Vietnam Tax Calculator for Foreigners

If you’re a foreigner living or working in Vietnam, figuring out how taxes work can feel overwhelming. But with a little understanding and the right tools, you can handle your Personal Income Tax (PIT) obligations smoothly and even save some money along the way.

Are You a Tax Resident or Non-Resident?

Vietnam’s tax system treats people differently based on whether they’re considered tax residents or non-tax residents.  Vietnam’s tax residency rules are outlined in the Law on Personal Income Tax (PIT), specifically in Article 4, which defines the criteria for determining tax residency.

Here’s how to figure out which category you fall into:

• Tax Residents: You’re a tax resident if you stay in Vietnam for 183 days or more in a calendar year or within 12 consecutive months from the first day of arrival or if you have a permanent residence in the country(g. you have a temporary residence card in Vietnam or if you/your company have leased a house or houses in Vietnam with an aggregate term of 183 days or more in an assessable tax period). If you’re a tax resident, Vietnam taxes your worldwide income, meaning everything you earn inside and outside the country.
• Non-Tax Residents: If you stay in Vietnam for less than 183 days and don’t have a permanent residence, you’re a non-resident.  In this case, you only pay tax on the money you earn in Vietnam.

Personal Income Tax Rates for Foreigners

Vietnam employs a progressive tax system (in respect of wages and remuneration) for tax residents and a flat tax rate for non-residents. Understanding these rates is essential for accurate tax calculation.

Tax Rates for Tax Residents

Tax residents are subject to the following progressive tax rates based on their monthly assessable  income (in respect of wages and remunerations):

Example 1: If your monthly assessable  income is 30,000,000 VND, your PIT is calculated as follows:

• 1^sttax bracket: 5,000,000 VND at 5% = 250,000 VND
• 2^ndtax bracket: (10,000,000 VND – 5,000,000 VND) at 10% = 500,000 VND
• 3^rdtax bracket: (18,000,000 VND – 10,000,000 VND) at 15% = 1,200,000 VND
• 4^thtax bracket: (30,000,000VND-18,000,000VND) at 20% = 2,400,000 VND

Total PIT = 4,350,000 VND

If you have business and other irregular incomes, these incomes are taxed at flat rates. Subject to the nature of your incomes, the flat rates may vary. It ranges from 0.1% to 20%.

Tax Rate for Non-Tax Residents

Non-tax residents are subject to a flat PIT rate of 20% on income (wages and remunerations) earned within Vietnam, regardless of the amount and place of payment. This simplifies tax calculations but does not allow for deductions or allowances.

If you have other business and other irregular incomes in Vietnam, these incomes are taxed at flat rates. Subject to the nature of your business incomes, the flat rates may vary. It ranges from 1% to 10%.

Deductions and Allowances for Tax Residents in Vietnam

If you’re classified as a tax resident in Vietnam, you’re entitled to various deductions that can significantly reduce your taxable income.

1. Personal Deduction

The personal deduction is a fixed amount of 11,000,000 VND per month that is automatically subtracted from your gross income. It is intended to cover basic living expenses for individuals earning taxable income in Vietnam.

Who Qualifies?

Any individual classified as a tax resident is eligible. This applies whether you’re a local or a foreigner who meets the residency criteria (staying in Vietnam for 183 days or more in a year or having a permanent residence).

How Does It Work?

When calculating your taxable income, you first subtract this 11 million VND allowance from your total gross income. It applies every month, so if you’re calculating for a year, multiply it by 12 (11,000,000 x 12 = 132,000,000 VND annually).

Example:

If you earn 50,000,000 VND per month:

• Personal Deduction: 11,000,000 VND
• Remaining Income: 50,000,000 – 11,000,000 = 39,000,000 VND
  This adjusted income becomes the base for applying other deductions and calculating taxes.

2. Dependent Deduction

The dependent deduction is an additional allowance of 4,400,000 VND per month for each qualified dependent you support. This deduction helps individuals who have financial responsibilities for family members.

Who Qualifies as a Dependent?

A dependent can include:

• Spouse: If they are disable and earning below a specified threshold.
• Children: Biological, adopted, or stepchildren under the age of 18. If they are older but attending school or university full-time, they may still qualify.
• Elderly Parents: If they rely on you financially and they do not have any income or they have average monthly income below a specified threshold.
• Other Relatives: In certain cases, siblings or grandparents may qualify if you are their primary source of financial support.

