Updated at 21/10/2022 - 11:37 am
Employees being foreign citizens come to work in Vietnam (hereinafter referred to as foreign workers) in the following forms:
a) Performance of labor contracts;
b) Intra-corporate transitions;
c) Performance of various types of contracts or agreements;
d) Contractual service provider;
e) Offering for sale of services;
e) Working for foreign non-governmental organizations, international organizations in Vietnam licensed to operate in accordance with Vietnamese law;
g) Volunteers;
h) The person responsible for establishing the commercial presence;
i) Managers, executive directors, experts, technical workers;
k) Participating in the implementation of bidding packages and projects in Vietnam.
Wages and personal income tax of foreign workers shall comply with the following regulations.
Minimum wage for foreign workers #
In Vietnam, the minimum wage is understood as the lowest salary as a basis for employees and businesses to negotiate with each other. In particular, the salary paid to employees in normal working conditions, ensuring enough working time in a month.
Here are some notes on regional minimum wages when employing workers in Vietnam.
According to Decree 38/2022/ND-CP, from July 01, 07, the regional minimum wage is regulated as follows:
Wage | Areas of application |
4.680.000 VND / month | Enterprises operating in the area of I |
3.920.000 VND / month | Enterprises operating in the area of Region II |
3.430.000 VND / month | Enterprises operating in the area of Region III |
3.070.000 VND / month | Enterprises operating in the area of region IV |
Including in the city. Ho Chi Minh:
- Region I includes Thu Duc City, District 1, District 2, District 3, District 4, District 5, District 6, District 7, District 8, District 9, District 10, District 11, District 12, Binh Thanh, Tan Phu , Tan Binh, Binh Tan, Phu Nhuan, Go Vap, Cu Chi, Hoc Mon, Binh Chanh, Nha Be districts.
- Region II includes Can Gio district.
- There are no zones III and IV.
Subjects applying the regional minimum wage
- Agencies, international organizations, foreign organizations, and foreign individuals in Vietnam employ or hire workers under labor contracts.
- Enterprises are established, organized, managed and operated in accordance with the Law on Enterprises.
- Employees work under the labor contract regime prescribed by the Labor Code.
- Cooperatives, farms, cooperative groups, households, individuals, unions of cooperatives and other organizations in Vietnam that employ workers under labor contracts.
Foreign-invested enterprises in Vietnam, when applying the regional minimum wage, must ensure knot lower than the regional minimum wage for employees doing the simplest jobs.
Tax-free incomes of foreign workers #
When finalizing personal income tax (PIT), foreign workers with taxable income will have to declare taxable incomes in the tax period.
However, some of the following incomes will not be subject to PIT.
1. Expenses for clothing, lunch, business trip, telephone:
For employees working in business organizations and representative offices, the applicable rate of payment as follows is classified as non-PIT taxable income.
1.1. Costume money
Fees for clothes that are exempt from PIT are as follows:
The expenses for clothing in kind for employees without invoices or vouchers shall be included in the expenses;
In cash for employees exceeding 05 (five) million VND/person/year.
Expenses for costumes in both cash and in kind, the maximum expenditure for cash expenses does not exceed 05 (five) million VND/person/year. In kind, invoices and vouchers must be provided.
1.2. Lunch and mid-shift meals
The money for mid-shift meals and lunches is provided by the employer to organize mid-shift meals and lunches for employees.
If the company does not organize cooking, the maximum amount of money spent on mid-shift meals for employees does not exceed 730.000 VND/person/month.
1.3. Business fee
In case the company has advanced travel, accommodation and allowances for employees on business trips and strictly complies with the financial regulations or internal regulations of the company, the travel and accommodation advances This allowance is exempt from PIT.
Thus, if the financial regulations and internal regulations of the company specify the level of work-trip allowances, they will be exempt from PIT according to such regulations.
1.4. Telephone fee
According to the law, phone bill is an income that is not included in the taxable income.
Enterprises need to stipulate the employee's mobile phone allowance. If the actual phone bill is higher than the prescribed amount of the business, the higher part will be subject to PIT.
