What does income from salaries and remunerations subject to PIT in Vietnam include?

What does income from salaries and remunerations subject to PIT in Vietnam include?

According to Clause 2, Article 3 of the Personal Income Tax Law 2007 (amended and supplemented by Clause 1, Article 1 of the Law on Amendment to Personal Income Tax Law 2012), taxable income from salaries and remunerations of employees includes:

- salaries, remunerations and amounts of similar nature;

- Allowances, subsidies, except for amounts:

+ Those paid under legal provisions on preferential treatment of persons with meritorious services;

+ defense or security allowances; hazard or danger allowances for persons working in branches, occupations or jobs at places where exist hazardous or dangerous elements;

+ allowances for attraction of laborers to work in certain branches or in certain regions specified by law;

+ allowances for sudden difficulties, allowances for laborers having labor accident or suffering from occupational disease, lump-sum maternity or child adoption allowances; allowances for working capacity loss, lump-sum retirement allowances, monthly survivorship allowances and other allowances as prescribed by law on social insurance;  

+ severance and job-loss allowances specified in the Labor Code;

+ subsidies of social relief nature and other allowances, subsidies without nature of salaries, remunerations as prescribed by the Government.

What does income from salaries and remunerations subject to PIT in Vietnam include? (Image from the Internet)

Which allowances and benefits are not subject to personal income tax in Vietnam?

Under Point b, Clause 2, Article 3 of Decree 65/2013/ND-CP amended by Clause 3, Article 2 of Decree 12/2015/ND-CP, the following allowances and benefits are not subject to personal income tax:

- Monthly and lump sum allowances, benefits for meritorious contributors prescribed by law;

- Monthly benefits and lump sum benefits for participants in protection of the country, people performing international tasks, young volunteers who have fulfilled their duties;

- National defense and security allowances; benefits for the servicemen;

- Allowances for toxic, dangerous jobs or workplaces with toxic, dangerous factors;

- Attraction allowances, region-based allowances;

- Benefits for unexpected difficulties, benefits for occupational accidents, occupational diseases, lump sum benefits upon delivery or adoption, benefits for decline in working capacity; lump sum pension, monthly death benefits, redundancy pay, severance pay, unemployment benefits, and other benefits prescribed by the Labor Code and the Law on Social insurance.

- Benefits for beneficiaries of social protection defined by law;

- Seniority allowances for senior officers;

- Lump sum benefits for individuals sent by their employers to extremely disadvantaged areas; lump sum benefits for officials whose tasks involve sovereignty over territorial sea and islands. Lump sum benefits for foreigners who move to reside in Vietnam, Vietnamese citizens working overseas, Vietnamese citizens who resided overseas and go back to work in Vietnam ;

- Allowances for health workers of villages;

- Vocational allowances.

Allowances and benefits that are not included in taxable income must be specified by competent authorities.

Who is required to pay personal income tax in Vietnam?

Under the provisions of Article 2 of the Personal Income Tax Law 2007, the provisions are as follows:

Taxpayers

1. Personal income taxpayers include residents who earn taxable incomes specified in Article 3 of this Law inside and outside the Vietnamese territory and non-residents who earn taxable incomes specified in Article 3 of this Law inside the Vietnamese territory.

2. Resident means a person who satisfies one of the following conditions:

a/ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

b/ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.

3. Non-resident means a person who does not satisfy any of the conditions specified in Clause 2 of this Article.

Thus, based on the above provisions, individuals subject to personal income tax include:

- Personal income taxpayers include residents who earn taxable incomes specified in Article 3 of the Personal Income Tax Law 2007 inside and outside the Vietnamese territory and non-residents who earn taxable incomes specified in Article 3 of the Personal Income Tax Law 2007 inside the Vietnamese territory.

- Resident means a person who satisfies one of the following conditions:

+ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

+ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.

- Non-resident individuals are those who do not meet the following conditions:

+ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

+ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.