PERSONAL INCOME TAX

LOGO
 Contents

1 OVERVIEW OF PERSONAL INCOME TAX

2 MAIN CONTENTS OF

PERSONAL INCOME TAX LAW

 1. OVERVIEW OF PIT

Definition

Income Tax (PIT) is a direct tax levied on

individual taxable income in a tax year
 1. OVERVIEW OF PIT

Characteristics

• Is a direct tax
• Normally levied using progresstive method.
• Do not distort the prices of goods and services.
 LEGAL DOCUMENTS

 Vietnam Law 04-2007: Law on Personal Income Tax

 Vietnam Law 26-2012: Amended Law on Personal
Income Tax
 Vietnam Decree 65-2013: Decree on Personal
Income Tax
 Vietnam Circular 111-2013: Circular on Personal
Income Tax
 Vietnam Law 71-2014
 Vietnam Decree 91-2014
 Vietnam Circular 151-2014 and 92-2015
 2. MAIN CONTENTS OF PIT LAW IN VIETNAM

2.1. Scope of application

2.2. Taxation bases

2.3. Tax registration, declaration & submission

 2.1. Scope of application

a. Taxable incomes
b. Non-taxable incomes
c. Taxpayers
 a. Taxable incomes

1. Incomes from business

2. Incomes from wages and remunerations
3. Incomes from capital investment
4. Incomes from capital transfer
5. Incomes from real estate transfer
6. Incomes from winning prizes
7. Incomes from copyright
8. Incomes from franchising
9. Incomes from inheritance
10. Incomes from receipt of gifts
 Incomes from business

- Incomes from production and sale of goods and

services.
- Incomes from freelance works of individuals in
the fields that are licensed or certificated as
prescribed by law.
Note: this type of income does not include individual
income from business of 100 mil. VND or under
 Incomes from wages and remunerations

- Wages & remumnerations

- Allowances and benefits
- Remunerations in forms of agent commission,
brokerage commission, payments for participation
in projects and scheme.
- Remunerations for participation in business
association, Boards of Directors, Control Boards, ...
- Other benefits in cash or not in cash
- Rewards in cash or not in cash
 b. Tax-exempt incomes (14)

1. Incomes from real estate transfer (including

future houses and constructions) between husband
and wife, parents and childrens, adoptive parents
and adopted children; parents-in-law and children-
in-law; grandparents and grand children, and
among siblings
 b. Tax-exempt incomes (14)

2. Incomes from transfering houses, rights to use

land and property on land of the person with only
one house, right to use land and property on land in
Vietnam
 b. Tax-exempt incomes (14)

3. Incomes from the person’s rights to use land

allocated by the State that is eligible for land levy
exemption or reduction.
 The person that transfers the area of land eligible
for exemption or reduction of land levies shall
declare and pay tax on the incomes from real
estate transfer
 b. Tax-exempt incomes (14)

4. Incomes from inherited real estate (including

future houses and constructions) between husband
and wife, parents and children; adoptive parents
and adopted children; parents-in-law and children-
in-law; grandparents and grand children, and
among siblings.
 b. Tax-exempt incomes

6. Incomes of households and individuals engaged in

agriculture, forestry, salt production and fishery.
7. Incomes from interest on deposits at credit
institutions; life insurance contracts or Government
bonds
8. Income from remittances: amount of money a
person receives from their relatives being Vietnamese
people residing abroad.
 b. Tax-exempt incomes

9. Incomes from additional payments for working

at night or working overtime,.
+ Identified based on the actual total payment for
working at night or overtime (-) the payment for an
ordinary working day.

10. Pensions paid by Social Insurance Fund or

from the voluntary pension fund.
 b. Tax-exempt incomes

11. Income from scholarships

. Funded by the government budgets
. Funded by Vietnamese and foreign organization

12. Incomes from indemnities under the contract

for life insurance, non-life insurance, or health
insurance
 b. Tax-exempt incomes

13. Income from non-profit charitable trusts

accredited by competent authorities, which aim for
charity, humanitarianism, and study
encouragement

14. Incomes from foreign aids for charitable and

humanitarian purposes
 Eg. 1

The wages of Mr. A on an ordinary working day is

40,000 VND/hour.

Calculate the tax-exempt incomes in the

following cases:
a/ When working overtime on a working day, he is
paid 60,000 VND/hour
b/ When working overtime on a holiday, he is paid
80,000 VND/hour.
 c. Taxpayers

 Residents in VN that have incomes earned

within or outside Vietnam’s teritory.
 Non-residents in VN have incomes earned
within Vietnam’s teritory.
 c. Taxpayers

A resident is a person that meets on of the

conditions below:
a) Has been present in Vietnam for 183 days or
longer in a calendar year, or:
b) Has a regular residence in Vietnam in one of
the two cases:
+ Has a regular residence registration
+ Rents a house in Vietnam under a contracts that
lasts 183 days or longer in a tax year.
 2.2. Taxation bases

 Residents
 Non-residents
 Residents

- Regular incomes: incomes from business,

wages & remunerations.
- Irregular incomes.
 Incomes from business

PIT
Turnover Tax rate
payable
(%)
s

+ Turnover: money received from sales of goods,

processing of goods, commisions and provision of
services in the tax year.
+ In case that individuals are not able to determine their
turnovers: turnover are determined by the tax authorities.
 Incomes from business

Tax rates (%)

Activities Tax rate (%)

1. Distribution and supplying of goods 0.5
2. Service provision, construction (exclusive 2-5
of materials
3. Production, transportation, services 1,5
provision associated with goods supply,
construction, inclusive of materials
4. Other business activities 1%
 Incomes from wages & remunerations

Assessable Taxable
Deductions
income income
 Taxable income

Sum of wages

remuneration Tax-
Taxable s and other exempt
income incomse incomes
considered
wages
 Eg. 3

Mr. A in the tax year has the following

incomes from wages and remunerations:
-Wages: 420 mil VND
-New year bonuses: 20 mil VND
-Wages for working overtime: 45 mil VND
(Mr. A is paid overtime 150% higher than
his ordinary wages)

Calculate the Taxable income of Mr. A

 Deductions

1 Deductions
for insurance
2 3
premiums Personal Deductible
and deductions charitable
contributions donations
to voluntary
pension fund
 Compulsory insurance premiums

• Social insurance
• Health insurance
• Unemployment insurance
 Deductions

Personal
deductions

For the For dependants

Taxpayer of the taxpayer

11 mil 4.4 mil

VND/person/ VND/person/month
month
 Who are the dependants?

The dependants are the ones that the taxpayer has the reponsibility to
provide for, who are:
- Outside working age; or
- Disable or incapable of work; or
- Have no income or low income (< 1 mil VND/month)

Including:
+ Children: children, adopted children, illegitimate childre, step
children,...
+ The taxpayer’s spouse
+ Taxpayer’s parents, parents-in-law
+ Other individuals : siblings, grand parents, aunts, uncles,
nephews, nieces,...
 Personal deduction rules

1 2
The deduction The number of
for a dependant dependants is
shall apply to declared by the
only one taxpayer (not
taxpayer in a tax limited)
year
 Deductions

Deductible charitable donations

Donations to the establishments that take care of

disadvantage children, the disabled and the
homeless elderly people.

Contributions to charitable, humanitarian and study

encouragement funds.
 Eg.

The taxable income of Mr. A in the tax year is

470 mil VND.
- In the year, Mr. A has paid compulsory
insurance premiums of 8 mil VND.
-Mr. A has registered 1 dependant (complied to
the regulations of dependants)
Calculate the assessible income of Mr. A?
 Tax rate

Progressive tax rate table

Assessible
Assessable income/year Tax rate
Level income/month
(mil VND) (%)
(mil VND)

1 Up to 60 Up 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 Over 960 Over 80 35
 PIT calculation method

PIT payable =
Σ(Assessible incometax-level× Tax ratetax-level)
 Eg.

