What does income not subject to PIT in Vietnam?

What does income not subject to PIT in Vietnam?

According to Clause 1, Article 3 of Circular 111/2013/TT-BTC as amended and supplemented by Article 12 of Circular 92/2015/TT-BTC:

- Incomes from real estate transfer (including future houses and constructions according to regulations of law on real estate trading) between husband and wife, parents and children; adoptive parents and adopted children; parents-in-law and children-in-law; grandparents and grand children, and among siblings.

The real estate (including future houses and constructions according to regulations of law on real estate trading) that is established by either spouse during the marriage, considered marital property, divided under agreements or judgment of the court when they divorce shall be tax-free.

- Income from transfer of a person's only house or right to use residential land and property thereon in Vietnam.

- Incomes from the person’s rights to use land allocated by the State that is eligible for land levy exemption or reduction.

The person that transfers the area of land eligible for exemption or reduction of land levies shall declare and pay tax on the incomes from real estate transfer according to Article 12 of Circular 111/2013/TT-BTC.

- Incomes from inherited real estate (including future houses and constructions according to regulations of law on real estate trading) between husband and wife, parents and children; adoptive parents and adopted children; parents-in-law and children-in-law; grandparents and grand children, and among siblings.

- Incomes from conversion of agricultural land, which is allocated by the State, to rationalize agricultural production without changing land purposes of the household or person engaged in agricultural production.

- Incomes of households and persons engaged in agriculture, forestry, salt production, and fishery.

Raw agriculture, forestry products, salt, and fishery products which have not yet been processed into other products or have been preliminarily processed are products that are just cleaned, dried, husked, cut, salted, frozen, and put into ordinary storage.

- Incomes from interest on deposits at credit institutions and branches of foreign banks, interest on life insurance contracts; incomes from interest on Government bonds.

- Income from remittances is the amount of money the person receives from their relatives being Vietnamese people residing abroad, Vietnamese people that work or study abroad;

In case a person receives a remittance from a foreign relative from abroad which comply with regulations on encouragement of remittance of money from abroad to Vietnam of the State bank of Vietnam, it will be exempt from tax as prescribed in this Point.

The basis for identifying tax-free incomes mentioned in this Point is papers proving that those amounts are sent from abroad and the payment notes issued by the money-transferring organization (if any).

- Incomes from the additional payments for working at night or working overtime in excess of wages according to the Labor Code.

- Pensions paid by Social Insurance Fund according to the Law on Social insurance; monthly pensions from the voluntary pension fund.

The pensions paid from abroad to the people living and working in Vietnam are tax-free.

- Incomes from scholarships, including:

- Incomes from indemnities under the contract for life insurance, non-life insurance, or health insurance; compensation for occupational accidents; compensation and support according to regulations of law on compensation, support, and relocation; compensations provided by the State and other compensations prescribed by law. To be specific:

- Incomes from non-profit charitable trusts accredited by competent authorities, which aim for charity, humanitarianism, and study encouragement.

- Incomes from foreign aids for charitable and humanitarian purposes, whether governmental or non-governmental, that are approved by competent authorities.

The basis for identification of the tax-free income in this Point is written approval for receipt of aids made by the competent authority.

- Incomes from wages and remunerations of Vietnamese crewmembers from working for foreign shipping companies of Vietnamese shipping companies that provide international transport services.

- Incomes of individuals being ship owners or individuals having the right to use the ships from provision of goods/services directly serving offshore fishing.

What does income not subject to PIT in Vietnam? (Image from the Internet)

What is the PIT paid by workers who do not sign employment contracts and are ineligible for PIT exemption in Vietnam?

According to Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC, residents signing employment contracts under 03 months or not signing employment contracts but receiving a total income of at least 2 million VND per payment must deduct tax at the rate of 10% on income (deduction before payment).

Thus, the tax payable is calculated as follows:

Personal income tax payable = 10% x Total income before payment

What is the partially progressive tariff applicable to taxable income not subject to PIT exemption in Vietnam?

According to Article 22 of the Law on Personal Income Tax 2007, the partially progressive tariff applicable to taxable income not subject to PIT exemption in Vietnam is as follows: