will be granted a tax code for dependent relief

purposes
Requirements of Dependants
 Children, including adopted and illegitimate children

 Children under the age of 18 years (counting the full number of
months).
 For example, if A was born in July 1992, A may be a dependant until the
end of June 2010.
 A child under the age of 18 years has the income of 1million per month. Is
she/he a dependent?
 A child over 18 years of age who is handicapped and unable to work.
 A child currently studying at a university, college, specialized
secondary school, vocational training establishment, graduate
program and does not have income or has income which does not
exceed the threshold (average 1million VND per month)
Requirements of Dependants
 A spouse of the taxpayer, parents of the taxpayer,

or any other person whom the taxpayer must
directly rear or care for
 above the working age (55 for women, 60 for men) and
does not have income or has income which does not exceed
the threshold (average 1mil VND per month)
 or still of working age but handicapped, unable to work,
and does not have income or has income which does not
exceed the threshold (average 1mil VND per month)
Determine Dependants
Others (in need

Conditions Children Parents Spouse of taxpayer's
direct support)
Total income > VND 1mil NO NO NO NO
Have no income, or Total income < VND 1mil
- Under 18 ages YES n/a n/a n/a
- Studying at university, college,

specialized secondary school, YES n/a n/a n/a
vocational training school
- Over working ages n/a YES YES YES

- Handicapped, unable to work YES YES YES YES
Illustration
 Ms. Ngoc’s son is 28 years old and not enrolling in any

educational program. Her son is unemployed, does not earn
any income, so Ms. Ngoc has to provide him financial support
at 5 million per month. Her son is
A. Ms. Ngoc’s dependant
B. Not Ms. Ngoc’s dependant
C. Ms. Ngoc’s dependant if he is handicapped and unable to
work
D. None of these above
Deductions for Compulsory Insurance Premiums
 Compulsory insurance premiums payable under the

Labor Code, the Law on Social Insurance, and the
Law on Medical Health Insurance
Social Health Unemployment Total
insurance insurance insurance %
% % %
Employee 8 1.5 1 10.5
Employer 17.5 3 1 21.5
Total 25.5 4.5 2 32
Progressive PIT Rates
 Apply to assessable income of resident individuals with taxable income from

business and from salary after deducting for family circumstances, compulsory
insurance premiums, and contributions to charitable funds
Treatment Summary
for Business Income and Income Being Salary
Resident Non- resident
World-wide income
Progressive tax rates Vietnam sourced income
Deductions
Yearend finalization
Business Income Progressive tax rate in 1% applicable to business in goods,

conjunction with Income 5% applicable to business in services,
Being Salary 2% applicable to manufacturing,
construction, transportation, and other
business activities
Income Being Progressive tax rate in Flat rate of 20%

Salary conjunction with Business
Income
Flat rates for other income
Resident Non- resident

Income from Capital Flat rate of 5% Flat rate of 5%
Investment
Income from Capital Transfers Income from transfer of a capital Flat rate of 0.1% on amount
contribution: Flat rate of 20% on received
income
Income from transfer of a
securities: Flat rate of 20% on
income or 0.1% on transfer price
Income from Real Property Flat rate of 25% on income Flat rate of 2% on amount
Transfers received
Income from Royalties and Flat rate of 5% Flat rate of 5%

Income from Franchises (after deductions of VND 10m) (after deductions of VND 10m)
Income from Winnings or Prizes Flat rate of 10% Flat rate of 10%
& Income from Receipt of an (after deductions of VND 10m) (after deductions of VND 10m)
Inheritance or Gift
Tax Calculation
Personal income tax payable on business income and on income being

salary shall be the total amount of tax assessed in accordance with each
income bracket and the relevant tax rate in the progressive scale, in which
the amount of tax assessed in accordance with each income bracket shall
be the assessable income of that bracket multiplied by the appropriate tax
rate.
 Assessable Income = Taxable Income – Deductions
 Tax payable = Sum of (Assessable Income of each bracket x

appropriate Tax Rate)
Tax Calculation
Quick method of calculation
Gross basis % Tax

G<5,000,000 5% T = 5% G
5,000,000 < G < 10,000,000 10% T = 10%G -250,000
10,000,000 < G < 18,000,000 15% T = 15%G - 750,000
18,000,000 < G < 32,000,000 20% T = 20%G - 1,650,000
32,000,000 < G < 52,000,000 25% T= 25%G - 3,250,000
52,000,000 < G < 80,000,000 30% T = 30%G - 5,850,000
G > 80,000,000 35% T = 35%G - 9,850,000
G: gross income (before-tax income).

