For foreigners who work in Vietnam, knowing clearly rights and responsibilities is necessary, especially having a deep understanding of personal income tax. Identifying personal income taxes, which can help individuals to optimize with their taxes, meanwhile, employers can also identify more competitive pay packages. In the article, we introduce the basic personal income tax and cases of personal income tax payment of foreign workers.
Personal income tax (PIT) of for expatriates in Vietnam
In case a foreigner working in Vietnam is determined to be a non-resident individual.
So, how to identify a non-resident individual?
- An employee who is a foreigner present in Vietnam is the presence of such an individual in the territory of Vietnam less than 183 days in a calendar year or in 12 consecutive months from the date of first presence in Vietnam.
- The employee is a foreigner who has no permanent residence in Vietnam, has no permanent residence as prescribed by law on residence or does not rent a house in Vietnam.
For example, Mr. John is a foreigner coming to Vietnam from April 20, 2019. In 2014 as of December 31, 2019, Mr. John was in Vietnam for a total of 130 days. Because John was in Vietnam for less than 183 days, he was identified as a non-resident individual.
In case a foreigner working in Vietnam is determined to be a resident individual
So, how to identify individual residents?
Foreigners are individuals who reside when satisfying the following conditions:
For foreigners who are present in Vietnam for less than 183 days in a calendar year or for 12 continuous months from the first day of arrival in Vietnam but have permanent residence in Vietnam according to one of two cases below:
1. Having a residence for permanent residence as prescribed by law on the residence: means a place of registration and is stated in the permanent residence card or temporary residence card issued by a competent agency of the Ministry of Public Security.
2. Having a house for rent in Vietnam in accordance with the housing law, with a term of a lease of 90 days or more in the tax calculation year, specifically as follows:
- Individuals who do not have permanent residence, are not granted permanent residence card or temporary residence card, but the total number of days of house rent under the lease contract from 90 days or more in the tax year is also subject to statutes by individuals residing, including cases of rent in many places.
- Houses for rent, including those in hotels, guest houses, motels, inns, working places, offices, etc., regardless of whether individuals rent or are hired by an employer's worker.
For example, Mr. John is a foreigner coming to Vietnam to work continuously from March 1, 2019. On November 15, 2019, Mr. John ended his labor contract and returned home. From March 1, 2019, Mr. John will be present in Vietnam for more than 183 days. Therefore, in 2019, Mr. John is determined to be a resident individual.
In Vietnam, foreign workers may be exempt from tax on certain employment benefits. These exemptions include:
- Relocation allowance once for foreigners moving to Vietnam;
- Round-trip air tickets are paid once a year by employers for foreign employees on annual leave;
- The general education fee or the fee paid by the employer to the children of foreigners studying in Vietnam.
Income tax is exempt
By law, the Vietnam Tax Authority has indicated some income excluded from PIT. Including:
- Income from housing transfers of individuals who own only one house or land.
- Interest earned on deposits from banks or life insurance policies.
- Transfer money abroad, pensions, scholarships.
- Income from compensation for insurance contracts or charity funds.
- Wages paid for overtime or night shifts are higher than wages paid for day shifts or regular working hours.
- Incomes received from governmental or non-governmental foreign aid for charitable or humanitarian purposes approved by competent state agencies.
Foreign candidates can ask for help from abroad job consultancy to find expected jobs with a suitable salary in Vietnam. In particular, understanding the personal income tax in Vietnam is very important for both foreign candidates and Vietnamese employers. In case, businesses need to salary guide and personal income tax for hiring foreign labor or Vietnam recruitment service, please leave Navigos Search your request by filling out the form on the contact page or visiting us on the 20th floor, e.town Central Tower, 11 Doan Van Bo, Ward 12, District 4, Ho Chi Minh.