Is the transportation expenses for employees included in taxable income for PIT in Vietnam?

Is the transportation expenses for employees included in taxable income for personal income tax in Vietnam?

Pursuant to the provisions of Clause 2, Article 3 of the Law on Personal Income Tax 2007, amended by Clause 1, Article 1 of the Amended Law on Personal Income Tax 2012 on income from salaries and wages of employees subject to personal income tax, as follows:

(1) Salaries, wages and amounts of similar nature to salaries, wages;

(2) The allowances and subsidies, except for the following:

- Allowances and subsidies as per law on preferential treatment for people with meritorious services;

- National defense and security allowances;

- Allowances for hazardous, dangerous jobs, industries or workplaces with hazardous, dangerous elements;

- Attraction and regional allowances as stipulated by law;

- Unexpected difficulty subsidies, labor accident subsidies, occupational disease subsidies, one-time allowances for childbirth or adoption, allowances due to reduced working capacity, lump-sum pension subsidies, monthly survivor benefits, and other allowances according to social insurance law;

- Severance, job loss allowances as stipulated by the Labor Code;

- Social protection subsidies and other allowances that are not of the nature of salaries, wages as stipulated by the Government of Vietnam.

Additionally, according to Official Dispatch 79557/CT-TTHT of 2018 on corporate income tax and personal income tax regarding allowances paid to employees, it is stipulated as follows:

Based on the aforementioned regulations, if the company pays allowances for housing rent, gasoline (from home to company on a fixed monthly basis), telephone, diligence allowances to the employees, clearly stating the conditions and levels of entitlement in one of the following documents: Labor contract; Collective labor agreement; Financial regulations of the Company, Corporation, Group; Bonus regulations as stipulated by the Chairman of the Board of Directors, General Director, or Director according to the company's financial regulations, then:

Regarding housing rent, gasoline, diligence allowances: The company may account for these as deductible expenses when determining corporate income taxable from income if complying with the provisions of Article 4 of Circular No. 96/2015/TT-BTC and these are included in the taxable income of the employee for personal income tax.

Regarding telephone allowances: fixed phone expenses for individuals included in deductible expenses when determining corporate income taxable base according to corporate income tax law can be deducted when determining taxable income for personal income tax.

In case the company pays the phone expenses for employees exceeding the fixed expense norm, the excess amount must be included in the taxable income for personal income tax."

Thus, based on the above regulations, transportation expenses is included in the taxable income of the employee for personal income tax.

Is the transportation expenses for employees included in taxable income for PIT in Vietnam? (Image from Internet)

Is the transportation expenses for employees included in compulsory social insurance contributions in Vietnam?

Pursuant to the provisions of Clause 3, Article 30 of Circular 59/2015/TT-BLDTBXH, 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 whose wages are decided by employers is stipulated as follows:

...

3. The monthly salary for compulsory social insurance contributions does not include policies and other benefits such as bonuses under Article 104 of the Labor Code, innovation bonuses; mid-shift meal expenses; gasoline, phone, travel, housing supports, childcare, small children support; support when employees have deceased relatives, employees have family members getting married, employee’s birthday, support for employees facing difficult circumstances due to labor accidents, occupational diseases, and other support and subsidies recorded in a separate section in the labor contract stipulated at sub-clause c2, point c, clause 5, Article 3 of Circular No. 10/2020/TT-BLDTBXH.

According to the aforementioned regulations, it can be seen that the transportation expenses is not one of the amounts required for compulsory social insurance contributions, in other words, the transportation expenses for employees is not included in compulsory social insurance contributions.

What is the rate of compulsory social insurance contributions for employees in Vietnam?

Pursuant to Clause 1, point a, Clause 2, Article 85 of the Law on Social Insurance 2014 regarding the latest rate of compulsory social insurance contributions for employees as follows:

(1) Employees stipulated in points a, b, c, d, đ, and h, clause 1, Article 2 of the Law on Social Insurance 2014, contribute monthly 8% of their monthly salary to the retirement and survivorship fund.

(2) Employees stipulated in point i, clause 1, Article 2 of the Law on Social Insurance 2014, contribute monthly 8% of the statutory pay rate to the retirement and survivorship fund.

(3) Employees stipulated in point g, clause 1, Article 2 of the Law on Social Insurance 2014, contribute monthly to the retirement and survivorship fund by 22% of the monthly salary on which social insurance contributions are based before going to work abroad, for employees who have participated in compulsory social insurance previously; or by 22% of twice the statutory pay rate for employees who have not participated in compulsory social insurance or have participated but have taken a one-time payment of social insurance benefits.