Illustration
 Mr. A is a resident individual with income being

salary of 40 million dong per month. Mr. A has two
children under 18, and within the month he pays
compulsory insurance premiums of 7% of his
salary for social insurance and 1.5% of his salary
for medical insurance; and during the month he did
not make any contributions to charitable funds.
Illustration
 Mr. A has the following deductions from taxable income

 For personal 9 million
 For dependents: 3.6 million x 2 = 7.2 million
 Social insurance and medical insurance : 40 million x (7%+1.5%) =
3.4 million
 Total deductions are: 19.6 million
 Assessable income is
40 million – 19.6 million = 20.4 million
 Tax payable in the month is
20.4 mil × 20% - 1.65 mil = 2.43 mil
Tax assessment period
 Applicable to taxpayers being resident individuals

Assessment period Types of income
Annual Business income and income being
salary
Each occasion (transaction) All except for Business income and
Income from salary
Either annual (with registration) or Income from transfer of security
transaction (no need registration)
 Applicable to taxpayers being non-resident individuals

 Each occasion (transaction)
Except: having fixed business location (a store or counter…)  apply
tax assessment period as resident individuals having income from
business
Business Income
1. Business individuals who do not implement the accounting

system on invoices and vouchers
Taxable income = Fixed level of turnover x Fixed taxable

income ratio
Fixed level of turnover shall be based on the declaration of the

business individual, the results of investigation by the tax
office, and the opinion of the commune or ward level tax
consultancy council.
Business Income
2. Business individual who is only able to account for turnover

from the sale of goods and services but not for expenses
Taxable income = Turnover to calculate x Fixed taxable

taxable income income ratio
Turnover to calculate taxable income shall be determined in

accordance with the accounting books and appropriate
invoices and vouchers
Business Income
3. Business individual who fully implements the accounting system

on invoices and vouchers
Turnover to calculate taxable
- Reasonable expenses
+ Other taxable income
Taxable income
 Turnover and expenses shall be determined on the basis of the

accounting books, invoices and vouchers.
 Other business income means other income arising during the business
process such as fines [received] for contractual breaches; fines
[received] for late payment; bank interest, etc…
Turnover to calculate taxable income
 Tax point: The time for fixing turnover to calculate

taxable income
 Inrespect of goods, the time when ownership of the goods
was transferred or the time when the goods' sale invoice
was issued.
 In the case of services, the time when provision of the
services was completed or the time when the invoice for
provision of the services was issued.
 Tax point will be the date of invoice if issuance before the
time of ownership transferred or service complete
 Specific cases
1. Turnover on goods sold on installments = the selling price of the goods
as for a one-off payment [lump sum price], excluding interest on late
payments
2. Turnover on goods sold on deferred payment (credit sales) = the selling
price of the goods as for a one-off payment [lump sum price], excluding
interest on deferred payments
Illustration: Lump sum price = 10m,

Payments made in 12 installments, 1m each  Total payment =12m
Turnover to calculate taxable income = 10m
3. Goods or services used as exchange, a gift, or to outfit

employees or to reward employees: turnover shall be fixed
as the market price of the same or similar goods or services
at the time of transaction
4. Goods and services used during the manufacturing or
business process: turnover shall be the costs of producing
such product, goods or services.
Illustration: The products of the business, tables, are used to

reward employees. Selling price is 3m each, and cost is 2m
each. Turnover to calculate taxable income is 3m
5. Processing: turnover shall be the total fees

including charges for labour, fuel, power, subsidiary
materials and other expenses of processing.
6. Agent or consignee to sell goods at listed price and

earn commission: turnover shall be the commission
receivable pursuant to the agency or consignment
contract.
7. Activities being leasing out assets

