Expat guide – what you need to know about income tax for expats in Vietnam. Know your numbers and rates!
Based on the country’s “Personal Income Tax (PIT) Law, taxpayers are resident and non-resident individuals who have income that is subject to tax. Residents are taxed on their worldwide income, while non-residents are taxed on their Vietnam-source income”.
To have a better grasp of the types of income, below are the specific income sources and their corresponding tax percent.
Income from employment – Employment income refers to all cash remuneration and benefits in kind (for example, salaries, wages, bonuses, allowances, premiums, directors’ fees, and remuneration, housing benefits, income tax and benefits paid by the employer, and other payments for employment services rendered).
The progressive tax rates ranging from 5% to 35% apply to both Vietnamese and expatriate residents, while a flat rate of 20% applies to non-residents.
Income received in foreign currency is converted to Vietnamese dong when calculating taxable income.
Income tax for expats in Vietnam – there are certain categories of employment income that are exempt from tax which is as follows:
Income from a business – Business income is income derived from production and business activities, including agriculture, forestry, salt production, aquaculture, and fishing, as well as income from independent practice in the fields that are licensed or certificated as prescribed.
Income from business activities is subject to a flat tax rate, which varies by sector.
Income from the capital investment – Income from capital investment paid to tax resident and tax non-resident individuals is taxed at a rate of 5%.
Income from capital transfers – A 20% tax rate is applied to the gains of tax resident individuals and 0.1% tax is applied to the sales proceeds of tax non-resident individuals.
Income from the transfer of real property – Assessable income from real property transfers is the price agreed in the transfer contract at the time of transfer. A tax rate of 2% is applied to the transfer price.
Income from royalties – Assessable income equals the amount of the royalties in excess of VND 10 million, according to the transfer contract, regardless of the number of payments the taxpayer receives.
Income from royalties (exceeding VND 10 million) is taxed at a flat rate of 5%.
Income from franchising – Assessable income equals the amount of the franchise fee in excess of VND 10 million based on the contract, regardless of the number of payments the taxpayer receives.
Income from franchising (exceeding VND 10 million) is taxed at a flat rate of 5%.
Income from winnings or prizes – Assessable income equals the amount of the prize in excess of VND10 million, determined on a transaction basis.
Income from winnings or prizes (exceeding VND 10 million) is taxed at a flat rate of 10%.
Income from the receipt of inheritances or gifts – Income from inheritances (exceeding VND 10 million) is taxed at a flat rate of 10%.