Conditions for Eligibility:

1. Dependents must be officially registered with the tax authorities. This involves submitting proof of their financial dependence on you.
2. Registration is typically handled by your employer through the local tax office. You’ll need to provide documentation such as birth certificates, marriage certificates, or legal guardianship papers.

How Does It Work?

For each dependent, 4,400,000 VND is deducted from your monthly taxable income. There’s no upper limit to the number of dependents you can claim as long as they meet the eligibility criteria.

Example 2:

If you have two registered dependents (e.g., two children):

• Dependent Deduction: 2 x 4,400,000 VND = 8,800,000 VND
• Combined with the personal deduction of 11,000,000 VND, your total monthly deduction becomes: 11,000,000 + 8,800,000 = 19,800,000 VND

This means your taxable income is significantly reduced, lowering the amount of tax you owe.

3. Additional Deductions and non-taxable incomes

a. Insurance Premiums

Contributions to mandatory social insurance schemes in Vietnam and in your home countries (including health and social insurances,) are often deductible from your taxable income. These contributions are typically handled by your employer and automatically deducted from your salary.

For the purpose of calculating health and social insurances, the salary used to calculate health and social insurances may not exceed 20 times of the basis salary. The current basis salary is 2,340,000 VND per month.

For example:

If you earn 50,000,000 VND per month, the salary which is used to compute your social insurance will be 46,800,000 VND (2,340,000 X 20) and your contribution to the social fund will be 3,744,000 VND  (46,800,000 x 8%) which is deducted from your taxable income.

b. Charitable Donations

Donations made to government-approved charitable organizations can also be deducted. These must be properly documented with receipts and official approval from tax authorities.

1. Non-taxable incomes

The following incomes and allowances paid to employees (whether Vietnamese or expatriates) are tax free:

• Mid-shift meal within the permitted cap;
• Training to improve employee’s knowledge and skills;
• Per diem expenses for telephone, uniform, stationary, etc. within the permitted cap; • Travel expenses for business trips;
• The positive difference between income from night-shift or overtime payment and the day shift payment or the salary payment for normal working hours;
• Allowances given to employees who work under hardship conditions in remote areas, offshore areas, etc. and in a toxic or dangerous environment;
• Allowances as set out in the Labor Code and in the Law on Social Insurance: one-off payment for delivery of a child or for adopting a child; one-off payment on retirement and monthly death gratuity, severance allowance, retrenchment allowance, unemployment allowance, etc.;
• Pension paid by the Social Insurance Fund.

Some compensation is non-taxable only to foreign employees:

• One round trip air ticket for annual leave;
• Tuition paid by the employer for the employee’s children, through primary and secondary education level;
• Compulsory insurancespaid in his home country.

Step-by-Step Guide to Calculating Your Taxable Income

Accurately calculating your taxable income is crucial for compliance and financial planning. Follow these steps to determine your PIT liability in Vietnam.

1. Determine Your Tax Residency Status

• Tax Resident: If you stay for 183 days or more or have a permanent residence in Vietnam.
• Non-Tax Resident: If you stay for less than 183 days without a permanent residence.

2. Calculate Taxable  Income

For tax purposes, taxable income includes both monetary and non-monetary benefits. The term “non-monetary benefit” includes several items. including membership fees; other services for individuals in entertainment, sports and aesthetics; housing rent, electricity, water, and other services paid by the employer, accumulated premiums paid by the employer under a life insurance policy or under other types of voluntary insurance, accumulated contributions under a voluntary pension plan contributed by the employer. In particular, the following incomes are taxable:

1. Income from salaries, remunerations and similar income; allowances and subsidies (with a few exceptions); brokerage commissions, payments for participation in projects, schemes, royalties, and other remuneration; stipends paid for participation in business associations, boards of directors, control boards, management boards, associations, professional societies, and other organizations; monetary or non-monetary benefits other than salaries and wages paid by employers to or on behalf of taxpayers in any form (except for organizational membership cards for common use; transportation for common use; and income specified in Point 3.c. above); monetary or non-monetary benefits (including securities in lieu of bonus);
2. Business income (eg, income from producing, trading goods, or providing services; income from independent professional activities, etc);
3. Income from capital investments [eg, loan interest (except interest received from banks or from life insurance policies); dividends; income that represents an increase of the value of capital contribution in case of merger, dissolution, re-structure, consolidation, or capital withdrawal)];
4. Income from capital transfer (eg, transfer of interest in companies, cooperatives, or other entities; sale of securities, etc.);
5. Income from transfer of real estate (eg, transfer of land use rights, and assets attached to the land; transfer of house ownership; transfer of the right to lease a house/land/water surface, etc.);
6. Income from winnings (eg, lottery, prizes received from commercial promotions, winnings from all forms of legal betting, etc.)
7. Income from royalties (eg, use fees, assignment of rights in respect of intellectual property assets, technology transfer, etc.);
8. Income from commercial franchises;
9. Income from inheritance (eg, securities, real estate, interest in an entity, etc.); and
10. Income from receipt of gifts (eg, securities, real estate, interest in an entity, etc.).

