Understanding Personal Income Tax (PIT) in Vietnam

May 08, 2024

HR & Payroll

Understanding Personal Income Tax (PIT) in Vietnam

Personal Income Tax (PIT) is a tax levied on the income of individuals in Vietnam. This guide outlines the key aspects of PIT, including your responsibilities as an employee or an employer.

Table of Contents

How is PIT Calculated?

Taxable Income: Employee taxable income is determined by his/her gross income (salary, bonuses, etc.) minus allowable deductions and exemptions.
Progressive Tax Rates: PIT is calculated using a progressive tax rate system. Here’s the current breakdown:

Monthly Income (VND)	Tax Rate (%)
Up to 5,000,000	5
5,000,001 – 10,000,000	10
10,000,001 – 18,000,000	15
18,000,001 – 32,000,000	20
32,000,001 – 52,000,000	25
52,000,001 – 80,000,000	30
Over 80,000,000	35

Tax Year and Finalizations

Tax Year: The tax year in Vietnam follows the calendar year (January 1st – December 31st).
Final Tax Declaration: Employers are generally responsible for filing final tax declarations on behalf of their employees. In some cases, individuals may need to file their final declarations directly.

Non-Taxable Benefits and Income

Certain types of income and benefits may be exempt from PIT, including:

Occupational-related allowances: Certain allowances provided for work-related purposes.
Social Insurance, Health Insurance, and Unemployment Insurance: Contributions made to these mandatory schemes.
Other Exemptions: Specific exemptions may apply under Vietnamese tax law. Consult a tax advisor for details.

Employer Responsibilities

Registration: Employers must register themselves and their eligible employees with the tax authorities.
Withholding PIT: Calculate the correct amount of PIT to withhold from each employee’s salary based on their taxable income.
Remitting PIT: Accurately submit withheld PIT payments to the tax authorities on time.
Record-Keeping: Employers must maintain accurate records of employee salaries, deductions, and PIT withheld.
Year-End Finalization: File final tax declarations for employees, where applicable.

Employee Responsibilities

Providing Accurate Information: Supply your employer with correct personal information and any relevant documentation to support deductions and exemptions you may be eligible for.
Final Tax Declaration (If Required): Under certain circumstances, you may need to file a final tax declaration directly with the tax authorities.

Disclaimer

Tax regulations in Vietnam are subject to change. Always consult a qualified tax advisor or accountant for the most up-to-date guidance and to ensure compliance with all PIT obligations.