Tiếng Việt
中文 (中国)
In Vietnam, the Personal Income Tax (PIT) is not something that employees with low income have to worry about cause they won’t be subjected to paying PIT. However, on the other hand, the employees with middle and high incomes should pay attention to the types of payment subject to PIT in Vietnam as it might be the core difference in whether they have to pay PIT or not. So, what are the regulations on incomes subject to PIT in Vietnam?
The taxable income (income subject to PIT) when calculating personal income tax (PIT) from wages and salaries is the income that the employee receives from the employer.
However, besides the normal salaries, wages, and other incomes of the nature of wages and salaries that are definitely subject to PIT, there are many other types of payments or bonuses that are also subject to PIT payment, such as:
Bonuses
For some businesses, the bonuses at the end of the year or on some other special occasions might not be money. However, regardless of the type of payment, if it is considered a bonus, it will be subject to PIT payment.
The bonus can be cash or non-cash, even in the type of stock bonuses of the business or other partner businesses.
Allowances and subsidies
Basically, all types of allowances and subsidies will be subject to PIT payment, except the following types:
- Monthly allowance and one-time allowance in accordance with the law on incentives for people with meritorious services.
- Monthly allowance, one-time allowance for those who participate in the resistance war and perform national defense duties.
- Defense and security allowances and allowances for the armed forces.
- Toxic hazard allowance
- Attraction allowance and regional allowance.
- Allowances for difficulties, labor accidents, occupational diseases, post-natal health rehabilitation, working capacity reduction, lump-sum retirement, job loss allowance, or other amounts as prescribed by the labour law in Vietnam and social insurance.
- Allowances of beneficiaries of social protection according to regulations.
- Lump-sum allowance for those who move to an area with extremely difficult economic conditions, the protection of sovereignty over seas and islands.
- Allowances for village health workers.
- Allowances for employees with special roles in society.
Remuneration
Besides salaries and wages, the employees who participate in special projects at the business might get remuneration for their work. This type of payment is also subjected to PIT payment.
The following types of remunerations received by the employees will be subject to PIT payment in Vietnam:
- Brokerage commissions, merchandise sales agency commissions
- Money to participate in projects and schemes
- Money to participate in scientific and technical research projects
- Royalties
- Money to participate in teaching activities
- Money for participation in cultural, artistic, physical training, and sports performances
- Advertising service fee
- Other remuneration, other service fees.
Benefits paid by the employer
In some businesses, the employee might get benefits that are not directly money but can be transferred to a specific amount of money.
For example, if the employee has to work far from home in a remote area for a long time, they might get benefits such as the fees used for accommodation and travel fees, etc.
Particularly, the types of benefits that are taxable income in Vietnam are:
- Electricity, water, housing, and accompanying services (if any)
- Money paid by the employer to buy life insurance, other optional insurance with accumulated premiums, buy voluntary retirement insurance or contribute to the voluntary retirement fund for employees.
- The part of expenses for stationery, business trip, phone, clothes, etc. which is higher than the current level regulated by the State.
- Other benefits such as spending on holidays, hiring consulting services, hiring tax returns for one or a group of individuals, spending on domestic helpers such as cooks, drivers, etc.
ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.
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