RESIDENTS – PIT ON INCOME FROM

Capital investment Capital transfer Real estate transfer Royalties Franchises Winning Inheritance Gifts
prizes
Taxable Interest from Income from Income from + Intellectual Franchise + Lottery + Securities / bonds /
income + loans + Capital contribution + Transfer of right to property right contracts, + Betting debentures …
+ bonds, transfer use / own / lease objects including + Casino + Capital share
debentures… by sub- … + Real property / other
domestic org. + Securities transfer + Authorization of + Transfer of franchising assets with ownership /
(include foreign org. management (has technical use right registration
in VN) rights like the owner) know-how

Dividends paid (cash + Real estate

/ shares) contribution as capital
to establish enterprises
Increased portion of / increase production /
value of capital business capital
contribution

Non- Income from

taxable investment of
income + Private companies
+ Single member
LLC

Tax- Interest from Income from real Within family

exempt + Bank deposit estate transfer
+ Insurance + Within family
+ Bonds issued by + 1 residential house
VN government + Land by the Sate

Tax Cash received + Capital contribution + Seller pays tax: Cash received Cash Cash When conduct
point transfer: transfer contract effective date of received received procedures for transfer of
 Capital investment Capital transfer Real estate transfer Royalties Franchises Winning Inheritance Gifts
prizes
EXCEPTION takes effect transfer contract ownership
+ Increased portion:
+ Shares paid as + Securities transfer: + Buyer pays tax on
dividends: when *of a public company, behalf of seller: time
transfer traded at the Stock of ownership
Exchange: cash received registration

*of a public company, not + Receive off-the-plan

traded at the Stock house / land: time of
Exchange, transferred via submitting tax
VN Securities Depository: declaration documents
ownership transferred

*others: transfer contract

takes effect

PIT Assessable income × + Capital contribution Transfer price × 2% (Taxable income – 10M) (Taxable income – 10M)
Calcula 5% transfer × 5% × 10%
tion = (Transfer price –
Purchase price – Related
expenses) × 20%

+ Securities transfer =
Transfer price × 0.1%

Special  Receive shares paid as dividends  Transfer price  Assessable income Same as Royalties and Franchises
cases / + Delay PIT on Income from capital investment + If contract doesn’t + Irrespective of the number
Notes + When transfer shares: PIT on specify transfer price of times payment
Or à 10M deduction is applied
 Capital investment Capital transfer Real estate transfer Royalties Franchises Winning Inheritance Gifts
prizes
1. Income from Capital investment = Shares + If price written in on the total income
received × Face value × 5% contract < price
imposed by the + Transfer to the same user,
2. Income from Securities transfer = Transfer People’s Committee but in different contracts
price × 0.1% à use price imposed à Total income in all
by the People’s contracts – 10M
 Calculation of PIT on Income from Committee
Capital investment when transfer shares  Co-creation
+ If transfer price < nominal price: + 10M deduction is applied
à use market price on the total income, NOT
+ If transfer price > nominal price: after income distribution to
à use nominal price each individual

 Distinguish
+ Capital contribution: limited liability company
+ Securities: joint-stock company

RESIDENTS – PIT ON INCOME BEING SALARY

Tax point: When employer paid such salary to employee / Tax rate: Progressive tax rate
TAX EXEMPT
a) Non-taxable income

Allowances
1. Meal shift In kind: no cap
In cash: cap at 730K / month
2. Per diem In state body: 200K / day
Other org.: depend on internal policy
3. Clothes In kind: no cap
In cash: cap at 5M / year
Expats working in VN / Vietnamese working overseas
1. Return airfare – Home For employees only
1 trip / year Specified in labor contract
Invoice under employer name
2. Children school fee Specified in labor contract
From kindergarten to high school
Invoice under employer name
3. One-way relocation allowance Specified in labor contract / collective labor agreement
Other allowances
1. Mobilization of foreigners Petroleum or mineral exploration industry
Specified in labor contract
Supported by air-ticket
2. Subsidy for intensive disease For employees or relatives
Amount exempted = Actual expenses (≤ hospital fee) – Fees covered by insurance
3. For state officers / employees in special Transportation allowance
industries
4. Bonus with recognition
5. Petrol, telephone, office supply In line with state / corporate regulations
6. For collective staff Not specifically referred to name of beneficiary / group of beneficiaries à non-taxable
(travel, tax services, member fee, insurance Or else à taxable
without interest cumulative, training,
entertainment, car allowance)
 7. Paid from compulsory insurance funds
8. Others: relevant training, car allowance Paid to individuals
from home to work … In line with corporate regulation / Specified in labor contract

b) Special treatment income

1. Housing allowance In cash: Fully taxable

In kind (paid by employer, under employer name):
à Taxable allowance = The lower between
+ Actual housing allowance
+ 15% total other taxable income
2. Overtime / Nigh-shift allowance First 100% payment: taxable
Extra % payment: exempt
3. Shares Tax on market price / recent book value when disposal