2. Allowances and subsidies not included in PIT taxable income:
Toxic and dangerous allowances for industries, occupations or jobs in the workplace with toxic and dangerous elements.
Attraction allowance, regional allowance.
Allowance for unexpected difficulties, allowance for labor accident, occupational disease, lump-sum allowance for childbirth or child adoption, maternity allowance, convalescence allowance, post-maternity rehabilitation …
Subsidies for the beneficiaries of social protection.
One-time allowance for individuals when they move to an area with extremely difficult socio-economic conditions.
Industry-specific allowances.
3. Money for shuttle bus, money to buy air tickets
Expenses for transportation to and from work.
The amount of money for buying round-trip air tickets paid for (or paid) by the employer for the foreign employee working in Vietnam, the Vietnamese employee working abroad on his/her leave of absence. once a year.
4. Bonuses are not subject to PIT
Bonuses attached to titles conferred by the State, including bonuses attached to emulation titles and other forms of commendation in accordance with the law on emulation and commendation.
Bonuses are accompanied by national and international awards recognized by the State of Vietnam.
Bonuses for technical improvements, inventions and inventions recognized by competent State agencies.
Bonuses for detecting and reporting violations of the law to competent State agencies.
5. Cash or non-monetary benefits
If the employer buys the employee an optional insurance product without accruing insurance premiums, the premium for this insurance product is not included in the PIT taxable income.
Membership fee: In case the card is used together, without the name of the individual or group of individuals using it, it is not included in taxable income.
6. Other benefits
The employer's support for critical illness examination and treatment for the employee himself and the employee's relatives.
Tuition fees for children of foreign workers working in Vietnam to study in Vietnam, children of Vietnamese workers working abroad to study abroad from preschool to high school paid for by the employer.
The money received is paid by the organization or individual to pay tribute and funeral expenses to themselves and the employee's family.
Above are the incomes that are not subject to PIT that employees need to know, in order to calculate the exact tax rate that they have to pay..
Personal income tax for foreign workers #
The way to calculate personal income tax (TNC) for foreign workers is as follows:
Personal Income Tax (PIT) of foreign workers in Vietnam is an issue that receives a lot of attention from foreign investors and workers when participating in business, investment and labor. operating in the Vietnamese market.
To determine how to calculate PIT of a foreign worker, it is first necessary to determine whether he is a resident individual or a non-resident individual in Vietnam.
How to calculate personal income tax of resident individuals:
1.1 Bases for determining resident individuals:
a) Being present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the first day of presence in Vietnam, in which the arrival and departure dates are counted as one (01) day. . The date of arrival and departure is based on the certification of the immigration authority on the passport (or travel document) of the individual upon arrival and departure from Vietnam. In case of entry and exit on the same day, it will be counted as one day of residence.
An individual present in Vietnam under the guidance at this point is his or her presence in the Vietnamese territory.
b) Having a regular place of residence in Vietnam in one of the following two cases:
b.1) Having a regular place of residence as prescribed by the law on residence:
b.1.1) For Vietnamese citizens: permanent residence is a place where an individual lives regularly and stably for an indefinite period at a certain place of residence and has registered his/her permanent residence in accordance with the law on residence. reside.
b.1.2) For foreigners: the place of permanent residence is the place of permanent residence stated in the permanent residence card or the place of temporary residence when applying for a temporary residence card issued by a competent agency of the Ministry of Public Security.
b.2) Having a rented house to live in in Vietnam in accordance with the law on housing, with the term of the lease contract from 183 days or more in the tax year, specifically as follows:
b.2.1) Individuals who have not or have not had a regular place of residence as guided at Point b.1, Clause 1 of this Article, but have a total of 183 days or more of renting a house to live in under the lease contracts in the year calculated Tax is also determined as a resident, even in the case of renting a house in many places.
b.2.2) Houses rented for accommodation include hotels, guest houses, motels, inns, workplaces, office buildings, etc., regardless of self-employed individuals or users. labor hire for employees.
