When does 35% personal income tax rate apply to monthly salary in Vietnam?

When is 35% personal income tax rate apply to monthly salary in Vietnam?

Based on Article 14 of Decree 65/2013/ND-CP (amended by Clause 4, Article 6 of Decree 12/2015/ND-CP) and Clause 1, Article 18 of Circular 111/2013/TT-BTC.

The personal income tax rate for Vietnamese residents is applied according to the following progressive tariff:

The 35% personal income tax rate applies to individuals with taxable income from salaries and wages, whereby the taxable income exceeds 80 million VND/month and exceeds 960 million VND/year.

Wherein:

- Taxable income:

Taxable Income = Taxable Revenue - Deductions

And

Taxable Revenue = Total Income - Exempted Amounts

When does 35% personal income tax rate apply to monthly salary in Vietnam? (Image from the Internet)

What is the current personal income tax rate in Vietnam?

According to the 2007 Law on Personal Income Tax and related guiding documents. To be specific, the personal income tax rates for 2024 are as follows:

(1) Progressive tariff:

Based on Article 22 of the 2007 Law on Personal Income Tax, the progressive tariff is stipulated as follows:

The progressive tariff applies to taxable income from business, salaries, and wages:

Under Clause 1, Article 21 of the 2007 Law on Personal Income Tax (amended by Clause 5, Article 1 of the 2012 Amended Law on Personal Income Tax), the taxable income for business activities, salaries, and wages is determined by the total taxable revenue stipulated in Article 10 of the 2007 Law on Personal Income Tax (amended by Clause 4, Article 2 of the 2014 Law Amending Tax Laws) and Article 11, minus the contributions for social insurance, health insurance, unemployment insurance, occupational liability insurance for some compulsory insurance sectors, voluntary retirement funds, and deductions.

(2) Fixed Tax Schedule

Under Article 23 of the 2007 Law on Personal Income Tax (amended by Clause 7, Article 2 of the 2014 Law Amending Tax Laws), the fixed tax schedule is determined as follows:

Note: The fixed tax schedule applies to taxable income specified in Clause 2, Article 21 of the 2007 Law on Personal Income Tax, specifically including:

Taxable income concerning capital investment, capital transfer, real estate transfer, prizes, royalties, franchise rights, inheritance, gifts is taxable income as per the 2007 Law on Personal Income Tax.

Vietnam: Which incomes does progressive tariff apply to?

As per Clause 1, Article 22 of the 2007 Law on Personal Income Tax, it is stipulated as follows:

Progressive tariff

1. The progressive tariff applies to taxable income stipulated in Clause 1, Article 21 of this Law.

...

Thus, the progressive tariff applies to taxable income from business, salaries, and wages.

Taxable income concerning business activities, salaries, and wages is the total taxable revenue stipulated in Articles 10 and 11 of the 2007 Law on Personal Income Tax, minus contributions to social insurance, health insurance, unemployment insurance, occupational liability insurance for certain compulsory insurance sectors, voluntary retirement funds, and deductions stipulated in Articles 19 and 20 of the 2007 Law on Personal Income Tax.

Note: The provision on determining tax for individual businesses in Clause 1, Article 21 was abolished by Clause 4, Article 6 of the 2014 Law Amending Tax Laws.