Expatriate tax ebook - Vietnam

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
An expatriate who requires a work permit must apply for this before taking up employment in Vietnam.

Employment visas
No local sponsor is required for a work permit, however, the number of expatriates in an enterprise is limited to 3% of the total number of employees. In certain cases, such as working for less than three months, working as chief representative, or a member of the management board, expatriates do not need work permits but they do still need to have basic personal information reported to local governing bodies.

If the expatriate's spouse and dependent family also relocate to and work in Vietnam, they will also require work permits.

Tax year
For the first year the tax year is 12 months from the date of first arrival in Vietnam. For following years, the tax year will be the calendar year, i.e. 1 January to 31 December.

Tax returns and compliance
For regular income, the tax procedures can be performed by the employer or its authorised tax agent following the withholding method. Alternatively, expatriates can register, declare, pay and finalise their tax liability directly at the local tax office.

Generally, personal income tax is required to be declared and paid monthly by the employer and finalised on an annual basis.

The monthly declaration dossier must be submitted not later than the 20th day of the following month. The deadline for the submission of the annual tax finalisation dossier is the 90th day from the end of the calendar year.
In case of expiration of contract, the deadline for the submission of the tax finalisation dossier is the 45th day from the date of expiration.

With regard to irregular income, personal income tax is required to be declared and paid each time the income is generated, following the withholding method. The deadline for submitting the declaration dossier is ten days from the date the tax liability arises.

Income tax rates
Regular income
Tax residents

Grade	Monthly average taxable income / person (VND '000)	Tax rate (%)
1	Up to 8,000	0
2	8,001 to 20,000	10
3	20,001 to 50,000	20
4	50,001 to 80,000	30
5	Over 80,000	40

*the latest tax rates and tax free threshold have been applied since 1 July 2004

Non-residents
The flat tax rate of 25% on the total income from Vietnam sources is applied. (Income amounts in foreign currencies should be converted into Vietnam Dong at the time the foreign currency income is generated, for the purpose of calculating taxable income).

Irregular income
These rates are determined on the basis of the total taxable income (over VND 15 million) and are 5% for income from technology transfer and 10% for income being lottery prizes or sales promotion prizes.

Starting 01 January 2009, regular income of residents will be subject to the following rates:

Portion of annual assessable income (million dong)	Portion of monthly assessable income (million dong)	Tax rate (%)
Over 60 to 120	Up to 5	5
Over 120 to 216	Over 5 to 10	10
Over 216 to 384	Over 10 to 18	15
Over 384 to 624	Over 18 to 32	20
Over 624 to 960	Over 32 to 52	25
Over 960	Over 52 to 80	30
	Over 80	35

Personal and dependents deduction are available for residents.

Business income of non residents shall be subject to tax at 1%, 2% or 5% depending on the activities. Salaries and wages of non residents shall be subject to tax at the rate of 20%.

Other types of income shall be subject to the following rates:

Assessable income			Tax rate for residents (%)	Tax rate for non-residents (%)
(a)		income from capital investments such as interests or dividends	5	5
(b)		income from royalties and franchises	5	5
(c)		income from winnings or prizes	10	10
(d)		income from inheritances and gifts	10	10
(dd) income from capital transfers			20 or 0.1	0.1
(e)	income from real property transfers		25 or 2	2

Sample income tax calculation
For 2007 tax year

Gross salary/month
USD	VND equivalent (USD1:VND16,000)
7,250	116,000,000.00
		(VND million)
	Total Income	116
	Taxable Gross Basic Salary	70
	Add: Taxable housing allowance (actual rent or 15% of taxable income whichever is higher)	12
	other bonuses and allowances	10
	Total taxable income	92
	Non-taxable items:
	Housing allowance - actual rent in excess of 15% of taxable income	12
	Tuition fees for children paid to VN schools	4
	Payment to compulsory insurance in home country	8
	Total non taxable income	24
	PIT payable/month =taxable income *40% less VND15,800,000	21,000,000.00
		or USD1,312.50

Information about Vietnam:

introduction

facts and figures

basis of taxation

what taxes?

tax planning opportunities