Foreign workers working in Vietnam must pay personal income tax.
Personal income tax for foreign workers is applied to wages and salaries and is divided into two cases: resident workers and non-resident employees.
When the foreign worker is a non-resident individual:
According to Clause 2, Article 1 of Circular 111/2013/TT-BTC, a non-resident individual means a person who satisfies one of the following conditions:
(i) Not being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months from the date of arrival in Vietnam, in which the date of arrival and departure date is counted as one (01) day.
(ii) Not having a regular residence under the law on residence or a house rented to live in Vietnam under the law on housing.
Personal income tax for foreign workers is determined as follows: Taxable income is the total amount of wages and salaries that a non-resident foreign worker receives from performing work in Vietnam, regardless of where the income is paid and the applicable tax rate is 20%.
Enterprises paying income subject to personal income tax, regardless of whether or not tax withholding is incurred, are responsible for making personal income tax finalization and personal income tax finalization on behalf of the authorized individuals.
When the foreign worker is a resident individual:
Resident individual means a person who satisfies one of the following conditions:
(i) Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months from the date of arrival in Vietnam, in which the date of arrival and departure date is counted as one (01) day. Individuals present in Vietnam according to the instructions at this point are their presence in the territory of Vietnam.
(ii) Having a regular residence in Vietnam in either of the following two cases: (i) Having a regular residence in accordance with the law on residence; (ii) having a house rented to live in Vietnam in accordance with the law on housing, with a lease contract term of 183 days or more in a tax year.
Personal income tax for foreign employees: Taxable income is income generated inside and outside the Vietnamese territory. The tax rate is applied according to the partial progressive tax schedule as prescribed by law in the Law on Personal Income Tax.
Resident foreign workers must declare personal income tax on wages and salaries in accordance with the law on specific cases.
The scale of taxation | Taxable income/year (million VND) | Taxable income/month (million VND) | Tax rate (%) |
1 | To 60 | To 5 | 5 |
2 | Above 60 to 120 | Above 5 to 10 | 10 |
3 | Above 120 to 216 | Above 10 to 18 | 15 |
4 | Above 216 to 384 | Above 18 to 32 | 20 |
5 | Above 384 to 624 | Above 32 to 52 | 25 |
6 | Above 624 to 960 | Above 52 to 80 | 30 |
7 | Above 960 | Above 80 | 35 |
FREQUENTLY ASKED QUESTIONS:
1. Can foreign workers who have paid insurance in foreign countries according to the regulations of that country deduct this part of insurance when finalizing tax in Vietnam?
Foreign employees working in Vietnam will be deducted from the insurance premiums paid abroad when finalizing personal income tax (“PIT”) on wages and salaries if the following conditions are met:
The paid compulsory insurance must be similar to the provisions of Vietnamese law such as social insurance, health insurance, unemployment insurance, compulsory professional liability insurance, and other compulsory insurances (if any); and
Proof of participation in the above-mentioned insurance premiums is required.
2. If the foreign worker is the head of a representative office in Vietnam and receives a salary from a foreign company, who will be responsible for declaring and finalizing tax for this person?
Foreign employees are obliged to declare PIT quarterly and finalize PIT according to regulations.
3. What tax obligations do foreign workers have to fulfill before returning to their countries?
In case the foreigner is a non-resident individual when returning home, there is no need to perform the tax finalization obligation after paying the tax rate of 20% for each time income is generated. In case the foreign worker is an individual residing in Vietnam, when returning home, he/she must make a tax finalization with the tax administration agency or authorize the income payer to finalize tax for the last working year before the end of the labor contract and exiting.
Please contact us for further assistance:
EZ TOURISM AND INVESTMENT CONSULTING COMPANY LIMITED
Address: No. 42, 26 Nguyen Hong, Lang Ha Ward, Dong Da District, Hanoi City, Vietnam
Phone: 0869 907 519 | 0867 439 725
Email: support@eztour.vn
Website: www.ez-consulting.com.vn/
