What tax rate does apply to monthly salary of VND 20,000,000 in Vietnam?

Which tax tariff applies to income from wages in Vietnam?

Pursuant to Clause 1, Article 22 of the Law on Personal Income Tax 2007, there are specific provisions regarding the application of the progressive tax tariff to the taxable income as prescribed in Clause 1, Article 21 of this Law.

Referring to Clause 1, Article 21 of the Law on Personal Income Tax 2007 (amended by Clause 5, Article 1 of the Law on Amendments to Law on Personal Income Tax 2012 and the provision related to determining tax for business individuals in this clause was repealed by Clause 4, Article 6 of the Law Amending Laws on Tax 2014) with specific provisions as follows:

Taxable Income 

1. Taxable income from business, wages, and salaries is the total taxable income prescribed in Articles 10 and 11 of this Law, minus contributions to social insurance, health insurance, unemployment insurance, professional liability insurance for certain professions that must participate in mandatory insurance, voluntary pension funds, and allowable deductions as prescribed in Articles 19 and 20 of this Law.

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Referring to Article 11 of the Law on Personal Income Tax 2007 which provides specifically as follows:

Taxable Income from Wages and Salaries

1. Taxable income from wages and salaries is determined by the total income specified in Clause 2, Article 3 of this Law that the taxpayer receives during the tax period.

2. The time to determine taxable income from wages and salaries is the time when the organization or individual pays income to the taxpayer, or the time when the taxpayer receives this income.

Thus, based on the above provisions, income from wages will apply to a progressive tax tariff.

What tax rate does apply to monthly salary of VND 20,000,000 in Vietnam? (Image from Internet)

What tax rate does apply to monthly salary of VND 20,000,000 in Vietnam?

Pursuant to Clause 2, Article 22 of the Law on Personal Income Tax 2007, specific provisions regarding the progressive tax tariff are as follows:

The applicable tax rate for a monthly salary of 20 million depends on the taxable portion of this 20 million salary.

Example: If your monthly salary is 20 million VND/month, your insurance-contribution salary is also 20 million VND/month, and you have no dependents, the applicable tax rate and the income tax you must pay are as follows:

Note:

- Contribution rates: SI (8%), HI (1.5%), UI (1%)

- Maximum salary for SI, HI: 36,000,000 (not exceeding 20 times statutory pay rate)

- Maximum salary for UI: 93,600,000 (not exceeding 20 times regional minimum wage)

Which income is exempt from personal income tax in Vietnam?

According to Article 4 of the Law on Personal Income Tax 2007 as supplemented by Clause 3, Article 2 of the Law Amending Laws on Tax 2014 and amended by Clause 2, Article 1 of the Law on Amendments to Law on Personal Income Tax 2012, personal income exempt from personal income tax is prescribed as follows:

- Income from real estate transfer between husband and wife; natural father, mother and natural children; adoptive father, mother and adopted children; father-in-law, mother-in-law and daughter-in-law; father-in-law, mother-in-law and son-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; biological siblings.

- Income from transferring residential houses, housing land rights, and assets attached to housing land, in cases where the individual has only one residential house or housing land.

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

- Income from inheritances or gifts as real estate between husband and wife; natural father, mother and natural children; adoptive father, mother, and adopted children; father-in-law, mother-in-law and daughter-in-law; father-in-law, mother-in-law, and son-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; biological siblings.

- Income of households and individuals directly engaged in agricultural production, forestry, salt-making, aquaculture, and fishing activities that have not been processed into other products or are only through traditional processing.

- Income from converting agricultural land allocated by the State to households and individuals for production.

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

- Income from remittances.

- Night work and overtime wages that are higher than day work and prescribed working hours.

- Pensions paid by the Social Insurance Fund; monthly pensions paid by the voluntary pension fund.

- Income from scholarships, including:

+ Scholarships granted from the state budget;

+ Scholarships granted by domestic and foreign organizations under their support programs.

- Income from life insurance contract compensations, non-life insurance compensation, labor accident compensations, state compensation, and other compensation as stipulated by law.

- Income received from charitable funds approved or recognized by state authorities, operating for charitable, humanitarian, or nonprofit purposes.

- Income from foreign aid for charitable, humanitarian purposes in government or non-government forms approved by competent state authorities.

- Income from wages and salaries of Vietnamese sailors working for foreign shipping companies or international shipping companies in Vietnam.

- Income of individuals who are ship owners, individuals having the right to use ships, and individuals working on ships from providing goods and services directly serving the offshore fishing activities.