In case an individual has a regular place of residence in Vietnam as prescribed in this Clause but is actually present in Vietnam for less than 183 days in a tax year and he cannot prove that he/she is a resident of any country, the that individual is an individual residing in Vietnam.
Proof of being a resident of another country is based on the Certificate of Residence. In case an individual belongs to a country or territory that has signed a tax agreement with Vietnam that does not have regulations on granting a Certificate of Residence, the individual shall provide a photocopy of his/her passport to prove the period of residence.
1.2 Basis for determining taxable income of resident individuals:
For resident individuals, taxable income is income generated inside and outside the territory of Vietnam, regardless of where the income is paid.
For individuals who are citizens of countries and territories that have signed an Agreement with Vietnam on avoidance of double taxation and prevention of tax evasion with respect to taxes on income and are resident individuals In Vietnam, the personal income tax liability is calculated from the month of arrival in Vietnam in the case that the individual is present in Vietnam for the first time to the month of termination of the labor contract and leaves Vietnam (in full monthly basis). do not have to carry out consular certification procedures to be exempt from double taxation under the Agreement on Avoiding Duplicate Taxation between the two countries.
1.3 Formula for calculating PIT of resident individuals:
PIT = Taxable income * Tax rate
In which:
- Taxable income = Taxable income – Deductions
- Taxable income = Total income – Tax exempt income
- Total income includes income from wages, salaries and other incomes of the nature of wages and salaries received by foreign workers in the tax period.
- Exempt income is income that is not subject to personal income tax.
- Deductions are amounts deducted from an individual's taxable income before determining taxable income from salaries, wages, and business. Including: family deduction, insurance premium deduction, voluntary retirement fund, charity contribution deduction.
- Tax:
- For foreign workers who are resident individuals who sign labor contracts with a term of 3 months or more: partial progressive tax rates will be applied (each part of income will have a different tax rate, the higher the income will be). the higher the tax rate).
tax bracket | Taxable income in 1 year (VND) | Taxable income in 1 month (VND) | 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 |
For foreign workers who are resident individuals who sign labor contracts with a term of less than 3 months or do not sign contracts: the tax rate of 10% of total income will be applied.
How to calculate personal income tax of non-resident individuals:
2.1. Bases for identifying non-resident individuals:
Being an individual who does not meet any of the conditions in Clause 1, Article 1 of Circular 111/2013/TT-BTC.
2.2. Basis for determining taxable income of non-resident individuals:
Taxable income of a non-resident individual is income generated in Vietnam, regardless of where the income is paid and received.
2.3. Formula for calculating PIT of non-resident individuals:
PIT = Taxable income * Tax rate of 20%
In which:
Taxable income from salaries and wages of non-resident individuals is determined as taxable income from salaries and wages of resident individuals.
The determination of personal income taxable income from salaries and wages in Vietnam in case a non-resident individual works in Vietnam and abroad at the same time but cannot separate the income generated in Vietnam. Nam does it according to the following formula:
a) In case a foreign individual is not present in Vietnam:
Total income generated in Vietnam | = | Number of working days for work in Vietnam | x | Income from wages, global wages (before tax) | + | Other taxable income (before tax) arising in Vietnam |
Total number of working days in the year |
In which: The total number of working days in a year is calculated according to the regime specified in the Labor Code of Vietnam.
b) For cases where foreigners are present in Vietnam:
Total income generated in Vietnam | = | Number of days in Vietnam | x | Income from wages, global wages (before tax) | + | Other taxable income (before tax) arising in Vietnam |
365 day |
Other taxable incomes (before tax) arising in Vietnam at points a, b above are other monetary or non-monetary benefits that employees enjoy in addition to salaries and wages paid by the employer. workers pay or pay on behalf of employees.
2.4. Responsibilities of enterprises when paying salaries to non-resident individuals:
Organizations and individuals in Vietnam that pay taxable incomes to foreign workers being non-residents are responsible for withholding personal income tax before paying income.
