What is the lowest personal income tax rate in Vietnam?

What is the lowest personal income tax rate in Vietnam?

According to Clause 2, Article 22 of the 2007 Law on Personal Income Tax, the rates for personal income tax are specified in the progressive tariffs as follows:

The lowest personal income tax rate that a taxpayer must pay is 5%.

Vietnam: When does a taxpayer pay personal income tax on income from salary?

Pursuant to Article 2 of Circular 111/2013/TT-BTC, the regulation is as follows:

Taxable Income

…

2. Income from salaries, wages

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

a) Salaries, wages, and amounts with the nature of salaries, wages in forms of money or not.

b) Allowances and subsidies, except the following allowances and subsidies:

b.1) Monthly preferred allowances and one-time subsidies as per the law on people with merit.

…

Additionally, according to Article 1 of Resolution 954/2020/UBTVQH14, it is regulated as follows:

Family Circumstance Reduction

The adjustment to the family circumstance deduction specified in Clause 1 Article 19 of the Law on Personal Income Tax No. 04/2007/QH12, amended and supplemented by Law No. 26/2012/QH13, is as follows:

1. The deductible amount for taxpayers is 11 million VND/month (132 million VND/year);

2. The deductible amount for each dependent is 4.4 million VND/month.

Thus, for individuals with no dependents, when the total income from salaries, wages exceeds 11 million VND/month, personal income tax is payable.

Who is required to pay personal income tax in Vietnam?

Article 1, Clause 2 of the 2007 Law on Personal Income Tax states:

Taxpayers

1. Personal income taxpayers are resident individuals with taxable incomes specified in Article 3 of this Law arising within or outside the territory of Vietnam and non-resident individuals with taxable incomes specified in Article 3 of this Law arising within the territory of Vietnam.

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

a) Present in Vietnam for 183 days or more during a calendar year or 12 consecutive months from the first day of presence in Vietnam;

b) Having a regular residence in Vietnam, including a registered permanent residence or a rented house in Vietnam under a rental agreement.

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

Article 1 of Circular 111/2013/TT-BTC, as amended by Article 2 of Circular 119/2014/TT-BTC, states:

Taxpayers

Taxpayers are resident individuals and non-resident individuals as specified in Article 2 of the Law on Personal Income Tax, Article 2 of Decree No. 65/2013/ND-CP dated June 27, 2013, by the Government detailing a number of articles of the Law on Personal Income Tax and the Law amending and supplementing a number of articles of the Law on Personal Income Tax (hereafter referred to as Decree No. 65/2013/ND-CP), with taxable income as stipulated in Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP.

The scope of determining taxable income for taxpayers is as follows:

For resident individuals, taxable income is the income derived within or outside the territory of Vietnam, irrespective of place of payment;

For individuals who are citizens of countries or territories with a Double Taxation Agreement with Vietnam on the avoidance of double taxation and tax evasion on income taxes and are residents in Vietnam, personal income tax obligations are calculated from the month they arrive in Vietnam in case they first arrive in Vietnam to the month the employment contract ends and they leave Vietnam (calculated in full months) without conducting procedures for consular certification to not subject double taxation under the Double Taxation Agreement between the two countries.

For non-resident individuals, taxable income is income derived in Vietnam, irrespective of place of payment and receipt.

Personal income tax is a mandatory payment to the state budget by individuals when they have taxable income. Individuals liable for personal income tax are resident and non-resident individuals with taxable income arising inside and outside the territory of Vietnam as prescribed.