Is personal income tax applied to unemployment benefits in Vietnam?

Is personal income tax applied to unemployment benefits in Vietnam?

Based on Clause Article 2 of Circular 111/2013/TT-BTC which regulates unemployment benefits as follows:

Taxable income

According to Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

1. Income from business

Income from business is income derived from production and business activities in the following fields:

a) Income from the production and business of goods and services in all business sectors according to the provisions of law such as: production, business of goods; construction; transportation; food service business; service business, including house rental, land use right, water surface, and other assets.

b) Income from independent practicing activities of individuals in fields or professions licensed or certified according to legal regulations.

c) Income from the production and business of agriculture, forestry, salt production, aquaculture, and fisheries exploitation that do not meet the conditions for tax exemption as guided at point e, clause 1, Article 3 of this Circular.

2. Income from salary, wages

...

b) Allowances and subsidies, except for the following allowances and subsidies:

b.1) Monthly preference allowances and one-time allowances according to the provisions of the law on persons with meritorious services.

b.2) Monthly allowances, one-time allowances for individuals participating in revolution, defending the nation, performing international duties, young volunteers who have completed their tasks.

b.3) Defense, security allowances; subsidies for the armed forces.

b.4) Hazardous and dangerous allowances for occupations or jobs where working conditions are hazardous or dangerous.

b.5) Attraction allowances, regional allowances.

b.6) Unforeseen hardship allowances, occupational accident allowances, occupational disease allowances, one-time allowances for childbirth or adoption, maternity benefits, convalescence, recovery benefits after maternity, work capacity reduction allowances, one-time retirement allowances, monthly pensions, dismissal allowances, job loss allowances, unemployment benefits, and other allowances according to the provisions of the Labor Code and the Law on Social Insurance.

b.7) Allowances for social protection beneficiaries according to legal regulations.

b.8) Service allowances for senior leaders.

...

As such, the unemployment allowance is not among the taxable personal income categories, so it is considered non-taxable personal income.

Is personal income tax applied to unemployment benefits in Vietnam? (Image from the Internet)

How to calculate the unemployment benefit period in Vietnam?

Based on Article 50 of the 2013 Employment Law which regulates the unemployment benefit period as follows:

Level, duration, and timing of unemployment benefits

1. The monthly unemployment benefit level is 60% of the average monthly salary on which unemployment insurance premiums were based during the 6 consecutive months prior to unemployment but not exceeding 5 times the statutory pay rate for employees subject to statutory pay policies set by the State or not exceeding 5 times the regional minimum wage according to the Labor Code for employees who paid unemployment insurance premiums according to pay policies decided by the employer at the time the labor contract or working contract was terminated.

2. The period of receiving unemployment benefits is calculated according to the number of months paying unemployment insurance premiums; for every 12 months to 36 months of premium, 3 months of unemployment benefits are granted; thereafter, for every additional 12 months of premium, an additional 1 month of unemployment benefits is granted, but the total period shall not exceed 12 months.

3. The period of receiving unemployment benefits starts from the 16th day after the complete application for receiving unemployment benefits is submitted according to Clause 1 Article 46 of this Law.

Thus, if you are eligible for unemployment benefits, for every 12 to 36 months of premium, you will receive 3 months of unemployment benefits. Subsequently, for every additional 12 months of premiums, you will receive an additional 1 month of unemployment benefits, but the total period shall not exceed 12 months.

What are cases of reduction in personal income tax for employees in Vietnam?

Based on Article 5 of the 2007 Law on Personal Income Tax, which regulates the following:

Tax Reduction

Taxpayers facing difficulties due to natural disasters, fires, accidents, life-threatening diseases which affect their ability to pay taxes shall be considered for a reduction in tax corresponding to the level of damage but not exceeding the payable tax amount.

Therefore, workers who pay personal income tax and encounter difficulties due to natural disasters, fires, accidents, or life-threatening diseases that affect their ability to pay taxes can be considered for a tax reduction corresponding to the level of damage but not exceeding the amount of personal income tax payable.