Vietnam: Instructions on how to make a PIT finalization declaration in 2018

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1. Individuals who sign labor contracts of 3 months or more

Taxable income (=) Taxed income (-) Deductions

Payable tax (=) Taxable income (x) Tax rate

- Taxable income is the total amount of taxable incomes from salaries, wages and other taxable incomes of the nature of wages and salaries that the paying agency has paid to individuals, except for tax-exempt items such as:

+ Mid-shift meal, lunch not exceeding 730,000 VND/month (If the enterprise cooks or buys meals by itself, and provides meal vouchers to employees, the whole is exempted);

+ Costume allowance is not more than 5,000,000 VND/year (If received in kind, the whole is exempted);

+ The fixed money for working-trip expenses and phone calls not exceeding  the regulations in the enterprise's regulations;

+ Overtime pay on holidays, holidays and night work paid higher than normal days.

- Deductions include:

+ Personal deductions: Deduction for the taxpayer is 9 million VND/month, deduction for each dependant is 3.6 million VND/month.

+ Deductible charitable donations: Donations to the establishments that take care of disadvantaged children, the disabled, and the homeless elderly people; Contributions to charitable, humanitarian and study encouragement funds established and operated on the organization and operation of non-profit social funds, charitable funds (if any).

+ Deductible insurance: Insurance contributions include social insurance, health insurance, unemployment insurance, professional liability insurance for some professions that must participate in compulsory insurance.

- The rate of personal income tax on incomes from business, wages shall apply the progressive tax table in Article 22 of the Law on Personal income tax of Vietnam. To be specific:

2. Individuals who sign labor contracts of less than 3 months

According to Point i Clause 1 Article 25 of the Circular No. 111/2013/TT-BTC of the Ministry of Finance of Vietnam:

- The organization or person that pays a total income from 2 million VND to a resident that does not sign a labor contract (as guided in Point c and Point d Clause 2 Article 2 of this Circular) or that signs a labor contract for less than 03 months shall withhold 10% tax on the income before it is paid to the person.

- For the person that earns only a taxable income as stated above but the total taxable income estimated after personal deductions are made does not reach the taxable level, the person shall make and send a commitment (the form is provided in the guiding documents on tax administration) to the income payer as the basis for temporarily exempting the income from personal income tax.

- The persons that make commitments as guided in this Point shall obtain tax registration and have tax codes when the commitments are made.

3. Non-residents

According to Clause 1 Article 18 of the Circular No. 111/2013/TT-BTC of the Ministry of Finance of Vietnam, the rate of personal income tax on incomes from wages earned by a non-resident equals the taxable income from wages multiplied by (x) 20% tax.

Payable PIT = Taxable income x 20% tax

Duy Thinh

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