Are the rewards of employee subject to personal income tax in Vietnam?
Are the rewards of employee subject to personal income tax in Vietnam? Thank you! - Mr. Khoa (An Giang)
Who are payers of personal income tax in Vietnam?
Pursuant to Article 2 of the Law on Personal Income Tax in 2007 stipulating taxpayers:
Taxpayers
1. Personal income taxpayers include residents who earn taxable incomes specified in Article 3 of this Law inside and outside the Vietnamese territory and non-residents who earn taxable incomes specified in Article 3 of this Law inside the Vietnamese territory.
2. Resident means a person who satisfies one of the following conditions:
a/ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;
b/ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.
3. Non-resident means a person who does not satisfy any of the conditions specified in Clause 2 of this Article.
As regulations above, personal income taxpayers include residents who earn taxable incomes inside and outside the Vietnamese territory and non-residents who earn taxable incomes inside the Vietnamese territory.
Resident means a person who satisfies one of the following conditions:
- Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;
- Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.
Non-resident means a person who does not satisfy any of the conditions for residents.
Are the rewards of employee subject to personal income tax in Vietnam? - image from internet
Are the rewards of employee subject to personal income tax in Vietnam?
Pursuant to Points a, b, e, Clause 2, Article 2 of the Circular 111/2013/TT-BTC stipulating taxable incomes:
Taxable incomes
...
2. Incomes from wages and remunerations.
Incomes from wages and remunerations (hereinafter referred to as wages) are incomes paid to employees from employers, including:
a) Wages, remunerations, and the other amounts paid as wages or remunerations in cash or not in cash.
b) Allowances and benefits, except for:
...
e) Rewards in cash or not in cash in any shape or form, including rewards in the form of securities, except for:
e.1) Prize money associated with the titles awarded by the State, including the prize money associated with honorary titles as prescribed by law:
e.1.1) Prize money associated with honorary titles awarded by Ministries, central and provincial agencies and associations, excellent employee titles.
e.1.2) Prize money associated with the awards.
e.1.3) Prize money associated with the titles awarded by the State.
e.1.4) Prize money associated with the awards presented by associations and organizations belonging to central and local political organizations, socio-political organizations, social organizations, professional-social organizations that conforms to their charters and the Law on Emulation and Commendation.
e.1.5) Prize money associated with the Ho Chi Minh Prize and National Prize.
e.1.6) Prize money associated with medals or badges.
e.1.7) Prize money associated with certificates of merit
The powers to decide the commendation and prize money associated with the titles and awards above must be conformable with the Law on Emulation and commendation.
...
According to the regulation above, rewards for employees are considered as salary or wages paid by the employer to the employees.
Therefore, the rewards of employees are subject to personal income tax in Vietnam.
However, following rewards of employees are exempt from personal income tax in Vietnam:
- Prize money associated with the titles awarded by the State, including the prize money associated with honorary titles as prescribed by law;
- Prize money associated with national awards and international awards recognized by the Vietnamese State.
- Prize money for technical improvement, invention, and innovation recognized by competent state agencies.
- Rewards for discovering and reporting violations of the law to competent state agencies.
How many rates of personal income tax are there in Vietnam?
Pursuant to Clause 2 Article 7 of the Circular 111/2013/TT-BTC (amended by Clause 6 Article 25 of the Circular 92/2015/TT-BTC), the rate of personal income tax on incomes from business, wages shall apply the progressive tax table. To be specific:
[1] Level 1: The tax rate is 5% if the assessable income is up to 60 million VND/year, or up to 5 million VND/month.
[2] Level 2: The tax rate is 10% if the assessable income is over 60 to 120 million VND/year, or over 5 to 10 million VND/month.
[3] Level 3: The tax rate is 15% if the assessable income is over 120 to 216 million VND/year, or over 10 to 18 million VND/month.
[4] Level 4: The tax rate is 20% if the assessable income is over 216 to 384 million VND/year, or over 18 to 32 million VND/month.
[5] Level 5: The tax rate is 25% if the assessable income is over 384 to 624 million VND/year, or over 32 to 52 million VND/month.
[6] Level 6: The tax rate is 30% if the assessable income is over 624 to 960 million VND/year, or over 52 to 80 million VND/month.
[7] Level 7: The tax rate is 36% if the assessable income is over 960 million VND/year, or over 80 million VND/month.
Best regards!
