Are persons having a place of habitual residence in Vietnam required to pay personal income tax?

Are persons having a place of habitual residence in Vietnam required to pay personal income tax?

Pursuant to Article 2 of the 2007 Personal Income Tax Law which stipulates the subjects to tax as follows:

Subjects to Tax

1. Subjects of personal income tax include resident individuals earning taxable income specified in Article 3 of this Law within and outside the territory of Vietnam, and non-resident individuals earning taxable income specified in Article 3 of this Law within the territory of Vietnam.

2. Resident individuals are those who meet one of the following conditions:

a) Being present in Vietnam for 183 days or more in a calendar year or within 12 consecutive months from the first day of their presence in Vietnam;

b) Having a place of habitual residence in Vietnam, including a registered permanent residence or a rented house in Vietnam according to a fixed-term lease contract.

3. Non-resident individuals are those who do not meet the conditions stipulated in Clause 2 of this Article.

Therefore, according to the above regulations, individuals who have a place of habitual residence in Vietnam, including a registered permanent residence or a rented house in Vietnam under a fixed-term lease contract, are considered residents.

Furthermore, if these residents generate taxable income, they will be required to pay personal income tax.

Are persons having a place of habitual residence in Vietnam required to pay personal income tax? (Image from Internet)

When will residents with a place of habitual residence in Vietnam have to pay personal income tax?

As mentioned above, if these residents generate taxable income, they will be required to pay personal income tax.

To be specific: income types are described in Article 3 of the 2007 Personal Income Tax Law (amended by Clauses 1 and 2, Article 2 of the 2014 Law on Amending Tax Laws and amended by Clause 1, Article 1 of the 2012 Amended Personal Income Tax Law) as follows:

Taxable Income

Personal taxable income comprises the following types of income, excluding the income exempt from tax stipulated in Article 4 of this Law:

1. Income from business activities, including:

a) Income from manufacturing and trading goods and services;

b) Income from independent professional activities of individuals who have practice licenses or certificates as prescribed by law.

Income from business activities stipulated in this clause does not include the income of individuals with annual revenue of 100 million dong or less.

2. Income from salaries and wages, including:

a) Salaries, wages, and remunerations of salary or wage nature;

b) Allowances, subsidies, excluding allowances and subsidies as stipulated by law for persons with meritorious services; national defense and security allowances; occupational hazard and risk allowances for jobs with hazardous and dangerous conditions; attractiveness allowances, region allowances as stipulated by law; sudden difficulty allowances, occupational accident and disease allowances, one-time childbirth or adoption allowances, reduction in work capacity allowances, one-time retirement allowances, monthly survivor's allowances, and other allowances and subsidies as stipulated by the social insurance law; severance and job loss allowances as stipulated by the Labor Code; social protection allowances and other allowances and subsidies not of salary or wage nature as stipulated by the Government of Vietnam.

3. Income from capital investment, including:

a) Loan interest;

b) Dividend;

c) Income from capital investment in other forms, excluding income from Government of Vietnam bonds.

4. Income from capital transfers, including:

a) Income from transferring capital shares in economic entities;

b) Income from transferring securities;

c) Income from capital transfer in other forms.

5. Income from real estate transfer, including:

a) Income from transferring land use rights and assets attached to land;

b) Income from transferring ownership or use rights of residential housing;

c) Income from transferring lease rights of land and water surface;

d) Other incomes arising from real estate transfer in any form.

6. Income from winning prizes, including:

a) Lottery winnings;

b) Prizes from promotional activities;

c) Winnings from betting transactions;

d) Winnings from games, contests with prizes, and other prize-winning forms.

7. Income from copyrights, including:

a) Income from the transfer, assignment of intellectual property rights;

b) Income from technology transfer.

8. Income from franchises.

9. Income from inheritances, including securities, capital shares in economic entities, business establishments, real estate, and other assets subject to ownership or use registration.

10. Income from gifts, including securities, capital shares in economic entities, business establishments, real estate, and other assets subject to ownership or use registration.

The Government of Vietnam stipulates in detail and guides the implementation of this Article.

Thus, for the 10 cases above, residents with a place of habitual residence in Vietnam will have to pay personal income tax if income is generated from these activities.

Whats are cases of personal income tax reduction in Vietnam?

Pursuant to Article 5 of the 2007 Personal Income Tax Law as follows:

Tax Reduction

Taxpayers facing difficulties due to natural disasters, fires, accidents, or serious illnesses affecting their tax-paying ability shall be considered for tax reduction corresponding to the degree of damage but not exceeding the payable tax amount.

Therefore, taxpayers experiencing difficulties in the following cases will be eligible for tax reductions:

[1] Natural disasters

[2] Fires

[3] Accidents

[4] Serious illnesses

Affecting the tax-paying ability will be considered for a tax reduction corresponding to the degree of damage but not exceeding the payable tax amount.