Vietnam: Guidelines for calculating personal income tax in 2018

Step 1: Determine taxable income

Taxable income is defined as the incomes under Article 3 of the Personal Income Tax Law 2007, amended and supplemented by the Amended Personal Income Tax Law 2012 and the Amended Tax Laws 2014:

Step 2: Determine tax-exempt and tax-reduced income

- Tax-exempt income is deducted when determining taxable income.

- The tax-exempt and tax-reduced incomes are stipulated in Article 4, Article 5 of the Personal Income Tax Law 2007, amended and supplemented by the Amended Personal Income Tax Law 2012 and the Amended Tax Laws 2014;

Step 3: Determine deductible expenses and family deductions, contributions, and social insurance.

- Reasonable expenses for taxable income from business activities are stipulated in Clause 3, Article 10 of the Personal Income Tax Law and guided by Article 9 of Decree 65/2013/ND-CP of Vietnam's Government.

- Family deduction: stipulated in Clause 1, Article 19, amended by Clause 4, Article 1 of the Amended Personal Income Tax Law 2012:

+ Deduction for the taxpayer is 9 million VND/month (108 million VND/year);

+ Deduction for each dependent is 3.6 million VND/month.

Step 4: Determine taxable income

- For income from business, salary, and wages: It is the total taxable income minus social insurance, health insurance, unemployment insurance, professional liability insurance for certain professions that must participate in mandatory insurance, voluntary pension fund, and other deductions.

- For income from capital investment, capital transfer, real estate transfer, winnings, royalties, franchise, inheritance, and gifts: it is taxable income.

Step 5: Calculate personal income tax

- For income from business, salary, and wages: Apply the progressive tax rate schedule in Article 22 of the Personal Income Tax Law:

- For income from capital investment, capital transfer, real estate transfer, winnings, royalties, franchise, inheritance, and gifts: Apply the comprehensive tax rate schedule in Article 23 of the Personal Income Tax Law, amended by Clause 7, Article 2 of the Amended Tax Laws 2014:

Legal basis:

- Personal Income Tax Law 2007;

- Amended Personal Income Tax Law 2012;

- Amended Tax Laws 2014;

- Decree 65/2013/ND-CP.

- Ngoc Duyen -

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