 If the lessee pays rent in advance for a number of years:
 Turnover to calculate taxable income
 allocated to the number of years for which rent was paid in advance OR
 fixed as turnover on a lump sum payment.
 If the lessee pays rent in advance for a number of years but bears all the
expenses arising during use of the assets:
 Turnover to calculate taxable income
 allocated over the number of years for which rent was paid in advance
AND
 calculation must be made of the amount of tax payable for each year
and payable for the entire period for which advance payment was
7. Activities being leasing out assets

Illustration: Mr. Trung leases his house for 5 years (2012-2016),
VND100million per year. The lessee pays VND500m in advance.
 If the lessee pays VND500m in advance, Mr. Trung could declare his turnover to
calculate taxable income
 VND500m in 2012 and pay tax in 2012 with corresponding tax rate OR
 VND100m each year from 2012 -2016 and pays tax each year
 If the lessee pays VND500m in advance and bears all the expenses arising
during the time of contract, Mr. Trung must declare his turnover to calculate
taxable income
 VND100m each year from 2012 -2016 AND calculate the tax for each year AND
8. Construction and installation, turnover shall be

the value of the works or items of work or the
value of the entire project works which were
tested, accepted and handed over
9. Transportation, turnover shall be the total monies
receivable from transportation of passengers,
luggage and cargo.
Deductible expenses
 Expenses
 actually arise
 directly related to creation of the turnover and taxable
income in the tax assessment period,
 have adequate invoices and vouchers as required by
law.
Deductible expenses
 Expenses being salaries and wages, allowances

 not include salaries and wages of the head of a business
household or of a member whose name is included in the
business registration of a business group.
 Uniforms allowance > 5mil per annum
Deductible expenses
 Cost of raw materials, supplies, fuel, power and goods

 Actually used in manufacture and business
 In accordance with reasonable levels of wear and tear and actual ex-
warehouse prices fixed by the business individual or business
household itself, and for which such individual or household shall be
liable.
 Not include the value of the loss of supplies, assets, capital monies
or goods unless such loss was due to a natural disaster, fire, epidemic
or other event of force majeure for which compensation is not
receivable.
 Supplies and goods are used both for private consumption and for
business purposes: include only that part of the expenses representing
the business use
Deductible expenses
 Depreciation of, and costs for maintaining and

servicing fixed assets
 used in manufacturing and business
 adequate invoices, vouchers and legal papers proving that
the fixed assets are owned by the business individual.
 managed, monitored and accounted for in the accounting
books of the business individual in accordance with current
regulations
Deductible expenses
 The amount or level of depreciation of fixed assets shall be

as stipulated in the regulations on management, use and
depreciation of fixed assets.
 For fully depreciated assets, depreciation shall not be
allowable
 Fixed assets are used for business and other purposes:
depreciated as usage portion for each purpose
Deductible expenses
 Expenses being payment of interest on loans

borrowed for manufacture and business
 actual interest rate pursuant to the loan contract with the
bank or credit institution
 the loan from an entity other than a bank or credit
institution: maximum interest rate may not exceed 1.5
times the basic interest rate announced by the State Bank
at the time of the loan
 not include payment of interest on loans in order to
contribute capital to establish the business premises
Deductible expenses
 Expenses being payment of interest on loans borrowed

for manufacture and business
Illustration:
 Borrowings VND300 million from a bank at the interest rate
10% per year. Is the interest expense VND 30 million per year
deductible?
 Borrowings VND300 million from a person at the interest rate
15% per year. The basic interest rate announced by the State
Bank at the time of the loan is 8%. How much of interest
expense is deductible?
Deductible expenses
 Expenses being payment of interest on loans

borrowed for manufacture and business
Illustration:
 Registered capital VND500 million.
 Contributed capital VND200 million.
 Borrowings from a bank for funding the lack of contributed
capital: VND300 million, interest expense VND 30 million
per year.
 Is the interest expense deductible?
Deductible expenses
 Taxes, fees and charges and land rent which are mandatory by
law and which relate to the manufacturing, business or service
activities,
 Allowances for employees' business trips (excluding travelling
and residential allowances) at a maximum of twice the amount
permitted pursuant to guidelines of the Ministry of Finance
applicable to State officials and employees
 Other expenses directly related to creation of turnover and
taxable income, and which have adequate invoices and vouchers
as required by law
Taxable income being salary
 Tax point:
The time for determining taxable income being
salary shall be the time when the employer pays
such salary to the employee.
Illustration: Employees received salary of Dec 2011 in Feb

