Tiếng Việt
中文 (中国)
(Vietnam) In all countries, tax is the main source of state budget revenue, including personal income tax. As the economy is growing, personal income tax also has a rapid increase, proportional to the per capita income. Accordingly, from the state’s point of view, contributing a higher level of personal income tax is good for the country. However, from the employee’s side, it is the other way around. All employees want to minimize their taxable personal income (if any). So, what are the regulations on non-taxable personal incomes in Vietnam?
Personal income tax in Vietnam
Personal income tax is an amount of money that income earners have to deduct part of their salary, or from other sources of revenue, into the state budget after deductions have been made.
Personal income tax is not levied on low-income individuals, so this revenue will be fair to all beneficiaries, contributing to reducing the disparity between classes in society.
Nonetheless, no employees like to see their money taken away. So, they wonder if all of their incomes, from winning a lottery to their lunch money provided by the business, etc. part of the taxable income?
Non-taxable personal incomes in Vietnam
According to Clause 2, Article 2 of Circular 111/2013/TT-BTC, the following amount of money are not included in the taxable income:
Money for mid-shift meals, lunch
In Vietnam, some businesses will provide their employees with assistance such as support for transportation, money for food, etc.
According to the current Vietnam law, the amount of money for mid-shift meals and lunches provided by the employer to organize mid-shift meals and lunches for employees in the form of directly cooking, buying meals, and providing meal vouchers will not be calculated as taxable personal income.
However, it should be noted that there have been some cases where the employer use this section of money to benefit the business and avoid the law of Vietnam. Accordingly, the Government has strictly set out some rules to prevent that from happening.
Particularly, the support money for mid-shift meals or lunches will not be calculated as taxable personal income if the expenditure is consistent with the guidance of the Ministry of Labour, Invalids, and Social Affairs.
In case the expenditure is higher than the guideline of the Ministry of Labour, Invalids, and Social Affairs, the excess expenditure must be included in the taxable income of the individual.
According to the Ministry of Labour, Invalids, and Social Affairs, the maximum level of money for food support is 730,000 VND/month. If the amount of support money is higher, it will be subject to PIT.
Other incomes that are not subject to PIT
Pursuant to Article 4 of the Law on Personal Income Tax 2007 and Article 4 of Decree 65/2013/ND-CP guided in detail by Article 3 of Circular 111/2013/TT-BTC (amended by Clause 2, Article 12 and supplemented by Clauses 4 and 5, Article 12 of Circular 92/2015/TT-BTC), incomes exempt from personal income tax include:
- The income from the salary and wages for night work and overtime work that is paid higher than the salary and wages for day work.
- The pension shall be paid by the Social Insurance Fund in accordance with the Law on Social Insurance.
- Income from the transfer of real estate assets.
- Incomes from the transfer of houses, residential land use rights and properties attached to residential land of individuals in case the transferor has only one house or residential land use right in Vietnam.
- Income from the value of land use rights of individuals who are allocated land by the State without payment or have land use levy reduction as prescribed by law.
- Incomes from inheritance or gifts being real estate (including houses and construction works to be formed in the future according to the provisions of the law on real estate business).
- Incomes of households and individuals directly engaged in agricultural production, forestry, salt making, aquaculture, and fishing that have not yet been processed into other products.
- Income from the agricultural land conversion of households and individuals allocated by the State for production.
- Income from interest on deposits at banks, credit institutions, income from life insurance contract interests.
- Tax-exempt income from overseas remittances – money received by an individual from abroad by his/her relatives who are Vietnamese residing abroad, Vietnamese who go to work, or study abroad and send money home to relatives in the country.
- Income from scholarships.
- Compensation for life insurance, non-life insurance, health insurance, workers’ accident compensation, state compensation, and other compensations as prescribed by law.
- Incomes received from charity funds, which are permitted to be established or recognized by competent state agencies, and operated for charitable and humanitarian purposes, not for profit-making purposes.
- Income received from foreign aid for charity and humanitarian purposes in the form of government and non-governmental approved by competent state agencies.
- Incomes from salaries and wages of Vietnamese seafarers working for foreign shipping lines or Vietnamese shipping lines for international transport.
- Income of individuals being ship owners, individuals having the right to use ships, and individuals working onboard ships from activities of providing goods and services directly serving offshore fishing and fishing activities.
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