Which incomes are not included in personal income tax from salaries and wages in Vietnam?

Which incomes are not included in personal income tax from salaries and wages in Vietnam?

Based on Point g, Clause 2, Article 2 of Circular 111/2013/TT-BTC, supplemented by Clause 5, Article 11 of Circular 92/2015/TT-BTC, the incomes excluded from personal income tax from salaries and wages include:

- Employer support for employees' treatment of critical illnesses and that of their relatives.

+ Relatives of the employee include: biological children, legal adopted children, illegitimate children, stepchildren of the wife or husband; spouse; biological parents; parents-in-law (or parents of the spouse); stepparents; legal adoptive parents.

+ The support amount excluded from taxable income is the actual amount paid according to the hospital fee payment receipt, but not more than the hospital fee amount after deducting the insurance organization's payments.

+ The employer providing the support is responsible for keeping copies of hospital fee payment receipts with the employer's confirmation (in case the employee and their relatives pay the remaining amount after direct payment by the insurance organization to the medical facility) or copies of hospital fee payment receipts; insurance payment receipts confirmed by the employer (in case the employee and their relatives pay the entire fee, and the insurance organization reimburses the insurance amount to the employee and their relatives) along with the support payment receipts for the employee and their relatives with critical illnesses.

- incomes received under regulations for the use of transportation within State agencies, public service providers, Communist Party organizations, and mass organizations.

- incomes received under policies for official residence housing as per legal regulations.

- incomes received outside of salaries and wages for participating in opinion contribution, assessment, review of legal documents, Resolutions, political reports; participation in inspection and supervision teams; meeting with voters, meeting with citizens; uniforms and other tasks directly related to serving the activities of the Office of the National Assembly, Ethnic Council, and Committees of the National Assembly, Delegations of the National Assembly; Central Office and Committees of the Communist Party; Offices of City and Provincial Party Committees and their Committees.

- Mid-shift meals and lunch provided by the employer in the form of direct cooking, meal purchasing, or meal vouchers.

If the employer does not organize mid-shift or lunch meals but provides cash to employees, it is excluded from taxable income if the amount is in line with the Ministry of Labor - Invalids and Social Affairs guidelines. If the amount exceeds the guidelines, the excess must be included in the taxable income.

Specific application levels for State enterprises and organizations under administrative and non-business units, Communist Party, trade unions, and associations should not exceed the Ministry of Labor - Invalids and Social Affairs guidelines.

For non-State businesses and other organizations, the level decided by the unit head and the union chairman should not exceed the level applicable to State enterprises.

- Round-trip air ticket payments made by the employer for foreign employees working in Vietnam or Vietnamese employees working abroad for an annual leave return.

The basis for determining air ticket payments is the labor contract and the payment from Vietnam to the foreign employee's home country or the country where the foreign family resides and vice versa; or payments from the country where the Vietnamese employee is working back to Vietnam and vice versa.

- Tuition fees for the children of foreign employees working in Vietnam attending school in Vietnam, and the children of Vietnamese employees working abroad attending school abroad from kindergarten to high school paid by the employer.

- Personal incomes received from associations and sponsoring organizations are excluded from taxable income if the recipient is a member of the association or organization; the sponsorship funds are from state budget resources or managed as per state regulations; for literary and artistic work creation, scientific research projects executed for state political duties or programs in line with the association's constitution.

- Payments made by the employer for the relocation and transfer of foreign employees working in Vietnam as per the labor contract, adhering to the standard work schedules as per international industry practices such as oil and gas, mining.

The basis for this is the labor contract and payment for air tickets from Vietnam to the foreign country of residence and vice versa.

Example: Mr. X, a foreigner, is transferred by the oil contractor Y to work on a rig on the Vietnam continental shelf. According to the labor contract, Mr. X's work cycle on the rig is 28 consecutive days, followed by a 28-day rest period.

Contractor Y pays Mr. X for round-trip air tickets from abroad to Vietnam and vice versa each shift change, helicopter transport costs from mainland Vietnam to the rig and back, lodging costs if Mr. X waits for the helicopter to the rig. These payments are not included in Mr. X's taxable income.

- incomes received due to organizing or individuals paying for funerals, weddings for the employee and their family as per the organization or individual's regulations, consistent with taxable income determination guidelines for corporate income tax as per Corporate Income Tax Law 2008.

Which incomes are not included in personal income tax from salaries and wages in Vietnam? (Image from Internet)

Which incomes from salaries and wages are subject to personal income tax in Vietnam?

Based on Clause 2, Article 3 of Law on Personal Income Tax 2007, amended by Clause 1, Article 1 of Amended Law on Personal Income Tax 2012, incomes from salaries and wages subject to personal income tax include:

- Salaries, wages, and incomes of similar nature;

- Allowances, subsidies, except for:

+ Allowances, subsidies as per laws favoring people with meritorious service;

+ National defense, security allowances; hazardous or dangerous job allowances at workplaces with hazardous or dangerous elements;

+ Attraction and regional allowances as per law;

+ Sudden difficulty assistance, occupational accident, and disease assistance, one-time childbirth or adoption assistance, reduced labor capacity assistance, one-time retirement assistance, monthly survivorship benefits, and other allowances as per social insurance laws;

+ Severance and job loss allowances as per the Labor Code;

+ Social protection allowances and other allowances not of salary, wage nature as provided by the Government of Vietnam.

When is the time for tax determination for personal income tax from salaries and wages in Vietnam?

Based on Article 11 of the Law on Personal Income Tax 2007:

Taxable income from salaries and wages

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

2. The tax determination point for taxable income from salaries and wages is when the organization or individual pays income to the taxpayer or when the taxpayer receives the income.

Thus, the tax determination time for personal income tax from salaries and wages is when the organization or individual pays income to the taxpayer or when the taxpayer receives the income.