What is the time for determination of income from salaries and remunerations subject to PIT in Vietnam?

What is the time for determination of income from salaries and remunerations subject to PIT in Vietnam?

Under Clause 2 Article 11 of the PIT Law 2007:

Tax on incomes from salaries and remunerations

1. A taxable income from salary or remuneration is determined to be equal to the total of incomes specified in Clause 2, Article 3 of this Law and earned by a taxpayer in a tax period.

2. Time of determination of a taxable income from salary or remuneration is the time when an organization or individual pays income to a taxpayer or when a taxpayer receives income.

Thus, the time for determination of income from salaries and remunerations subject to PIT in Vietnam is the time when an organization or individual pays income to a taxpayer or when a taxpayer receives income.

What is the time for determination of income from salaries and remunerations subject to PIT in Vietnam? (Image from the Internet)

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

Under Clause 2, Article 3 of Decree 65/2013/ND-CP, amended by Clauses 2 and 3, Article 2 of Decree 12/2015/ND-CP, income from salaries and remunerations subject to PIT includes the following incomes:

(1). Salaries, remunerations and amounts of similar nature receivable in monetary or nonmonetary forms.

(2). Allowances and benefits, except for:

- 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.

(3). The received remunerations under forms as: brokerage commissions, payments for participation in schemes or projects, royalties, and other commissions, remunerations.

(4). Sums of money earned from participation in business associations, boards of directors, control boards, management boards, associations, professional clubs and other organizations;

(5). Benefits in cash or in kind in addition to salaries/remunerations paid by the employer to which the taxpayer is entitled in any shape or form:

- Payment for housing, electricity and water supply, associated services (if any), not including benefits of housing built by the employer to provide for employees at industrial parks or housing built by the employee at an economic zone, disadvantaged area or extremely disadvantaged area to provide for employees.

- The employer’s payment for life insurance and voluntary insurance with accumulated premiums, payment for voluntary pension insurance or contribution to Voluntary pension fund for employees.

- Membership fees and payments for other services serving personal needs such as: healthcare, entertainment, sports, beauty care.

- Other benefits prescribed by law

(6). Monetary or non-monetary bonuses or rewards in any form, including also bonus securities, except for the following bonuses or rewards:

- Rewards accompanying honorary titles conferred by the State, including also those accompanying emulation titles and other commendation and reward forms under the law on emulation and commendation;

- Rewards accompanying international or national prizes recognized by the Vietnamese State;

- Rewards for technical renovations, innovations or inventions recognized by competent state agencies;

- Rewards for detection of and reporting on illegal acts to competent state agencies.

Not count in taxable incomes for the following amounts:

- The support amounts of the employers for the employees and the employees’ relatives (parents, spouses, and children) so as to pay for medical examination and treatment involving dangerous diseases;

- The received amounts under the regime involving use of travel means in state agencies, public non-business units, party’s organizations, mass associations;

- The received amounts under the regime of official-duty houses as prescribed by law;

- The received amounts other than remunerations, salaries because of participation in or serving for activities of the Party, Union, National Assembly or elaborating legal documents of the State;

- Amounts for shift meals for employees paid by the employers not exceeding the level set by the Minister of Labor, Invalids and Social Affairs.

- Amount of buying the round-trip flight tickets paid on behalf (or paid) by the employers for employees being foreigners, employees being Vietnameses working abroad to go back home country for once annual leave;

- Study charges for children of foreign employees to study in Vietnam, children of the Vietnamese employees working abroad to study in foreign country at the education grade from early childhood education to upper secondary education paid on behalf by the employers.

What is the PIT rate applicable to income from salaries and remunerations for non-residents in Vietnam?

Pursuant to Article 26 of the PIT Law 2007:

Tax on incomes from salaries and remunerations

1. Tax on income from salary or remuneration of a non-resident is determined to be equal to his/her income from salary or remuneration specified in Clause 2 of this Article multiplied by the tax rate of 20%.

2. Taxable income from salary or remuneration of a non-resident is the total of salary or remuneration amounts received by a non-resident for job performance in Vietnam, regardless of income payers.

Thus, the PIT rate applicable to income from salaries and remunerations for non-residents in Vietnam is 20%.