What income is exempt from personal income tax in Vietnam?

Which types of income are applicable for annual personal income tax calculation in Vietnam?

Pursuant to Article 7 of the Law on Personal Income Tax 2007, as amended by Clause 3, Article 1 of the Amended Law on Personal Income Tax 2012, specific regulations on the tax calculation period are as follows:

Tax Calculation Period

1. The tax calculation period for resident individuals is stipulated as follows:

a) The annual tax calculation period applies to income from business activities; income from salaries and wages;

b) The tax calculation period on a per-incident basis applies to income from capital investment; income from capital transfer, except for income from securities transfer; income from real estate transfer; income from winnings; income from copyright; income from franchising; income from inheritance; income from gifts;

c. The tax calculation period can be applied on a per-transaction basis or annually for income from securities transfer.

2. The tax calculation period for non-resident individuals is calculated based on each incidence of income received, applicable to all taxable income.

Hence, based on the aforementioned regulations, the types of income subject to annual personal income tax calculation include:

- Income from business activities

- Income from salaries and wages

- Income from securities transfer (which may be subject to either annual tax calculation or per-transaction tax calculation)

What income is exempt from personal income tax in Vietnam? (Image from internet)

What income is exempt from personal income tax in Vietnam?

According to Article 4 of the Law on Personal Income Tax 2007, supplemented by Clause 3, Article 2 of the Law Amending Various Tax Laws 2014 and amended by Clause 2, Article 1 of the Amended Law on Personal Income Tax 2012, the following personal income types are exempt from tax:

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

- Income from the transfer of housing, rights to use homestead land, and assets attached to the homestead land of individuals who possess only one house or homestead land.

- Income from the value of land use rights allocated by the State.

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

- Income from households and individuals directly engaged in agricultural production, forestry, salt-making, aquaculture, or fisheries that have not been processed into other products or which have only been preliminarily processed.

- Income from the exchange of agricultural land by households and individuals allocated land for production by the State.

- Interest income from deposits at credit institutions, interests from life insurance contracts.

- Income from remittances.

- Night shift or overtime wages paid higher than day-shift wages, within the legal framework.

- Retirement pensions paid by the social insurance fund; monthly pensions paid by voluntary pension funds.

- Income from scholarships, including:

+ Scholarships from the state budget;

+ Scholarships from domestic and foreign organizations within their educational support programs.

- Income from compensation under life or non-life insurance contracts, compensation for occupational accidents, state compensation, and other types of legally stipulated compensation.

- Income received from charitable funds authorized or recognized by competent state agencies, operating for charitable purposes, humanitarian reasons, non-profit.

- Income from foreign aid due to charitable, humanitarian purposes under governmental or non-governmental forms approved by competent state agencies.

- Income from wages or salaries of Vietnamese seamen working for foreign shipping companies or Vietnamese shipping companies with international transport operations.

- Income for individuals as ship owners, individuals who have rights to use ships and individuals working on ships from activities providing goods and services directly serving offshore fishing and capture activities.

What is the current income level requiring personal income tax payment without dependants?

According to Clause 2, Article 2 of Circular 111/2013/TT-BTC, as amended and supplemented by Clause 1, Article 11 of Circular 92/2015/TT-BTC, specific regulations on taxable income items are as follows:

Taxable Income Items

…

2. Income from salaries and wages

Income from wages and salaries is income received by employees from employers, including:

a) Salaries, wages and monetary equivalents or non-monetary forms of salaries and wages.

b) Allowances, subsidies, except for the following:

b.1) Monthly preferential subsidies and one-time allowances as per the law on individuals with credited services.

…

And as per Article 1 of Resolution 954/2020/UBTVQH14 stipulating the family circumstance deduction level as follows:

Family Circumstance Deduction Level

Adjust the family circumstance reduction level defined in Clause 1, Article 19 of the Law on Personal Income Tax No. 04/2007/QH12, which has been amended and supplemented by several laws, including Law No. 26/2012/QH13 as follows:

1. The deduction level for taxpayers is 11 million VND per month (132 million VND annually);

2. The deduction level for each dependant is 4.4 million VND per month.

Therefore, based on the above regulations, individuals without dependants must pay personal income tax when their total income from salaries and wages exceeds 11 million VND per month.