In the tax year, Mrs. B has the following incomes from wages and
remunerations:
- Wages: 550 mil VND
- Benefits for senior officers: 20 mil VND
- New year bonuses: 20 mil VND
- Overtime payments: 60 mil VND (Mrs. B is paid overtime 150% higher than
her ordinary salary)
Given:
- The compulsory insurance preminum paid in the year: 8 mil VND
- Mrs. B has a 2 year-old son, a 6 year-old daughter, and a 20-year-old adopted
son currently in university. She is also supporting her mother, age 48 with no
pension.
- In the year, Mrs. B has donated for areas suffered from flooding: 2 mil VND.
- The tax policy of PIT has not changed over the year.
Calculate the PIT payable of Mrs. B in the tax year?
 Irregular incomes

Tax rate
Assessible incomes
(%)

1. Incomes from capital investments 5

2. Incomes from copy right, franchising (the excess over 10

5
mil/time)

3. Incomes from winning prizes (the excess over 10 mil/time) 10

4. Incomes from inheritance, gifts (the excess over 10 mil/time) 10

5. Incomes from capital transfer 20

- Incomes from securities transfer 0.1

6. Incomes from real estate transfer 2

 Incomes from capital transfer

PIT Assessible Tax rate

payable inome (20%)

In which:
Assessible income = Transfer price – Purchase price – Deductible
expenses of the transfer
 Incomes from securities transfer

• Based on the transfer value

Securities
PIT
transfer 1%
payable
value
 Incomes from real estate transfer

Based on the transfer value

PIT Transfer
price 2%
payable
 Irregular income – Example 1

In 2019, Mrs Lan has the following incomes and transaction

regarding her sercurities investment
. Hold 120.000 PDL shares until 31/3/2019.
. 15/4/2019: receive 20.000 PDL shares as dividends for the
120.000 PDL shares held.
. 15/4/2019: receive 120 million dong as dividend in cash.
. 31/10/2019: sold 50.000 PDL shares with the price of
20.000 dong/share.
. The normimal price of PDL share is 10.000 dong/share
Calculate PIT payable on investment income and
income from securities transfer of Mrs Lan
 Irregular income – Example 2

Mr Tien Dung, 22 years old, is a football player in

national team of Vietnam. In 2017, Mr Tien Dung
receive the following gifts as the national team won
the U-23 Asian Cup:
. A car with the market price of 800 mill dong from a
car company
. Free air tickets from Vietnam airlines with the total
value not exceeding 500 million dong.

Calculate the PIT payables for Mr. Tien Dung in

2017
 Irregular income – Example 3

In 2020, Mr. Minh is informed that he will inherit a

building in Ho Chi Minh City with a market value of
30 billion VND from his aunt, who died in June
2020.
In July 2020, when the inheritance is received, he
decided to sell the bulding with the price of 35
billion VND, and bought a villa in Hanoi.

. Calculate the PIT payables for Mr. Minh in 2020

 Taxation bases – Non-residents

Types of taxable incomes Tax rate

(%)
Incomes from business
+ Goods sale 1
+ Service privision 5
+ other businesses 2
Incomes from wages and remunerations 20

Incomes from capital investments 5

Incomes from capital transfer 0,1

Incomes from real estate transfer 2

Incomes from copyright, franchising (the excess of 10 mil/time) 5

Incomes from winning prizes, inheritance, gifts (the excess of 10
10
mil/time)
 Non-residents

1. Incomes from business

PIT
Revenue Tax rate
payable

Tax rate:
 Goods sale: 1%;
 Service provision: 5%;
• Other business activities: 2%
 Non-residents

2. Incomes from wages

PIT payable = Taxable income * tax rate (20%)
3. Incomes from capital investments
PIT payable = Total investment value * (5%)
4. Incomes from capital transfer
PIT payable = Total transfer value * (0,1%)
 Non-residents

5. Incomes from real estate transfer

PIT payable = Transfer value * 2%
6. Incomes from copyright, franchising
PIT payable = Taxable income (>10mil) * (5%)
7. Incomes from winning prizes, inheritance,
gifts
PIT payable = Taxable income (>10 mil) * (10%)
 2.3 Tax registration, declaration, submission and
settlement

Text book
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