Bases for calculating personal income tax for non-residents in Vietnam 2023

Bases for calculating personal income tax for non-residents in Vietnam 2023 (Internet image)

To this problem, LawNet would like to answer as follows:

1. Tax on incomes from business in Vietnam

Article 25 of the Law on Personal Income Tax 2007 stipulates tax on incomes from business as follows:

- Tax on incomes from business of a non-resident is determined to be equal to his/her turnover from production or business activities specified in Clause 2 of Article 25 of the Law on Personal Income Tax 2007 multiplied by the tax rate specified in Clause 3 of Article 25 of the Law on Personal Income Tax 2007.

- Turnover is the total sum of money derived from the provision of goods or services, including also expenses paid by the goods or service buyer on behalf of the non-resident but not refunded to the goods or service buyer.

If a contract between the goods or service provider and buyer does not specify personal income tax, the taxable turnover that must be converted is the total sum of money in any form earned by the non-resident from the provision of goods or services in Vietnam, regardless of places where business activities are conducted.

- Tax rates applicable to incomes from business are specified for different production sectors or business lines as follows:

+ 1% for goods trading;

+ 5% for service provision;

+ 2% for production, construction, transportation and other business activities.

2. Tax on incomes from salaries or wages in Vietnam

Article 26 of the Law on Personal Income Tax 2007 stipulates tax on incomes from salaries or wages as follows:

- Tax on income from salary or wage of a non-resident is determined to be equal to his/her income from salary or wage specified in Clause 2 of Article 26 of the Law on Personal Income Tax 2007 multiplied by the tax rate of 20%.

- Taxable income from salary or wage of a non-resident is the total of salary or wage amounts received by a non-resident for job performance in Vietnam, regardless of income payers.

3. Tax on incomes from capital investment in Vietnam

Article 27 of the Law on Personal Income Tax 2007 stipulates tax on income from capital investment as follows:

Tax on income from capital investment of a non-resident is determined to be equal to the total sum of money earned by a non-resident from his/her capital investment in organizations or other individuals in Vietnam, multiplied by the tax rate of 5%.

4. Tax bases for income from capital transfer in Vietnam

Article 28 of the Law on Personal Income Tax 2007 stipulates tax on incomes from capital transfer as follows:

Tax on income from capital transfer of a non-resident is determined to be equal to the total sum of money earned by a non-resident from the transfer of his/her capital portions in Vietnamese organizations or individuals, multiplied by the tax rate of 0.1%, regardless of whether the transfer is made in Vietnam or abroad.

5. Tax on incomes from real estate transfer in Vietnam

Article 29 of the Law on Personal Income Tax 2007 stipulates tax on incomes from real estate transfer as follows:

Tax on income from real estate transfer in Vietnam of a non-resident is determined to be equal to the real estate transfer price multiplied by the tax rate of 2%.

6. Tax on incomes from copyright or franchising in Vietnam

Article 30 of the Law on Personal Income Tax 2007 stipulates tax on incomes from copyright or franchising as follows:

- Tax on income from copyright of a non-resident is determined to be equal to the income in excess of VND 10 million earned from each contract on assignment or licensing of an intellectual property object or technology transfer in Vietnam, multiplied by the tax rate of 5%.

- Tax on income from commercial franchising of a non-resident is determined to be equal to the income in excess of VND 10 million earned from each contract on commercial franchising in Vietnam, multiplied by the tax rate of 5%.

7. Tax on incomes from won prizes, inheritances or gifts in Vietnam

Article 31 of the Law on Personal Income Tax 2007 stipulates tax on incomes from won prizes, inheritances or gifts as follows:

- Tax on income from won prize, inheritance or gift of a non-resident is determined to be equal to his/her taxable income specified in Clause 2 of Article 31 of the Law on Personal Income Tax 2007 multiplied by the tax rate of 10%.

- Taxable income from won prize of a non-resident is the prize value in excess of VND 10 million upon each time of winning in Vietnam;

Taxable income from inheritance or gift is the inheritance or gift value in excess of VND 10 million upon each time of income receipt by a non-resident in Vietnam.

8. Time of determination of taxable income for non-residents in Vietnam

In Article 32 of the Law on Personal Income Tax 2007, the time of determining taxable income is as follows:

- Time of determination of taxable income with respect to incomes specified in Article 25 of the Law on Personal Income Tax 2007 is the time when a non-resident earns an income or a goods sale or service provision invoice is issued.

- Time of determination of taxable income with respect to incomes specified in Articles 26, 27, 30 and 31 of the Law on Personal Income Tax 2007 is the time when an organization or individual in Vietnam pays an income to a non-resident or when a non-resident receives an income from an overseas organization or individual.

- Time of determination of taxable income with respect to incomes specified in Articles 28 and 29 of this Law is the time when a transfer contract becomes effective.

Vo Ngoc Nhi

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