2012. The salary is declared as taxable income of Feb 2012
Group of business individuals
 In a case where a number of people are jointly named

in the business registration, including a case of
leasing out housing and land with co-owners named
in the certificate of ownership or certificate of land
use right (hereinafter referred to as a group of
business individuals), the taxable income shall be
allocated to each individual by one of the following
methods
1. In accordance with the capital contribution ratio

of each individual as recorded in the business
registration
2. Pursuant to an agreement between the individuals
concerned
3. Average amount of income per person if 2 above
methods are inapplicable
 Mr. A, Mr. B and Mr. C are all jointly named in the

business registration and each participates in the business
(group of business individuals).
The business registration specifies the capital contribution
ratio of each of these individuals as 50% for Mr. A, 30%
for Mr. B and 20% for Mr. C; and suppose that the
taxable income in year X is 300 million. Calculate taxable
income for each person.
 Mr. A = 300 x 50% = 150 million
 Mr. B = 300 x 30% = 90 million
 Mr. C = 300 x 20% = 60 million
NON-RESIDENT INDIVIDUALS
 Business Income
 Tax rate
 1% applicable to business in goods
 5% applicable to business in services
 2% applicable to manufacturing, construction, transportation and
other business activities
 If unable to separate turnover from each sector, the highest

tax rate applicable shall be applied to the entire turnover
NON-RESIDENT INDIVIDUALS
 Income being Salary

 Taxable income from salary are receivable by the non-
resident individual in money or kind as a result of working
in Vietnam, irrespective of the place were the income is
paid
 Flat tax rate of 20%
TAX REGISTRATION
 Taxpayers who must conduct tax registration

 Income-paying entities
 Individuals with taxable income
 Location for lodging file for tax registration

 An individual with taxable income being salary
 income-paying entity or the tax office directly managing such entity
 Individuals with other taxable income
 the Tax Department where they reside
 Individuals with a number of income sources
 may select the place, either at the income-paying entity or body, or at the
Tax Department in the locality where they conduct business.
Tax Deduction – Withholding Tax
 Tax deduction [deduction at the source] means

the income-paying entity calculates and deducts tax
payable from the income of the taxpayer before
paying such income
 Types of income from which deductions must be

made
 Income of non-resident individuals
 Income of resident individuals
 Income being salary;
 Income from capital investments
 Income from capital transfers and from transfers of
securities
 Income from all types of prizes
 Income from copyright [royalties]
 Income from copyright [royalties]
 Tax deduction in the case of income being salary of

an individual with a labour contract and who was
employed on a long term and stable basis
 deducted on a monthly basis
 conduct provisional deduction for family circumstances and
registered dependents of the taxpayer, and then on the basis
of the residual income and the scale of progressive tax
tariff, such entity shall deduct the amount of tax calculated
in order to pay it to the State budget
 Organizations and individuals who pay income to a

resident individual without a labor contract, or with a
labor contract of less than 3 months, shall apply a
consistent withholding rate of 10% on income from
VND2mil/payment, regardless of whether or not the
individual has a tax code
Double Tax Treaties
 If a foreign company / individual is the “tax resident” /

‘resident establishment’ in both Vietnam and the foreign
country, they may / will be taxed on income in both
countries (i.e. Double Tax)
 Double tax treaties are applied to subjects which are tax

residents/resident establishments of Vietnam or of the
Contracting State to an Agreement concluded with
Vietnam or of both
Double Tax Treaties
 A resident of the Contracting State

means any person who, under the laws of that state, is
liable to tax therein by reason of:
 That person has an home, a period of residence in that State or

any other criterion of similar nature, in the case of an individual;
or
 That person has a place of management, a registered office, or is
established in that State or has any other criterion of similar
nature, in the case of an organization
Double Tax Treaties
 Vietnam is a signatory to a Treaty for the

