Do individuals directly engaged in agricultural production pay personal income tax in Vietnam?

Do individuals directly engaged in agricultural production pay personal income tax in Vietnam?

Based on the provisions in Clause 5, Article 4 of Decree 65/2013/ND-CP (supplemented by Clause 6, Article 2 of Decree 12/2015/ND-CP) regarding tax-exempt income as follows:

Tax-Exempt Income

1. Income from the transfer of real estate (including houses, buildings formed in the future as per real estate business laws) between: Spouses; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and paternal grandchildren; maternal grandparents and maternal grandchildren; siblings.

2. Income from the transfer of houses, residential land use rights, and assets attached to the residential land use rights of individuals in cases where the transferor has only one house or one residential land use right in Vietnam.

Individuals eligible for tax exemption under this Clause must meet the following conditions:

a) At the time of transfer, the individual owns only one house or one residential land use right (including cases with houses or buildings attached to that land);

b) The ownership period or the right to use the house, residential land must be at least 183 days from the time of transfer;

c) The transfer includes the entire house or residential land use rights;

The determination of ownership and use rights for houses and residential land is based on the certificate of ownership and use rights. Individuals transferring houses or residential land must declare and be responsible for the accuracy of their declaration to the law. If an authorized body finds incorrect declarations, tax exemption will not be granted and legal action will be taken as stipulated by law.

3. Income from the value of land use rights given by the State without payment, or receiving land rent reductions as per the law.

4. Income from inheritance or gifts of real estate (including houses, buildings formed in the future as per real estate business laws) between: Spouses; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and paternal grandchildren; maternal grandparents and maternal grandchildren; siblings.

5. Income of households and individuals directly engaged in agricultural production, forestry, salt production, aquaculture, and fishing that has not been processed into other products or has only undergone primary processing.

Households and individuals engaged in the production defined in this Clause must satisfy the following conditions:

a) Have legal land or water surface use rights for production and directly participate in agricultural production, forestry, salt production, and aquaculture. For fishing, they must have ownership or use rights to boats, ships, and fishing vehicles and be directly engaged in fishing;

b) Reside at the locality where the agricultural production, forestry, salt production, aquaculture according to residency laws.

6. Income from the conversion of agricultural land use rights given by the State for production.

7. Income from bank deposits or credit institution interest, and interest from life insurance contracts.

8. Income from remittances.

9. The portion of night shift or overtime wages higher than daily or regular working wages according to the law.

10. Pension paid by the Social Insurance Fund as per the Social Insurance Law, monthly pensions from voluntary pension funds. Individuals residing or working in Vietnam are exempt from taxes on pensions paid by foreign sources.

11. Income from scholarships, including:

a) Scholarships from state budgets;

b) Scholarships from domestic and foreign organizations (including living costs) following the organization's support programs.

12. Life insurance, non-life insurance, health insurance compensation; worker's accident compensation; state compensation and other compensation as stipulated by law.

13. Income from charity funds established or recognized by the competent state body, operating for charitable, humanitarian purposes, not for profit.

14. Income from foreign aid for charitable, humanitarian purposes in the form of government and non-governmental aid approved by the competent state body.

The Ministry of Finance regulates the procedures and documents to determine tax-exempt incomes stated in this Article.

15. Income from wages and salaries received by Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies engaged in international transport;

16. Income of individuals as ship owners, individuals having the right to use ships and individuals working on ships from supplying goods, services directly for distant sea fishing.

Therefore, based on the above provisions, it can be inferred that the personal income of individuals directly engaged in agricultural production shall be exempt from personal income tax.

However, the following conditions must be met:

Condition [1]: Have legal land or water surface use rights for production and directly engage in agricultural work such as farming, forestry, salt production, or aquaculture. For fishing, they must have ownership or use rights to boats, ships, and fishing equipment and be directly engaged in fishing;

Condition [2]: Be residing in the locality where agricultural, forestry, salt production, or aquaculture activities take place according to the residency laws.

Do individuals directly engaged in agricultural production pay personal income tax in Vietnam? (Image from the Internet)

What are regulations on resident and non-residents subject to personal income tax in Vietnam?

According to Article 2 of the 2007 Personal Income Tax Law on taxable persons:

- Personal income taxpayers are residents with taxable income as prescribed in Article 3 of the 2007 Personal Income Tax Law arising inside and outside Vietnam, and non-residents with taxable income as prescribed in Article 3 of the 2007 Personal Income Tax Law arising in Vietnam.

- residents are persons who meet one of the following conditions:

+ Present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the first day of presence in Vietnam;

+ Have a regular residence in Vietnam, including registered residence or rented house under a lease contract in Vietnam.

- Non-residents are those who do not meet the conditions as prescribed in Clause 2, Article 2 of the 2007 Personal Income Tax Law.

What are 10 types of taxable income of personal income tax in Vietnam?

Based on Article 3 of the 2007 Personal Income Tax Law (amended by Clauses 1 and 2, Article 2 of the 2014 Law on Amendments to Tax Laws and Clause 1, Article 1 of the 2012 Amended Personal Income Tax Law) as follows:

[1] Income from business activities, including:

- Income from production and trading of goods and services;

- Income from independent professional activities of individuals licensed or certified according to law.

Income from business activities does not include income of individuals with an annual turnover of 100 million VND or less.

[2] Income from salaries and wages, including:

- Salary, wages, and other amounts of a similar nature;

- Allowances and subsidies, excluding: allowances and subsidies according to laws on preferential treatment of people with meritorious services; defense and security allowances; toxic and hazardous allowances; attraction allowances, regional allowances as regulated; unexpected difficulties allowances, work accident, occupational disease allowances, one-time childbirth or adoption allowances, loss of working capacity allowances, one-time pension, monthly survivor benefits, and other social insurance allowances; severance and job loss allowances under the Labor Code; social protection allowances and other allowances not of a similar nature to salary or wages as regulated by the Government of Vietnam.

[3] Income from investments, including:

- Loan interest income;

- Share dividends;

- Income from other investment forms, excluding interest on Government bonds.

[4] Income from capital transfers, including:

- Income from the transfer of capital contributions in economic entities;

- Income from securities transfers;

- Income from other forms of capital transfer.

[5] Income from real estate transfers, including:

- Income from the transfer of land use rights and attached assets;

- Income from the transfer of ownership or use rights of houses;

- Income from the transfer of land lease rights, water surface lease rights;

- Other income from real estate transfers in any form.

[6] Income from winning prizes, including:

- Lottery winnings;

- Winning from promotions;

- Winning from betting;

- Winning from prize games, competitions, and other forms of prize-winning.

[7] Income from copyrights, including:

- Income from the transfer or license to use intellectual property rights;

- Income from technology transfer.

[8] Income from franchising.

[9] Income from inheritances in the form of securities, capital contributions in economic organizations, business establishments, real estate, and other assets subject to ownership or use registration.

[10] Income from gifts in the form of securities, capital contributions in economic organizations, business establishments, real estate, and other assets subject to ownership or use registration.