Residents of Vietnam are taxed on their worldwide income, regardless of where it is paid or received. Employment income is taxed at progressive rates, while non-employment income is taxed at a variety of different rates. However, this will depend on any double taxation agreement that might apply. Non-residents are taxed at a flat rate on income from working in Vietnam or from Vietnam-related activities, and at various other rates on their non-employment income.
Vietnam Individual Income Tax Rates
Vietnam’s individual income tax rates are progressive, with tax brackets ranging from 5% to 35%. Taxable incomes are divided into eight brackets, with each bracket being taxed at a different rate. Vietnam’s individual income tax rates apply to both resident and non-resident taxpayers. Vietnam residents are taxed on their worldwide income, while non-residents are only taxed on Vietnam-source income. Taxable income includes wages, salaries, bonuses, commissions, rent, and other forms of compensation. Vietnam has Double Taxation Agreements (DTAs) with several countries, which may exempt or reduce the amount of tax payable on foreign-source income. For example, the Vietnam-Singapore DTA eliminates withholding tax on dividends and interest payments. Vietnam also has a number of Free Trade Agreements (FTAs), which provide preferential tax rates for certain categories of income. For example, the Vietnam-South Korea FTA provides a 0% tax rate on dividends and interest payments for qualifying investors. Vietnam’s individual income tax rates are among the lowest in Southeast Asia.
Wages & Salaries
|Bracket||Tax Rate||Annual Taxable Income (VND)||Quick Calculation (VND)|
|1||5%||0 to 60 million||3 million|
|2||10%||60 to 120 million||6 million|
|3||15%||120 to 216 million||14.4 million|
|4||20%||216 to 384 million||33.6 million|
|5||25%||384 to 624 million||60 million|
|6||30%||624 to 960 million||100.8 million|
|7||35%||Over 960 million||–|
Yearly income = 1 Billion VND
Bracket 1: 5% * 60 million = 3 million VND tax on for the first 60 million
Bracket 2: 10% * 60 million = 6 million VND tax on the next 60 million
Bracket 3: 15% * 96 million = 14.4 million VND tax on the next 96 million
Bracket 4: 20% * 168 million = 33.6 million VND tax on the next 168 million
Bracket 5: 25% * 240 million = 60 million VND tax on the next 240 million
Bracket 6: 30% * 336 million = 100.8 million VND tax on the next 336 million
Bracket 7: 35% * 40 million = 14 million VND tax on the remaining 40 million
Total = 3 + 6 + 14.4 + 33.6 + 60 + 100.8 + 14 = 231.8 million VND tax due on an annual salary of 1 billion VND.
Allowances & Deductibles In Vietnam
Vietnam offers a number of allowances and deductions that can help to reduce the amount of tax that you owe. The personal allowance is a deduction that is available for single taxpayers and can deduct up to VND 11 million per month. The dependent allowance is a deduction that is available for taxpayers who have dependents and can deduct up to VND 4 million per month paper dependent.
Tax Residency In Vietnam
Vietnam’s tax residency rules are governed by Vietnam’s Tax Code. An individual is considered a tax resident in Vietnam if they satisfy any one of the following criteria:
– They have lived in Vietnam for 183 days or more in a 12-month period;
– They have a home or accommodation in Vietnam and live there for at least 30 days in a 12-month period;
– They have a spouse or dependent who is a Vietnamese tax resident; or
– They carry out economic activities in Vietnam and generate income from such activities.
Individuals who do not satisfy any of the above criteria are considered non-residents for tax purposes.
Vietnamese tax residents are subject to taxation on their worldwide income, while non-residents are only subject to tax on income sourced in Vietnam. For individuals who are considered residents, Vietnam taxes personal income at progressive rates ranging from 0% to 35%. For non-residents, Vietnam taxes personal income at a flat rate of 20%. Overseas income that is brought into Vietnam is also subject to taxation. However, an individual may be eligible for certain deductions and exemptions.
In order to qualify as a Vietnamese tax resident, individuals must file a self-assessment form and submit it to the tax authorities. Those who fail to correctly file their taxes may be subject to penalties.
Social Security In Vietnam
Vietnam has a social insurance system that is mandatory for all citizens and legal residents. The system provides health insurance, maternity benefits, disability benefits, survivorship benefits, and old-age pensions. Foreigners who work in Vietnam are also required to contribute to the social insurance system. Contributions are made through payroll deductions and are based on a percentage of an individual’s wages.
|Social Security||Employer Rate (% of salary)||Employee Rate (% of salary)|
Double Taxation Treaties
Vietnam has a network of double taxation treaties with over 80 countries. These treaties are designed to prevent double taxation of income earned in one country by residents of the other country. Under Vietnam’s domestic law, income earned by foreign nationals from sources within Vietnam is subject to Vietnam tax. However, if the foreign national is a resident of a country that has a double taxation treaty with Vietnam, they may be exempt from Vietnam tax on their income, or may be entitled to a reduced rate of tax. The specific rules depend on the particular treaty concerned. In order to claim treaty benefits, taxpayers must provide evidence of their residency status in the form of a valid passport or residency permit. Vietnam’s double taxation treaties typically contain provisions for the exchange of information between the tax authorities of the two countries, in order to help prevent tax evasion.
How NNRoad Can Help
NNRoad is a global Employer of Record & PEO provider with a base in Vietnam. We are able to advise you and your dispatched or payroll employees in Vietnam on their individual income taxes. For more information on our HR and payroll related services in Vietnam, please visit our Vietnam county services page or contact us directly.