Is the allowance for working capacity loss subject to personal income tax in Vietnam?
Is the allowance for working capacity loss 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 concerning taxable income are as follows:
Taxable income
Personal income taxable income includes the following types of income, except for tax-exempt income stipulated in Article 4 of this Law:
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- Income from salary, wages, including:
a) Salaries, wages, and other income of a salary or wage nature;
b) Allowances and subsidies, except for allowances and subsidies: under legal provisions regarding preferential treatment for people with meritorious services; defense, security allowances; hazardous, dangerous allowances for sectors, professions, or jobs in places with harmful, hazardous factors; attraction allowance, regional allowance as stipulated by law; unexpected hardship allowance, occupational accident, disease allowance; one-time childbirth or adoption allowance, allowance for working capacity loss, one-time retirement allowance, monthly survivor benefits, and other allowances as per social insurance regulations; severance allowance, unemployment allowance under the Labor Code; social protection allowance and other allowances, subsidies not of a salary or wage nature as stipulated by the Government of Vietnam.
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Thus, according to the above regulations, the allowance for working capacity loss is not subject to personal income tax.
Is the allowance for working capacity loss subject to personal income tax in Vietnam? (Image from the Internet)
What is the current salary threshold for personal income tax without dependants in Vietnam?
Based on Clause 2, Article 2 of Circular 111/2013/TT-BTC, as amended by Clause 1, Article 11 of Circular 92/2015/TT-BTC, specific regulations on taxable income are as follows:
Taxable Income
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- Income from salary, wages
Income from salary and wages is income received by an employee from the employer, including:
a) Salaries, wages, and other income of a salary or wage nature, whether in cash or not.
b) Allowances and subsidies, except for the following allowances and subsidies:
b.1) Monthly special allowances and one-time allowances as per the legal provisions for people with meritorious services.
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According to Article 1 of Resolution 954/2020/UBTVQH14, which stipulates the personal exemption levels as follows:
Personal exemption levels
Adjustments to the personal exemptions stipulated in Clause 1, Article 19 of the Law on Personal Income Tax No. 04/2007/QH12, as amended and supplemented by Law No. 26/2012/QH13, are as follows:
- The deduction for the taxpayer is 11 million VND/month (132 million VND/year);
- The deduction for each dependant is 4.4 million VND/month.
Therefore, based on the above regulations, individuals without dependants must pay personal income tax if their total income from salary or wages exceeds 11 million VND/month.
What income is currently exempt from personal income tax in Vietnam?
According to Article 4 of the 2007 Law on Personal Income Tax, as supplemented by Clause 3, Article 2 of the 2014 Law on Amendments to Law on Various Taxes, and Clause 10, amended by Clause 2, Article 1 of the 2012 Law on Amendments to Law on Personal Income Tax, specifically stipulates the types of income that are exempt from personal income tax, including:
- Income from transferring real estate 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.
- Income from transferring residential houses, residential land use rights, and properties associated with residential land of individuals in cases where individuals only have one residential house or residential land use right.
- Income from the value of the land use right of individuals granted land by the State.
- Income from inheritance or gifts, which are real estate 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.
Income of households and individuals directly producing agriculture, forestry, salt production, aquaculture, and fishery without being processed into other products or only being preliminarily processed.
- Income from the conversion of agricultural land allocated by the State for production by households and individuals.
- Income from interest on deposits at credit institutions, interest from life insurance contracts.
- Income from remittances.
- Part of night shift or overtime wages paid higher than regular daytime or in-hour wages according to legal regulations.
- Retirement pensions paid by the Social Insurance Fund; retirement pensions paid by voluntary pension funds monthly.
- Income from scholarships, including:
+ Scholarships received from the state budget;
+ Scholarships received from domestic and foreign organizations in accordance with their support programs.
- Income from life and non-life insurance contract compensations, occupational accident compensation, state compensation, and other compensations as per legal provisions.
- Income received from charitable funds permitted to be established or recognized by the competent state authority, operating for charitable, humanitarian, non-profit purposes.
- Income received from foreign donations for charitable, humanitarian purposes in the form of government and non-government organizations approved by the competent state authority.
- Income from salary, wages of Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies conducting international transportation.
- Income of individuals who are ship owners, ship users, and individuals working on ships from activities providing goods and services directly serving offshore fishing activities.
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