What are the types of direct taxes in Vietnam? Which incomes are exempt from direct taxes like personal income tax?

What are the types of direct taxes in Vietnam?

Pursuant to Article 2 of the 2007 Personal Income Tax Law, the taxpaying subjects are stipulated as follows:

Taxpaying Subjects

1. The subjects liable to personal income tax are resident individuals earning taxable income as stipulated in Article 3 of this Law arising both within and outside the territory of Vietnam, and non-resident individuals earning taxable income as stipulated in Article 3 of this Law arising within the territory of Vietnam.

2. A resident individual is a person who meets one of the following conditions:

a) Being present in Vietnam for 183 days or more calculated in a calendar year or a consecutive 12-month period from the first day of presence in Vietnam;

b) Having a permanent residence in Vietnam, including a registered place of permanent residence or a rented house to live in Vietnam according to a lease contract with a term.

3. A non-resident individual is a person who does not meet the conditions stipulated in Clause 2 of this Article.

In Article 2 of the 2008 Corporate Income Tax Law, amended and supplemented by Clause 1 Article 1 of the 2013 Amended Corporate Income Tax Law, the entities liable to tax are regulated as follows:

Taxpayers

1. Corporate income taxpayers are organizations conducting production and trading of goods and services earning taxable income as stipulated by this Law (hereinafter referred to as enterprises), including:

a) Enterprises established under Vietnamese law;

b) Enterprises established under foreign law (hereinafter referred to as foreign enterprises) with permanent establishments or non-permanent establishments in Vietnam;

c) Organizations established under the Cooperative Law;

d) Public service units established under Vietnamese law;

đ) Other organizations conducting production and business activities generating income.

2. Enterprises having taxable income as stipulated in Article 3 of this Law must pay corporate income tax as follows:

a) Enterprises established under Vietnamese law pay tax on taxable income generated in Vietnam and taxable income generated outside Vietnam;

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Thus, the types of direct taxes in Vietnam include personal income tax, corporate income tax,...

What are the types of direct taxes in Vietnam? Which incomes are exempt from direct taxes like personal income tax? (Image from the Internet)

Which incomes are exempt from direct taxes such as personal income tax in Vietnam?

According to Article 4 of the 2007 Personal Income Tax Law (supplemented by Clause 3 Article 2 of the 2014 Law amending a number of tax laws; amended by Clause 2 Article 1 of the 2012 Amended Personal Income Tax Law), the following incomes are exempt from direct taxes, specifically personal income tax:

- Income from real estate transfers between husband and wife; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

- Income from transferring residential houses, homestead land use rights, and assets attached to such land of individuals in cases where individuals have only one residential house, homestead land.

- Income from land use rights of individuals assigned land by the State.

- Income from inheritance and gifts in terms of real estate between husband and wife; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

- Income of households and individuals directly engaged in agricultural production, forestry, salt production, aquaculture, not yet processed into other products or only preliminary processed.

- Income from converting agricultural land assigned by the State for production.

- Income from interest on deposits in credit institutions, interest from life insurance contracts.

- Income from remittances.

- The part of salary for night work, overtime work paid higher than daytime work salary, work done in working hours according to legal regulations.

- Retirement pension paid by the Social Insurance Fund; retirement pension paid monthly by the voluntary pension fund.

- Income from scholarships, including:

+ Scholarships received from the state budget;

+ Scholarships received from domestic and foreign organizations under their support programs for education.

- Income from insurance compensation, non-life insurance compensation, labor accident compensation, state compensation, and other compensations as prescribed by law.

- Income received from charitable funds authorized by competent state agencies to be established or recognized, operating for charity and humanitarian purposes, not for profit.

- Income received from foreign aid for charitable, humanitarian purposes in the form of government and non-government approved by competent state agencies.

- Income from salaries and wages of Vietnamese seamen working for foreign shipping lines or Vietnamese shipping lines in international transportation.

- Income of individuals who are ship owners, individuals who have the right to use ships, and individuals working on ships from activities directly supplying goods and services supporting offshore fishing.

What is tax?

According to Article 3 of the 2019 Tax Administration Law, tax is defined as follows:

Terminology Explanation

1. Tax is a mandatory payment to the state budget by organizations, households, business households, and individuals in accordance with tax laws.

2. Other amounts collected to the state budget managed by tax authorities include:

a) Fees and charges as prescribed by the Law on Fees and Charges;

b) Land use money paid to the state budget;

c) Money for leasing land, water surfaces;

d) Money for granting mineral exploitation rights;

đ) Money for granting water resource exploitation rights;

e) Money paid to the state budget from selling assets on land, transferring land use rights according to the Law on Management and Use of Public Assets;

g) Money collected from administrative violation penalties as prescribed by the law on administrative violation penalties in the field of taxation and customs;

h) Late payment money and other collections as prescribed by law.

3. Other amounts collected to the state budget not managed by tax authorities include:

a) Money for using the sea area for dumping as prescribed by the law on marine and island resources and environment;

b) Money for protecting and developing rice cultivation land as prescribed by the land law;

c) Money collected from administrative violation penalties as prescribed by the law on administrative violation penalties, excluding taxation and customs fields;

Thus, Tax is a mandatory payment to the state budget by organizations, households, business households, and individuals in accordance with tax laws.