Is income from defense allowances subject to personal income tax in Vietnam?

Is income from defense allowances subject to personal income tax in Vietnam?

Pursuant to Clause 2, Article 3 of the 2007 Law on Personal Income Tax, as amended by Clause 1, Article 1 of the 2012 Law on Amendments to Law on Personal Income Tax, specific regulations on taxable income are as follows:

Taxable Income

Personal income tax covers the following types of income, excluding income exempt from tax as provided for in Article 4 of this Law:

....

2. Income from wages, salaries, including:

a) Wages, salaries, and other payments of a similar nature;

b) Allowances, subsidies, excluding: allowances and subsidies according to laws on preferential treatment for persons with meritorious services; defense and security allowances; hazardous or dangerous job allowances for industries or jobs with hazardous or dangerous factors; attraction allowances, regional allowances as prescribed by law; unexpected hardship allowances, occupational accident, occupational disease allowances, maternity or child adoption one-time allowances, allowances due to reduced working capacity, one-time retirement allowances, monthly death allowances, and other allowances as specified by the social insurance laws; severance and job loss subsidies as provided for in the Labor Law; social protection allowances and other allowances and subsidies not of a wage or salary nature as prescribed by the Government of Vietnam

....

Thus, according to the above regulation, income from defense and security allowances falls under the category of income from wages and salaries that is not subject to personal income tax.

Is income from defense allowances subject to personal income tax in Vietnam? (Image from Internet)

Which Income is exempt from personal income tax in Vietnam?

According to Article 4 of the 2007 Law on Personal Income Tax, supplemented by Clause 3, Article 2 of the 2014 Law on Amendments to Various Tax Laws, and amended by Clause 2, Article 1 of the 2012 Law on Amendments to Law on Personal Income Tax, regulations on tax-exempt personal income are as follows:

- Income from estate transfers between spouses; 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 grandchildren; maternal grandparents and grandchildren; siblings.

- Income from the transfer of residential houses, homestead land, and properties attached to the homestead land in cases where the individual has only one housing, homestead land.

- Income from the value of land use rights granted by the State.

- Income from inheriting or being gifted real estate between spouses; 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 grandchildren; maternal grandparents and grandchildren; siblings.

- Income of households and individuals directly engaged in agricultural, forestry production, salt making, fishery, aquatic product breeding and catching that remain unprocessed into other products or only through preliminary processing.

- Income from the conversion of agricultural land granted by the State for production.

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

- Income from remittances.

- The portion of wages for nighttime work or overtime paid at a higher rate than regular daytime or regular hours as provided by law.

- Pensions paid by the Social Insurance Fund; monthly pensions paid by voluntary pension plans.

- Income from scholarships, including:

+ Scholarships obtained from the state budget;

+ Scholarships received from domestic and international organizations under their support programs for education promotion.

- Income from compensation of life insurance contracts, non-life insurance contracts, compensation for occupational accidents, compensation from the State, and other compensation as provided for by law.

- Income received from charitable funds established or recognized with approval and operating for non-profit, humanitarian, and charitable purposes.

- Income from foreign aid for charity, humanitarian purposes under governmental and non-governmental forms approved by competent state agencies.

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

- Income of individuals who own or have rights to use vessels, and individuals working on vessels from providing goods and services directly serving offshore fishing and catching activities.

What are regulations on personal income tax period in Vietnam?

According to Article 7 of the 2007 Law on Personal Income Tax as amended by Clause 3, Article 1 of the 2012 Law on Amendments to Law on Personal Income Tax, the regulation on the personal income tax period is as follows:

- The tax period for resident individuals is regulated as follows:

+ An annual tax period applies to income from business; income from wages and salaries;

+ A tax period for each time an income is generated applies to income from investment capital; income from capital transfer, except income from securities transfer; income from real estate transfer; income from winning prizes; income from royalties; income from franchise; inheritance income; gift income;

+ A tax period for each transfer or yearly for income from securities transfer.

- The tax period for non-resident individuals is calculated for each instance of income generated and applies to all taxable income.