What is the current minimum salary for personal income tax payment in Vietnam?

What is the current minimum salary subject to personal income tax in Vietnam?

Based on Clause 1, Article 19 of the Personal Income Tax Law 2007, as amended by Article 1 of Resolution 954/2020/UBTVQH14, the family circumstance deduction is regulated as follows:

Family Circumstance Deduction

1. Family circumstance deduction is the amount deductible from taxable income before tax calculation for income from business activities, salaries, wages of individual taxpayers who are residents. Family circumstance deduction includes the following two parts:

a) Deduction for taxpayers is VND 9 million per month (VND 108 million per year);

b) Deduction for each dependent is VND 3.6 million per month.

In case the consumer price index (CPI) fluctuates by more than 20% compared to the time the law takes effect or the most recent adjustment of family circumstance deduction, the Government of Vietnam shall propose to the Standing Committee of the National Assembly to adjust the family circumstance deduction specified in this clause to suit price fluctuations for the subsequent tax period.

2. The determination of family circumstance deduction for dependents is implemented following the principle that each dependent is only counted once for deduction in one taxpayer.

3. Dependents are those whom the taxpayer has a duty to support, including:

a) Minor children; disabled children who are incapable of working;

b) Individuals without income or with income not exceeding the prescribed level, including adult children studying at university, college, vocational school; spouse incapable of working; parents who are beyond working age or incapable of working; other individuals without support whom the taxpayer must directly support.

The Government of Vietnam stipulates the income level and declaration procedures to determine dependents eligible for family circumstance deduction.

According to the above regulation, the deduction for taxpayers is VND 9 million per month and the deduction for each dependent is VND 3.6 million per month. Therefore, individuals without dependents must pay personal income tax when total income from salaries and wages exceeds VND 11 million per month.

Income from salaries and wages is income after deducting the following:

- Insurance contributions, voluntary pension funds, charitable contributions, study promotion, and humanitarian contributions.

- Income exempt from income tax.

- Non-taxable income such as certain allowances, subsidies, lunch money, etc.

Thus, the minimum salary subject to personal income tax based on the number of dependents of an individual with income from salaries and wages is as follows:

What is the current minimum salary subject to personal income tax in Vietnam? (Image from Internet)

What are cases of tax reduction for individuals in Vietnam?

According to regulations in Article 5 of Decree 65/2013/ND-CP, individuals may receive tax reduction under the following circumstances:

Taxpayers facing difficulties due to natural disasters, fires, accidents, serious illness affecting their ability to pay tax are entitled to apply for tax reduction corresponding to the degree of loss but not exceeding the tax payable.

Additionally, Article 4 of Circular 111/2013/TT-BTC provides detailed guidance on determining the amount of tax eligible for reduction as follows:

- Tax reduction is considered on an annual tax calculation basis. Taxpayers facing difficulties due to natural disasters, fires, accidents, serious illness in any tax year will be considered for a reduction in the amount of tax payable for that tax year.

- The tax payable as a basis for considering tax reduction is the total personal income tax payable by the taxpayer in that tax year, including:

+ Personal income tax paid or withheld for income from capital investment, transfer of capital, real estate transfers, lottery winnings, royalties, franchise licenses, inheritance; gift income.

+ Personal income tax payable for income from business and salary, wages.

- The basis for determining the degree of loss eligible for tax reduction is the total actual cost to remediate the damage minus (-) compensation received from insurance organizations (if any) or from organizations or individuals causing the accident (if any).

- The amount of tax reduction is determined as follows:

+ If the tax payable in the tax year exceeds the degree of loss, the tax reduction equals the degree of loss.

+ If the tax payable in the tax year is less than the degree of loss, the tax reduction equals the tax payable.

Which entities are personal income tax payers in Vietnam?

According to Article 2 of the Personal Income Tax Law 2007, subjects required to pay personal income tax include resident individuals with taxable income as prescribed in Article 3 of the Personal Income Tax Law 2007 arising within and outside the territory of Vietnam, and non-resident individuals with taxable income as prescribed in Article 3 of the Personal Income Tax Law 2007 arising within the territory of Vietnam.

- Resident individuals are those who meet one of the following conditions:

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

+ Having a regular residence in Vietnam, including having a place registered as a permanent residence or a rented house for residence in Vietnam under a lease contract.

- Non-resident individuals are those who do not satisfy the condition:

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

+ Having a regular residence in Vietnam, including having a place registered as a permanent residence or a rented house for residence in Vietnam under a lease contract.