What are the PIT deductions for employees in Vietnam?

What are the PIT deductions for employees in Vietnam?

These deductions are regulated under Article 9 of Circular 111/2013/TT-BTC, as amended by Article 1 of Resolution 954/2020/UBTVQH14 as follows:

 

Deductions

The deductions guided in this Article are the amounts deducted from the taxable income of the person before calculating taxable income from wages, remunerations, and business. In particular:

1. Personal deductions

According to Article 19 of the Law on Personal income tax, Clause 4 Article 1 of the Law on the amendments to the Law on Personal income tax, and Article 12 of the Decree No. 65/2013/ND-CP:

a) Personal deduction is the amount of money deducted from the taxable income before calculating tax on incomes from business, or wages earned by the resident taxpayer.

If the resident earns income from both business and wages, one deduction from the total income from business and wages shall be made.

b) Deductions

​b.1) For taxpayers: 11 million VND/month, 132 million VND/year.

b.2) For each dependent: 4.4 million VND/month.

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2. Deductions for insurance premiums and contributions to the voluntary pension fund

a) Insurance premiums include premiums for social insurance, health insurance, unemployment insurance and professional liability insurance, which is compulsory for some professions.

b) Contributions to the voluntary pension fund

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3. Deductible charitable donations.

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Thus, if meeting the conditions stipulated by law, employees will be able to deduct the following amounts before determining taxable income:

- Personal deduction;

- Deductions for insurance premiums and contributions to the voluntary pension fund;

- Deductible charitable donations...

What are the PIT deductions for employees in Vietnam? (Image from the Internet)

What is the determination of the PIT period for employees in Vietnam?

Under Article 7 of the Law on Personal Income Tax 2007, as amended by Clause 3 Article 1 of the Law Amending the Law on Personal Income Tax 2012, the personal income tax period is determined as follows:

- For residents, the tax period is specified as follows:

+ Annual tax period, which is applicable to incomes from business, salaries and wages.

+ Tax period upon each time of income generation, which is applicable to incomes from capital investment; incomes from capital transfer, except for incomes from securities transfer; incomes from real estate transfer; incomes from prizes; incomes from copyright; incomes from commercial franchising; incomes from inheritances; and gifts.

+ Tax period upon each transfer or annual tax period, which is applicable to Incomes from transfer of securities

- For non-residents, the tax period counted upon each time of income generation is applicable to all their taxable incomes.

What is the time for determining taxable income from salaries/remunerations of employees in Vietnam?

Pursuant to Clause 2 Article 11 of Decree 65/2013/ND-CP, as amended by Clause 8 Article 2 of Decree 12/2015/ND-CP:

Taxes on incomes from salaries/remunerations

1. Taxable income from salaries, remuneration shall be determined in accordance with Clause 2 Article 3 of this Decree.

2. Taxable income from salaries/remunerations shall be determined when the employer pays salary/remuneration to the taxpayer, or when the taxpayer receives such income.

In case the employer buys life insurance for his/her employees (except for voluntary pension insurance), other voluntary insurance with accumulated premiums from an insurer that is established and operating within Vietnam’s law, the employee is not required to include it to taxable income when insurance is bought. When the contract expires, the insurer shall deduct 10% tax from the accumulated premium paid by the employer for the employee starting from July 01, 2013.

In case the employer buys life insurance for his/her employees (except for voluntary pension insurance), other voluntary insurance with accumulated premiums from an insurer that is not established and operating within Vietnam’s law but permitted to sell insurance in Vietnam, the employer shall deduct 10% tax from the insurance premium that is paid before paying the income to the employee.

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Thus, taxable income from salaries/remunerations shall be determined when the employer pays salary/remuneration to the taxpayer, or when the taxpayer receives such income.