DEDUCTIONS

1. Self-deduction 11M / month

2. Dependents 4.4M / month / person
* Children ≤ 18
* Children > 18
+ handicapped, unable to work
+ study university / high school and have no income or avg. income ≤ 1M / month

* Working age but handicapped, unable to work

and have no income or avg. income ≤ 1M / month

* Out of working age and have no income or avg. income ≤ 1M / month

3. Compulsory insurance (SHUI) Deductible amount / month = The lower between
+ 10.5% × Actual salary
+ 10.5% × 20 × 1.8M
4. Voluntary pension fund Maximum deductible amount: 1M / month
 5. Contribution to Maximum deductible amount: ≤ Tax assessable from Business income + Income being
Charitarian – Humanitarian – Study salary
encouragement funds

CALCULATION

Gross salary Net salary

Gross salary Net salary
+ Taxable allowances + Taxable allowances
+ Taxable housing allowance – Deductions
– Deductions = Net income before housing allowance
= Assessable income × Rate = PIT à Gross up = Gross income before housing allowance
+ Deductions
= Total taxable income before housing allowance

Identify Taxable housing allowance

Net income before housing allowance

+ Taxable housing allowance
= Net income including housing allowance
à Gross up = Gross assessable income
× Rate = PIT

2 SOURCES OF INCOME IN VN

2 REGULAR INCOMES – SAME TIME 1 REGULAR INCOME – 1 VISITED INCOME 2 REGULAR INCOME – DIFFERENT TIME
Source 1: Regular income: Source 1:
+ Deductions + Deductions + Deductions
+ Progressive tax rate + Progressive tax rate + Progressive tax rate

Source 2: Visited income: < 3 months Source 2:

+ No deductions + No deductions + Deductions
+ Progressive tax rate + 10% + Progressive tax rate

1 SOURCE OF INCOME IN VN & 1 SOURCE OF INCOME OVERSEA

Taxable income from oversea A

+ Taxable income in VN B
= Total taxable income (A + B) C
– Deductions (D)
= Total assessable income (C – D) E
à PIT (formula) F
A (G)
– Tax paid oversea (The lower between Tax in VN for oversea income: F × and Tax oversea for oversea income
C H
= PIT payable (F – G)

DOUBLE TAX TREATIES

Principles for application + If there are disparities between Agreement and domestic law
à apply the Agreement
+ The Agreement: not create new tax obligations / impose heavier
tax obligations than the domestic laws
VN right to tax PIT Income for working in VN earned by a resident individual of a
foreign country having DTA with VN à Tax credit method
Exemption if satisfies ALL conditions 1. Present in VN ≤ 183 days in 12 months
2. Employer: not resident taxpayer in VN
3. Permanent establishment: not in VN

RESIDENTS – PIT ON INCOME FROM BUSINESS

Applicable person + Independent practitioners
+ Lottery / insurance / multi-level-marketing agents
+ Business cooperation with org.
+ Agricultural / forestry / salt production
+ E-commerce
+ Lease out property
+ Transfer VN domains “.vn”
+ Declare and pay tax on behalf of others
Principles For calculation of VAT & PIT
Revenue ≤ 100M / year: No tax
Group of

TAXATION OVERALL

Origin and evolution of taxation Associated with Origin and evolution of

 + Government
+ The commodity – monetary economy
Definition + Compulsory payment
+ Levied by governments on individuals and corporations
+ Payments levels and deadlines: prescribed by law
+ For public welfare purposes

≠ Fees: not compulsory, sometimes not used for welfare purposes

Functions and purposes 1. Economic
+ Generate financial resources for the gov (tax = main source of revenue)
+ Regulate the macro-economy – 4 aims: promote investments & economic
growth; stabilize price & curb inflation; redistribute social income and wealth;
protect domestic production & facilitate international economic integration

2. Social
+ Ensure equality, redistribution of income
+ Efficient tax: low collection cost
+ Compliance cost

3. Environment
+ Taxation moves slowly to accommodate environmental concerns

TAX CLASSIFICATION – research and sort different taxes in a tax system according to certain criteria
Purposes:
+ Tax policy planning
+ Tax administration

By taxation bases Income tax Tax base: income level, levied on sources of income
E.g.: CIT, PIT
 Capital tax (asset tax) Tax base: asset value, levied on transfer price of capital
Consumption tax Tax base: proportion of income used for current consumption
E.g.: VAT, excise tax, import tax, export tax
By tax methods Direct tax Levied on income / assets of taxpayers
Indirect tax Levied on prices of goods / services consumed
Paid by consumers à discourage spending, encourage savings
Lower / nil rates on essentials
E.g.: VAT, excise tax
By the relationship Progressive rate Proportion of income paid over tax increases as income increases
between tax and Target who can afford to pay
income Starting threshold / rates can be adjusted à ensure low-income
earners pay little / no tax
Regressive rate Proportion of income paid over tax decreases as income increases
Flat rate Fair treatment
By calculation Specific rate A fixed certain amount of money (e.g. 10K / good)
Ad valorem rate Shown in form of percentage (e.g. 10% / good)
By the right to tax Central tax (national tax)
Local tax