3. Apply Deductions and Allowances (For Tax Residents Only)

Subtract the following from your taxable income:

• Personal Deduction: 11,000,000 VND per month
• Dependent Deductions: 4,400,000 VND per month per dependent
• Other Allowable Deductions: Insurance premiums, charitable donations, etc.

4. Determine Assessable  Income

Once deductions have been applied, your assessable  income is the amount that will be subject to PIT. Use the formula:

 Assessable Income =  Taxable Income − Total Deductions

5. Apply the Relevant Tax Rates

• For Tax Residents: Use (i) the progressive tax rates based on the assessable income bracket(in case of receiving salaries, remunerations and similar incomes) or (ii) flat tax rates based on the taxable income (in case of having business incomes and other incomes as mentioned at Point 2.b. to Point 2.j. above).
• For Non-Tax Residents: Apply the flat 20% tax rate on income (in respect of wages and remunerations) earned in Vietnam.

6. Calculate PIT Owed

Sum the tax amounts calculated for each income bracket (for residents).  See Example 1

For non-residents, simply multiply the taxable income by 20%. For example: the gross salary of a foreign employee (being a non-resident) is 25,000,000 VND, then

Total PIT Owed= 25,000,000 × 20% = 5,000,000 VND

Filing Your Taxes in Vietnam

An institutional taxpayer (e.g. companies, branches, representative offices, etc.) is responsible to withhold, file tax returns and pay income taxes for its employees on monthly basis. If you are an employee of the Vietnam-based entity (i.e. you and the Vietnam-based entity have signed a labor contract), the Vietnam-based entity is required to withhold, file tax returns and pay income taxes for you. At the end of an assessable period, if you have no other own incomes, you may authorize the Vietnam-based entity to file annual tax return on your behalf. The deadline for the Vietnam-based entity to file monthly tax returns and annual tax returns is 20th day of each calendar month, and March 31 of the following year, respectively.

If your salary and remunerations are paid by offshore individuals/entities, you are responsible to pay income tax and file tax returns by yourself on quarterly basis. The deadline for you to file quarterly tax returns, and annual tax returns is the last day of the 1^st month of the following quarter, and April 30^th of the following year, respectively.

Of note, you must file your tax finalization and pay all outstanding taxes BEFORE your departure.  Unconformable situation may occur at the airport if the immigration office receives a notice from the tax authorities, preventing you to exit from the country on a ground that you have incurred tax debts to the state budget)

1. How to File:
   • Use the General Department of Taxation (GDT) online portal.
   • Submit your tax forms directly to a local tax office.
   • Hire a tax agent if you’re unsure about the process.
2. Documents Needed:
   • Tax Identification Number (TIN) – you can register for one at the tax office.
   • Income statements from your employer.
   • Proof of deductions (e.g., dependent registration)

Other Legal Considerations and Compliance

Ensuring compliance with Vietnamese tax laws is essential for foreigners working in Vietnam to avoid legal issues and penalties.

Double Taxation Agreements (DTAs)

Vietnam has established Double Taxation Agreements (DTAs) with numerous countries to prevent the double taxation of income.

These agreements are governed by Circular No. 205/2013/TT-BTC, issued by the Ministry of Finance, which provides guidance on the implementation of DTAs between Vietnam and other countries.

Social and Health Insurance Contributions

Foreigners working in Vietnam are required to participate in the compulsory social insurance (SI) program and health insurance (HI) if they have work permits, practice certificates, or practice licenses issued in Vietnam, and are employed under indefinite-term contracts or contracts with a duration of at least one year.

Contribution Rates:

• Employee Contribution: Foreign employees contribute 8% of their monthly salary to the SI fund, and5% to the HI fund.
• Employer Contribution: Employers contribute 17.5% of the employee’s monthly salary to the SI fund, and 3% to the HI fund.

Penalties for Non-Compliance

Non-compliance with tax obligations can lead to significant penalties, including fines and interest on unpaid taxes. In severe cases, legal action may be taken. These penalties are outlined in Decree No. 125/2020/ND-CP, which specifies penalties for administrative violations in taxation and invoices.