Are increased pension benefits subject to personal income tax in Vietnam?

Are increased pension benefits subject to personal income tax (PIT) in Vietnam?

Pursuant to the provisions in Article 4 of the 2007 Law on Personal Income Tax (amended by Clause 2, Article 1 of the 2012 Amended Law on Personal Income Tax, supplemented by Clause 3, Article 2 of the 2014 Law on Amending Tax Laws), tax-exempt income includes:

- Income from the transfer of real estate between spouses; biological parents and children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

- Income from the transfer of residential houses, right to use homestead land, and assets attached to homestead land of individuals in cases where individuals have only one residential house or homestead land.

- Income from the value of land use rights allocated by the State to individuals.

- Income from inheritance, gifts that are real estate between spouses; biological parents and children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

- Income of households and individuals directly engaged in agricultural, forestry, salt-making, aquaculture, and fishing production, not yet processed into other products, or only simply processed.

- Income from the conversion of agricultural land allocated by the State to households or individuals for production.

- Income from interest on deposits at credit institutions, from life insurance contracts.

- Income from remittances.

- Night shift and overtime wages that are higher than daytime wages and wages during legal working hours.

- Pensions paid by the Social Insurance Fund; pensions paid by voluntary pension funds on a monthly basis.

- Income from scholarships, including:

+ Scholarships received from the state budget;

+ Scholarships received from domestic and foreign organizations under their educational support programs.

- Income from compensation of life and non-life insurance contracts, compensation for labor accidents, state compensation, and other compensations as prescribed by law.

- Income from charitable funds approved or recognized by competent state agencies, operating for charitable, humanitarian, non-profit purposes.

- Income from foreign aid for charitable, humanitarian purposes, whether governmental or non-governmental, approved by competent state agencies.

- Income from wages and salaries of Vietnamese seafarers working for foreign shipping companies or Vietnamese shipping companies engaged in international transport.

- Income of individuals who are ship owners, individuals entitled to use ships, and individuals working on ships from supplying goods and services directly serving off-shore fishing activities.

Thus, pension benefits are considered tax-exempt income. Therefore, even if pension benefits are increased, pension recipients are not required to pay PIT.

Are increased pension benefits subject to personal income tax in Vietnam? (Image from the Internet)

How much is the monthly pension for participants in compulsory social insurance in Vietnam from July 1, 2025?

Monthly pension amounts starting July 1, 2025, for participants in compulsory social insurance are stipulated in Article 66 of the 2024 Law on Social Insurance as follows:

(1) The monthly pension for those who qualify under Article 64 of the 2024 Law on Social Insurance is calculated as follows:

- For female workers, it is equal to 45% of the average wage used as the basis for social insurance contributions as stipulated in Article 72 of the 2024 Law on Social Insurance corresponding to 15 years of social insurance contributions, with an additional 2% for each subsequent year of contributions, up to a maximum of 75%;

- For male workers, it is equal to 45% of the average wage used as the basis for social insurance contributions as stipulated in Article 72, corresponding to 20 years of social insurance contributions, with an additional 2% for each subsequent year of contributions, up to a maximum of 75%.

In cases where male workers have contributed to social insurance for 15 to less than 20 years, the monthly pension equals 40% of the average wage used as the basis for social insurance contributions as stipulated in Article 72 for 15 years of social insurance contributions, with an additional 1% for each subsequent year of contributions.

(2) The monthly pension for individuals working in certain specific occupations and specialties within the people's armed forces, as regulated by the Government of Vietnam. Funding for implementation is sourced from the state budget.

(3) The monthly pension for those who qualify under Article 65 of the 2024 Law on Social Insurance is calculated according to (1), with a 2% reduction for each year of early retirement before the stipulated age.

For early retirement of less than 6 months, the percentage of pension is not reduced. For 6 to less than 12 months, the reduction is 1%.

(4) Calculation of the monthly pension for workers eligible for a pension but with social insurance contributions under international treaties that the Socialist Republic of Vietnam is a party to but with less than 15 years of contributions in Vietnam is 2.25% of the average wage used as the basis for social insurance contributions per year as stipulated in Article 72.

How much is the monthly pension for participants in voluntary social insurance in Vietnam from July 1, 2025?

Monthly pension amounts starting July 1, 2025, for participants in voluntary social insurance are stipulated in Clause 1, Article 99 of the 2024 Law on Social Insurance as follows:

(1) The monthly pension for those who qualify under Article 98 of the 2024 Law on Social Insurance is calculated as follows:

- For female workers, it is equal to 45% of the average income used as the basis for social insurance contributions as stipulated in Article 104 of the 2024 Law on Social Insurance corresponding to 15 years of social insurance contributions, with an additional 2% for each subsequent year of contributions, up to a maximum of 75%;

- For male workers, it is equal to 45% of the average income used as the basis for social insurance contributions as stipulated in Article 104, corresponding to 20 years of social insurance contributions, with an additional 2% for each subsequent year of contributions, up to a maximum of 75%.

In cases where male workers have contributed to social insurance for 15 to less than 20 years, the monthly pension equals 40% of the average income used as the basis for social insurance contributions as stipulated in Article 104 for 15 years of social insurance contributions, with an additional 1% for each subsequent year.

(2) Calculation of the monthly pension for workers eligible for a pension, with social insurance contributions under international agreements to which the Socialist Republic of Vietnam is a party, but less than 15 years of contributions in Vietnam, is 2.25% of the average income used as the basis for social insurance contributions per year as stipulated in Article 104.