Prevention of Double Taxation with many countries
all over the world.
Draft agreements with additional countries are at
the discussion stages.
Double Tax Treaties
 Principles for Double Tax Treaties

 In cases where there are disparities between the provisions
of the Agreements and those of domestic laws, the
provisions of the Agreements shall apply
 The Agreements shall not create new tax obligations or tax

obligations that are different from or heavier than those
prescribed by the domestic tax laws
Double Tax Treaties
 Vietnam’s right to tax Personal Income Tax

 Income for working in Vietnam earned by a resident
individual of a foreign country having DTT with Vietnam:
Vietnam has the right to tax
 However, Vietnam will exempt for the individual’s salary if
he/she satisfies all the following conditions:
 The individual is present in Vietnam for less than 183 days in 12
months which starts or ends in the tax year in question
 The employer is not resident taxpayer in Vietnam (regardless
whether the salary is paid directly by the employer or a
representative)
 The salary is not borne / paid by a P/E of the employer in Vietnam
Double Tax Treaties
 NTB Co., a Japanese company, set up a Joint Venture in Vietnam with

a Vietnamese company. The JV’s name is NTB – Vitco.
 In 2012, NTB appointed Mr. Nagakawa to represent it in negotiating
with the JV whereby NTB will transfer “know-how” to the JV. The
negotiation happened from 1 November 2012 to 31 December 2012.
Salary of Mr. Nagakawa during 2012 will be paid by NTB in Japan
 Can Mr. Nagakawa be exempted from PIT in 2012 ?
 Mr. Nagakawa can be exempted from PIT in 2012 because:
 He spent only 61 days in Vietnam in 2012
 NTB (employer) is not resident in Vietnam
 His salary is not paid / borne by any P/E of NTB in Vietnam (the JV is
not considered P/E of NTB in Vietnam)
Double Tax Treaties
 In 2011, Mr. Nagakawa was appointed by NTB to work in NTB – Vitco

(the JV) from 1/1/2011 to 27/3/2011 for training and implementation of
the “know-how” in the JV.
 His salary will be paid by NTB in Japan, and NTB will then charge
back this costs to the JV
 Can Mr. Nagakawa be exempted from PIT in 2011 ?
NO- Mr. Nagakawa spent 86 days for this new job in Vietnam in the
year 2011. He will still satisfy the 183 days condition. However the 3 rd
condition (salary not paid / borne by a P/E of the company in Vietnam)
is not satisfied because actually the JV will have to bear such costs.
Double Tax Treaties
 Assuming in 2011, Mr. Nagakawa was appointed by NTB to work in NTB – Vitco from
10/2/2011 to 10/7/2011 for implementation of the “know-how” to a client of NTB –
Vitco. His activities will be under management of NTB – Vitco.
All housing/accommodation for Mr. Nagakawa during his time in Vietnam will be
borne by NTB – Vitco. As the JV is newly established and is running a loss, NTB
agreed that they will bear all the salary of Mr. Nagakawa during the 5 months period he
is in Vietnam. This favour will give NTB a right to receive more dividends from the JV
in the future
Can Mr. Nagakawa be exempted from PIT in 2011 ?
 NO - Mr. Nagakawa satisfies all 3 conditions in form. However, the real question is
“who is actually the employer of Mr. Nagakawa?”. Although his salary is borne by NTB
(and not the JV), he is actually employed by the JV (because he works for the JV in
providing the “know-how” to the client, the beneficiary of his activity is the JV, and his
salary is ultimately borne by the JV (NTB agree to bear this costs but this is in exchange
for a right for more dividends later)
Double Tax Treaties Calculation
 If a tax resident in Vietnam paid tax in a foreign

country having DTT with Vietnam, the income
received overseas will be included in the taxable
income of that tax resident in Vietnam, but the
tax paid overseas will be credited against tax
payable in Vietnam
 The tax credit should not exceed the tax liability in
Vietnam attributable to that income
 Mr. Antoine, a tax resident in Vietnam, has no dependent has

the following income in Vietnam in year 2020:
 Salary for working in France (in July – October) equivalent VND
120,000,000
 Salary for working in Vietnam (for other months in the year) received
in Vietnam VND 240,000,000
 Gross interest for bank deposits in France (US$1000) = VND
17,000,000
 Tax on individual income in France (applicable on both employment
and interest income) is 20%
 Required: calculate final tax liabilities of Mr. Antonie in

