Is an employee who receives more than 10 million VND in compensation for an occupational accident required to pay personal income tax in Vietnam?

Is an employee who receives more than 10 million VND in compensation for an occupational accident required to pay personal income tax in Vietnam?

Pursuant to Clause 12, Article 4 of the Personal Income Tax Law 2007, the regulations are as follows:

Income Exempt from Tax

1. Income from real estate transfer between husband and wife; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughter-in-law; parents-in-law and son-in-law; grandparents and grandchildren; siblings with each other.

2. Income from the transfer of housing, use rights of homestead land, and assets attached to homestead land in case the individual owns only one house or homestead land property.

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11. Income from scholarships, including:

a) Scholarships received from the state budget;

b) Scholarships received from domestic and foreign organizations under that organization's educational support program.

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

13. Income received from charitable funds established or recognized by competent state agencies, operating for charitable, humanitarian purposes, and not for profit.

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

Therefore, according to the above regulations, one of the incomes exempt from tax is compensation for workplace accidents, so regardless of the compensation amount, it is exempt from tax.

Is an employee who receives more than 10 million VND in compensation for an occupational accident required to pay personal income tax in Vietnam? (Image from Internet)

Is income from traditional product manufacturing subject to personal income tax in Vietnam?

Pursuant to Clause 1, Article 2 of the Law on Amendments to Tax Laws 2014, the regulations are as follows:

Amendments and Supplements to Certain Articles of the Personal Income Tax Law No. 04/2007/QH11, Amended, and Supplemented by Law No. 26/2012/QH13.

1. Amend and supplement Clause 1, Article 3 as follows:

“1. Income from business, including:

a) Income from manufacturing, trading goods, services;

b) Income from independent practice activities of individuals with licenses or practice certificates according to the law.

Business income as stipulated in this clause does not include income from individual businesses with a turnover of 100 million VND/year or less.

According to the mentioned regulations, income from manufacturing, trading goods, and services is subject to personal income tax, including traditional product manufacturing. However, if the turnover is 100 million VND/year or less, it is not subject to tax.

What is the basis for determining the level of loss for personal income tax reduction in Vietnam?

According to Point c, Clause 1, Article 4 of Circular 111/2013/TT-BTC, the regulations are as follows:

Tax Reduction

According to the regulations in Article 5 of the Personal Income Tax Law, Article 5 of Decree 65/2013/ND-CP, taxpayers facing difficulties due to natural disasters, fires, accidents, severe diseases affecting their tax payment ability are eligible for tax reduction corresponding to the level of loss but not exceeding the tax payable amount. To be specific, as follows:

1. Determining reduced tax amount

a) Tax reduction consideration is conducted annually. Taxpayers facing difficulties due to natural disasters, fires, accidents, or severe illnesses in any tax year are eligible for reduced tax payable of that year.

b) The basis for considering tax reduction is the total amount of personal income tax that taxpayers must pay in the tax year, which includes:

b.1) Personal income tax already paid or deducted from investment income, transfer income, real estate transfer income, lottery winnings, royalties, franchise income, inheritance income; gift income.

b.2) Personal income tax payable on income from business and income from salaries, wages.

c) The basis for determining the level of loss eligible for tax reduction is the total actual cost to overcome the damage minus (-) compensation received from insurance organizations (if any) or from the organizations or individuals causing the accident (if any).

Therefore, according to this regulation, the basis for determining the level of loss eligible for tax reduction is the total actual cost to overcome the damage minus (-) any compensation received from insurance organizations (if any) or from the organizations or individuals causing the accident (if any).