Is the housing allowance paid by the Company a taxable personal income in Vietnam?

Is the housing allowance paid by the Company a taxable personal income in Vietnam?

Based on sub-item d.1, point d, clause 2, Article 2 of Circular 111/2013/TT-BTC, as amended by clause 2, Article 11 of Circular 92/2015/TT-BTC and Article 11 of Circular 151/2014/TT-BTC concerning income from salaries and wages subject to personal income tax, it includes:

Taxable income

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

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2. Income from salaries, wages

Income from salaries, wages is income an employee receives from an employer, including:

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d) Benefits in cash or non-cash besides salaries and wages paid by the employer which the taxpayer enjoys in any form:

d.1) Housing, electricity, water payments, and accompanying services (if any), excluding: housing benefits provided free by the employer for workers in the industrial zone; housing constructed at economic zones or in areas with difficult or exceptionally difficult socioeconomic conditions, provided free for the workers.

In cases where individuals reside at the workplace, taxable income is based on the rental or depreciation costs, electricity, water, and other services calculated proportionally between the personal use area and the workplace.

The housing rent paid by the employer on behalf of the employee is included in taxable income based on the actual amount paid on behalf but does not exceed 15% of total taxable income (excluding housing rent) at the unit.

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Therefore, if the housing allowance is less than or equal to 15% of total taxable income (excluding housing rent), it must be included in taxable personal income. The remaining portion of the housing allowance paid by the Company to the employee will not need to be included in taxable personal income.

Is the housing allowance paid by the Company a taxable personal income in Vietnam? (Image from the Internet)

Is the housing allowance paid by the Company included in the salary for social insurance contributions in Vietnam?

Based on the provisions of clause 3, Article 30 of Circular 59/2015/TT-BLDTBXH, as amended by clause 26, Article 1 of Circular 06/2021/TT-BLDTBXH on monthly salary for compulsory social insurance contributions as follows:

Monthly salary for compulsory social insurance contributions

The monthly salary for social insurance contributions for employees covered by social insurance according to wage policies decided by the employer is regulated as follows:

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3. The monthly salary for compulsory social insurance contributions does not include policies and other benefits such as bonuses as stipulated in Article 104 of the Labor Code, initiative bonuses; meals during shifts; support for transportation, telephones, commuting, housing, child care, small children; support when an employee’s family member dies, an employee's family member gets married, the employee's birthday, assistance for employees in difficult circumstances due to work accidents, occupational diseases, and other support and allowances recorded separately in labor contracts as stipulated in sub-item c2, point c, clause 5, Article 3 of Circular No. 10/2020/TT-BLDTBXH.

Based on the aforementioned regulations, the monthly salary for compulsory social insurance contributions does not include other policies and benefits. Therefore, the housing allowance received by the employee is not included in the salary for social insurance contributions.

Is the housing allowance a deductible expense of the Company in Vietnam?

Based on Official Dispatch 79557/CT-TTHT in 2018 regarding corporate income tax, personal income tax on allowances paid to employees, it is regulated as follows:

Based on the above regulations, if the Company pays a housing allowance, transportation allowance (from home to the company at a fixed rate per month), telephone allowance, diligence allowance to employees, with specific conditions and amounts detailed in one of the following documents: Labor contract; Collective labor agreement; Financial regulation of the Company, General Company, Corporation; Rewarding regulation issued by the Chairman of the Board of Directors, General Director, Director according to the Company's financial regulation, General Company, then:

Regarding housing, transportation allowances, diligence allowance: The Company can account for these as deductible expenses when determining the taxable income for corporate income tax if it meets the provisions of Article 4 of Circular No. 96/2015/TT-BTC and accounted into the taxable personal income of the employee.

Regarding the telephone allowance: the telephone expense fixed for an individual can be deducted when determining taxable income for corporate income tax according to the Corporate Income Tax Law, it can be deducted when determining the taxable personal income.

If the Company provides a telephone allowance higher than the fixed rate, the excess amount must be included in the taxable personal income.

Therefore, if the Company pays a housing allowance to employees, with specific conditions and amounts detailed in documents such as Labor contracts; Collective labor agreements; Financial regulations of the Company, General Company, Corporation; Reward regulations issued by the Chairman of the Board of Directors, General Director, according to the Company's financial regulation, General Company, then the Company can account for this as a deductible expense when determining taxable income for corporate income tax if it meets the provisions of Article 4 of Circular 96/2015/TT-BTC (as amended and supplemented by Circular 25/2018/TT-BTC).