PERSONAL INCOME TAX FOR FOREIGNERS IN VIETNAM

PERSONAL INCOME TAX FOR FOREIGNERS IN VIETNAM
Among foreigners coming to live and work in Vietnam, who are obliged to pay income tax in Vietnam?
The answer is all foreigners earning income in Vietnam, as a rule, are subject to taxation.
Now, let take a quick overview of PIT’s regulations in Vietnam!
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Tax residence for foreigners work in Vietnam
Based on the length of stay in Vietnam, authorities could identify whether a foreigner is a resident or non-resident of Vietnam, and they are subject to pay the correlative type of tax: tax for resident and tax for non-resident.
Pursuant to Circular No.111/2013/TT-BTC (article 1), residents are those individuals meeting one of the conditions below:
– Residing in Vietnam for 183 days or longer in a calendar year, or for 12 consecutive months from the date of the first arrival;
– Having a permanent residence in Vietnam (including a registered residence which is recorded on the permanent/ temporary residence card or a rented house in Vietnam with a contract term of 183 days or more in tax years) and unable to prove tax residency in another country.
Individuals not meeting the conditions for being tax resident are considered tax non-resident. The taxable income and tax rates applicable to residents and non-residents are different. Technically, a tax resident shall pay their tax in Vietnam based on his/ her “worldwide income” while a non-tax resident is only required to pay tax on his/ her “Vietnam sourced income”. In the case that foreigners are classified as residents in Vietnam, the same tax rates are applicable to both Vietnamese and foreign residents.
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Taxable income
There are 10 types of earnings which are subject to PIT, as follows:
1. Income from business activities;
2. Wages received from employers;
3. Capital investment;
4. Capital transfer;
5. Property transfer;
6. Prizes;
7. Royalties;
8. Commercial franchising;
9. Inheritances in the forms of securities, capital contribution in companies or economic organizations, real estate, and other assets requiring the registration of ownership or use right; and
10. Gifts in the forms of securities, capital contribution in companies or economic organizations, real estate, and other assets requiring the registration of ownership or use right.
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Tax rate
Because Facebook does not allow to show the table of the tax rate. Please see the tax rate at this article http://www.gbeeconsulting.com/PIT
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