Is retirement pension a taxable income in Vietnam?

Is retirement pension a taxable income in Vietnam?

Article 4 of the Personal Income Tax Law 2007 (as supplemented by Clause 3, Article 2 of the Law on Tax Amendments 2014; as amended by Clause 2, Article 1 of the Personal Income Tax Law Amendments 2012) defines tax-exempt incomes as follows:

Tax-Exempt Incomes

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5. Incomes of households and individuals directly engaged in agricultural, forestry, salt production, and aquaculture activities, which have not been processed into other products or only gone through basic processing.

6. Incomes from the conversion of agricultural land by households and individuals granted by the State for production.

7. Interest income from deposits at credit institutions, and interest from life insurance contracts.

8. Income from remittances.

9. Wages and salaries received for night work and overtime work paid higher than those received for day work and work during legal working hours.

10. Retirement pensions paid by the Social Insurance Fund; monthly pensions paid by voluntary pension funds.

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Thus, according to the above regulation, retirement pensions are exempt from personal income tax.

Is retirement pension a taxable income in Vietnam? (Image from the Internet)

Are other incomes besides pensions considered taxable incomes in Vietnam?

According to Clause 2, Article 2 of Circular 111/2013/TT-BTC (as amended and supplemented by Article 11 of Circular 92/2015/TT-BTC) on taxable incomes from wages and salaries as follows:

Taxable Incomes

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2. Income from wages and salaries

Income from wages and salaries is the income received by an employee from the employer, including:

a) Wages, salaries, and other amounts of similar nature in cash or in kind.

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

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c) Remuneration received in forms such as: sales commission, brokerage commission; remuneration for participating in scientific and technical research projects; remuneration for participating in projects and schemes; royalties as stipulated by law on royalties; remuneration for teaching activities; remuneration for participating in cultural, artistic, sports activities; advertising services; and other services and other compensation.

d) Income from participation in business associations, boards of directors of enterprises, supervisory boards of enterprises, project management boards, management councils, professional associations, and other organizations.

dd) Benefits in cash or in kind other than wages and salaries paid by the employer to which the taxpayer is entitled in any form:

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e) Cash or in-kind bonuses in any form, including bonuses in the form of stocks, except for the following bonuses:

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Thus, incomes from wages and salaries that are not pensions are still subject to personal income tax.

Who are personal income taxpayers in Vietnam?

Based on the provisions of Article 2 of the Personal Income Tax Law 2007, the following is stipulated:

Taxpayers

1. Personal income tax payers are resident individuals with taxable incomes as prescribed in Article 3 of this Law arising inside and outside the territory of Vietnam, and non-resident individuals with taxable incomes as prescribed in Article 3 of this Law arising within the territory of Vietnam.

2. Resident individuals are those who meet one of the following conditions:

a) 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;

b) Have a regular place of residence in Vietnam, which includes a registered place of permanent residence or a rented house for living in Vietnam under a lease contract with a term.

3. Non-resident individuals are those who do not meet the conditions stipulated in Clause 2 of this Article.

Thus, based on the above regulations, the personal income tax payers include:

- Personal income tax payers are resident individuals with taxable incomes as prescribed in Article 3 of the Personal Income Tax Law 2007 arising inside and outside the territory of Vietnam, and non-resident individuals with taxable incomes as prescribed in Article 3 of the Personal Income Tax Law 2007 arising within the territory of Vietnam.

- Resident individuals are those 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 place of residence in Vietnam, which includes a registered place of permanent residence or a rented house for living in Vietnam under a lease contract with a term.

- Non-resident individuals are those who do not meet the conditions stipulated above:

+ 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 place of residence in Vietnam, which includes a registered place of permanent residence or a rented house for living in Vietnam under a lease contract with a term.