Personal income tax (PIT) is an amount that people earning income from wages and salaries must partially deduct to pay into the state budget in accordance with law. Individuals who have income from wages and salaries in Vietnam, whether residing or not residing in Vietnam, are obliged to pay personal income tax. However, each object has a different way of accumulating income tax.
How to calculate PIT for resident individuals #
Resident is an individual who has a regular place of residence in Vietnam, has a regular place of residence according to the regulations on residence, has a rented house to live in in accordance with the law, with a rental term from 183 days in the year. years or for 12 consecutive months from the first day of presence in Vietnam, the arrival and departure date is counted as 1 day. For individuals with a place of residence, the income tax calculation shall be divided into individuals with labor contracts (labor contracts) of more than 3 months and less than 3 months.
Individuals signing labor contracts of more than 3 months #
If an individual signs a labor contract for 3 months or more, personal income tax is calculated:
Personal income tax payable = Taxable income x Tax rate
In which:
- Taxable income
Taxable income = Taxable income – Deductions
= (Total Income – Exemptions) – Deductions
Tax-free income includes:
- The difference in wages due to night work or overtime compared to hourly wages as prescribed by law.
- Incomes from salaries and wages of Vietnamese seafarers working for international carriers.
Family circumstances deductions are:
- Discount 11 million VND/month for taxpayers themselves (132 million VND/year).
- Discount 4,4 million VND/month/person for dependents.
In addition, insurance contributions, voluntary retirement funds, charitable contributions, study promotion and humanitarian contributions are also deducted.
- Tax:
Tax rates for individuals signing labor contracts of 3 months or more are applied according to each tax level, specifically:
| tax bracket | Taxable income/year (million dong) | Taxable income/month (million dong) | Tax(%) |
| 1 | Go to 60 | Go to 5 | 5 |
| 2 | On 60 to 120 | On 5 to 10 | 10 |
| 3 | On 120 to 216 | On 10 to 18 | 15 |
| 4 | On 216 to 384 | On 18 to 32 | 20 |
| 5 | On 384 to 624 | On 32 to 52 | 25 |
| 6 | On 624 to 960 | On 52 to 80 | 30 |
| 7 | On 960 | On 80 | 35 |
When the taxable income and tax rate are known, there will be 2 tax calculation methods to calculate the payable tax amount:
Method 1: The method of calculating the amount of tax payable by each tax level and then adding the total, also known as the progressive method.
Method 2: The reduction method is clearly stated in the following table:
Step |
Assessable income / month (million dong) | Tax(%) | Calculate tax payable | |
| Option 1 | Option 2 | |||
| 1 | Go to 5 | 5 | 0 million VND + 5% TNT | 5% of assessable income |
| 2 | On 5 to 10 | 10 | VND 0,25 million + 10% TNTT over VND 5 million | 10% of assessable income - 0,25 million VND |
| 3 | On 10 to 18 | 15 | VND 0,75 million + 15% TNTT over VND 10 million | 15% of assessable income - 0,75 million VND |
| 4 | On 18 to 32 | 20 | VND 1,95 million + 20% TNTT over VND 18 million | 20% of assessable income - 1,65 million VND |
| 5 | On 32 to 52 | 25 | VND 4,75 million + 25% TNTT over VND 32 million | 25% of assessable income - 3,25 million VND |
| 6 | On 52 to 80 | 30 | VND 9,75 million + 10% TNTT over VND 52 million | 30% of assessable income - 5,85 million VND |
| 7 | On 80 | 35 | VND 18,15 million + 35% TNTT over VND 80 million | 35% of assessable income - 9,85 million VND |
Failing to sign a labor contract or sign a labor contract for less than 3 months #
If a resident signs a labor contract for less than 3 months, or does not sign a labor contract but has a total income of 2 million VND/time or more, according to Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC, must withhold tax at the rate of 10% on income (deduct always before paying). If the case is eligible and makes a commitment according to Form 08/CK-TNCN, there is no need to deduct tax.
The payable tax amount in case of failure to sign a labor contract or a labor contract of less than 3 months is calculated as follows:
Personal income tax payable = 10% x Total income before payment
How much salary is taxable? #
- Individuals without dependents must pay tax when the salary is over 11 million VND/month.
- Individuals with one dependent shall pay tax when the salary is over 15,4 million VND/month.
- Individuals with two dependents shall pay tax when the salary is over 19,8 million VND/month.
- Individuals with three dependents shall pay tax when the salary is over 24,2 million VND/month
In short, each dependent will be exempted and reduced by 4,4 million VND, so individuals will pay tax when the income from salary is greater than 11 million + 4.4 million x number of dependents.
The above income is the income from salary and wages after deducting the following:
- The prescribed insurance payment, voluntary retirement fund, charity, humanitarian...
- Income tax exemption.
- Non-taxable items such as allowances, allowances, clothes, lunches, etc.
How to calculate PIT for non-resident individuals #
Taxable income of a non-resident individual is income arising in Vietnam, regardless of where the income is paid and received.
Having income in Vietnam #
For non-resident individuals earning incomes from salaries and wages in Vietnam, personal income tax is calculated according to the following formula:
PIT = Taxable income from salary and wages x 20%
In which:
The taxable income of a non-resident individual is determined to be the same as the PIT taxable income of a resident individual.
The time when organizations and individuals pay income to taxpayers is the time to determine taxable income. Particularly, the time to determine taxable income for insurance premiums is the time when the insurance enterprise or intellectual fund management company pays the insurance.
Earning at the same time in Vietnam and abroad #
For individuals who earn VND from salary and wages at the same time in Vietnam and abroad but cannot separate the income, personal income tax is calculated according to the formula.
Foreign individuals not present in Vietnam:
Total income generated in Vietnam = (Number of working days for work in Vietnam / Total number of working days in a year) x Income from global wages and salaries (before tax) + Other taxable income (before tax) arising in Vietnam.
The total number of working days in a year is calculated according to the regime prescribed in Vietnam.
For individuals who are foreigners present in Vietnam:
Total income generated in Vietnam = (Number of days present in Vietnam / 365 days) x Income from global wages and salaries (before tax) + Other taxable income (before tax) arising in Vietnam Male.
Other taxable income (before tax) arising in Vietnam is the benefits that the employee enjoys in addition to the salary or wages paid or paid by the employer on behalf of the employee.
Refer Tax consulting service of Expertis to better understand tax regulations in Vietnam!
