Are the social insurance premiums subject to personal income tax in Vietnam?

Are the social insurance premiums subject to personal income tax in Vietnam?

According to Clause 2, Article 9 of Circular 111/2013/TT-BTC, the provisions related to personal income tax for individual business in this Article were annulled by Clause 6, Article 25 of Circular 92/2015/TT-BTC and amended by Clause 6, Article 15 of Circular 92/2015/TT-BTC, which specifically regulate deductions as follows:

Deductions

...

2. Deductions for insurance contributions, voluntary pension funds

a) Insurance contributions include: social insurance, health insurance, unemployment insurance, professional liability insurance for certain professions required to participate in mandatory insurance.

b) The contribution level to voluntary pension fund, voluntary pension insurance purchase is deductible from taxable income according to actual expenses but not exceeding one (01) million VND/month for workers participating in voluntary pension products as guided by the Ministry of Finance, including amounts contributed by the employer for the employee and the amounts the employee self-contributes (if any), even in the case of participating in multiple funds. The basis for determining deductible income is the photocopy of the payment (or fee) receipt issued by the voluntary pension fund, insurer.

c) Foreigners residing in Vietnam, Vietnamese individuals residing but working abroad who have income from business, salaries, wages abroad who have participated in mandatory insurance contributions according to the regulations of the country where the individual resides or works, similar to the regulations of Vietnamese law such as social insurance, health insurance, unemployment insurance, mandatory professional liability insurance, and other mandatory insurances (if any) shall be deductible from taxable income from business, salaries, wages when calculating personal income tax.

...

Therefore, according to the above regulation, social insurance premiumss will be deducted when calculating PIT.

Are the social insurance premiums subject to personal income tax in Vietnam? (Image from the Internet)

Which income is exempt from personal income tax in Vietnam?

According to Article 4 of the Law on Personal Income Tax 2007, amended by Clause 3, Article 2 of the Law on Amending the Law on Personal Income Tax 2012 and supplemented by Clause 3, Article 2 of the Law Amending the Laws on Taxation 2014, the following personal incomes are exempt from personal income tax:

- Income from real estate transfer between spouses; biological parents with biological children; adoptive parents with adopted children; parents-in-law with daughters-in-law; parents-in-law with sons-in-law; grandparents with grandchildren; siblings.

- Income from transferring housing, the right to use homestead land, and assets attached to homestead land of an individual if that individual owns only one housing, homestead land.

- Income from the value of land use rights of an individual allocated land by the State.

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

- Income of households, individuals directly engaged in agricultural, forestry production, salt making, aquaculture, catching fisheries that have not been processed into other products or only undergone normal preliminary processing.

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

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

- Income from remittances.

- The salary difference for working at night, overtime paid higher than daytime working, working hours as prescribed by law.

- Retirement pensions paid from the Social Insurance Fund; monthly retirement pension paid by voluntary pension fund.

- Income from scholarships, including:

+ Scholarships received from the state budget;

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

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

- Income received from charitable fundings that are allowed or recognized by competent state agencies, operating for charity, humanitarian, non-profit purposes.

- Income received from foreign aid for charity, humanitarian purposes in the form of government and non-government approved by competent state agencies.

- Income from salaries, wages of crew members who are Vietnamese working for foreign shipping lines or Vietnamese shipping lines conducting international transport.

- Income of individuals who are shipowners, individuals who have the right to use the ship, and individuals working on ships from providing goods and services directly serving offshore fishing.

When shall PIT be refunded in Vietnam in 2024?

Based on Clause 2, Article 8 of the Law on Personal Income Tax 2007, the following cases are eligible for PIT refund (hereinafter referred to as PIT):

- The amount of PIT paid is greater than the amount of PIT payable;

- Individuals have paid PIT but have taxable income not reaching the level of tax payment;

- Other cases as decided by competent state agencies.