Vietnam
 As a resident, Mr. Antonie will be subject to tax on global income (120m

for working overseas + 240m for working in Vietnam (regardless of where
to receive) + 17m interest)
However, as bank interest is exempted, taxable income of Mr. Antonie in
2020 is 120 + 240 = 360m
 Average taxable income = 360m / 12 months = 30m / month
 Average Assessable income =
 Annual tax liabilities =
 Tax paid overseas:
 On employment income (120m*20%) VND 24,000,000
 On interest (17m*20%) VND 3,400,000
 The tax paid overseas for employment income will be creditable to tax
liabilities of Mr. Antonie up to the Vietnamese tax on that income. The
tax paid overseas for interest will not be credited because bank interest
is exempted from PIT in Vietnam (therefore no credit / deduction
available for exempted income)
 Vietnamese tax on employment income:
= Total Vietnamese tax on total income * Overseas income / Total income
= _________________ * (120,000,000 / 360,000,000) =
 Tax credit = Min( and )=
 Mr. Antonie’s tax liabilities =_________– ___________ = VND
End

Personal Income Tax 2023

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Personal Income Tax 2023

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PERSONAL INCOME TAX

Instructor: Le Phuong Thao, MBA

After complete this lecture, you are able to

Decision 65/2013/NĐ-CP, 91/2014/ND-

Circular no. 84/2008/TT-BTC Circular 111/2013/TT-BTC

Circular no. 10/2009/TT-BTC

 Personal Income Tax (PIT) is a direct tax levied

Individuals are liable to pay PIT

A resident individual means a person who satisfies

2. Having a regular residential location in Vietnam

 An individual has a total number of leased days under a

 Non-resident individual means a person not

Providing his resident status in other

Having regular resident place; or Yes

Before Jul 1, 2013: renting house in VN >= 90 days?

 John is a Canadian citizen. He arrived Ho Chi Minh City on

 Business income means income derived from manufacturing

Income being salary means income receivable by employees from employers

5. Other monetary or non-monetary benefits other than salary to which an

 Membership fees for individuals such as membership cards of gold clubs,

7. Monetary or non-monetary bonuses such as monthly, quarterly, annual or

Allowances and subsidies which are deductible from salary when

 Allowances as stipulated in the Law on Social Insurance and

 Allowances to resolve social evils in accordance with law.

1. Presumptive expenditures for stationery, working mission allowances,

Other benefits enjoyable by employees shall be accounted

 House rents paid by employers for their employees: These

 Expenses paid for membership cards without specific names of any

Ms. Lan Anh is a manager of JetBlue Co. The

 Income of a family household or individual directly engaged in

1. Deductions for family circumstances.

 Deduction for family circumstances means the

Noted: this deduction shall be made once time

 Personal deduction: 9,000,000 VND per month and 108,000,000 VND

From 1 Jul 2020

 Each dependant may only be assessed for deduction once in respect of

 If a taxpayer has a dependant in common with other taxpayers, then all

 A taxpayer shall be responsible to declare the number of his or her

 Qualifying dependents will be granted a tax code for dependent relief

 Children, including adopted and illegitimate children

 A spouse of the taxpayer, parents of the taxpayer,

Others (in need

Total income > VND 1mil NO NO NO NO

Have no income, or Total income < VND 1mil

- Under 18 ages YES n/a n/a n/a

- Studying at university, college,

- Over working ages n/a YES YES YES

 Ms. Ngoc’s son is 28 years old and not enrolling in any

 Compulsory insurance premiums payable under the

 Apply to assessable income of resident individuals with taxable income from

Resident Non- resident

Business Income Progressive tax rate in 1% applicable to business in goods,

Income Being Progressive tax rate in Flat rate of 20%

Resident Non- resident

Income from Royalties and Flat rate of 5% Flat rate of 5%

Personal income tax payable on business income and on income being

 Assessable Income = Taxable Income – Deductions

 Tax payable = Sum of (Assessable Income of each bracket x

Quick method of calculation