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THE MINISTRY OF
FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 84/2008/TT-BTC
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Hanoi, September 30,
2008
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CIRCULAR
GUIDING
THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF THE LAW ON PERSONAL INCOME TAX
AND GUIDING THE IMPLEMENTATION OF THE GOVERNMENT’S DECREE NO. 100/2008/ND-CP OF
SEPTEMBER 8, 2008, DETAILING A NUMBER OF ARTICLES OF THE LAW ON PERSONAL INCOME
TAX
Pursuant to November 21, 2007 Law No.
04/2007/QH12 on Personal Income Tax;
Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax Administration;
Pursuant to the Government’s Decree No. 100/2008/ND-CP of September 8, 2008,
detailing a number of articles of the Law on Personal Income Tax;
Pursuant to the Government’s Decree No. 77/2003/ND-CP of July 1, 2003, defining
the functions, tasks, powers and organizational structure of the Ministry of
Finance;
The Ministry of Finance guides the implementation of a number of articles of
the Law on Personal Income Tax and guides the Government’s Decree No. 100/2008/ND-CP
of September 8, 2008, detailing a number of articles of the Law on Personal
Income Tax as follows:
Part A
GENERAL
PROVISIONS
I. TAXPAYERS
Under Article 2 of the Law on Personal Income
Tax and Article 2 of Decree No. 100/2008/ND-CP of September 8, 2008, detailing
a number of articles of the Law on Personal Income Tax (below referred to as
Decree No. 100/2008/ND-CP), personal income taxpayers include resident and
non-resident individuals who earn taxable incomes specified in Article 3 of the
Law on Personal Income Tax and Article 3 of Decree No. 100/2008/ND-CP. The
scope of determination of taxable incomes of taxpayers is as follows:
For resident individuals, their taxable
incomes are incomes earned inside and outside the Vietnamese territory, regardless
of where their incomes are paid and received.
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1. A resident individual means a person who
satisfies any of the following conditions:
1.1. Being present in Vietnam for 183 days or
more in a calendar year or 12 consecutive months counting from the first date
of his/her presence in Vietnam, of which the date of arrival is counted as one
day and the date of departure is also counted as one day. Date of arrival and
date of departure are determined based on certifications of the immigration
management agency on his/her passport (or laissez-passer) upon his/her arrival
at and departure from Vietnam. In case his/her entry and exit are on the same
day, this day is counted as one day of residence.
Individuals present in Vietnam under the guidance of this point means those who appear in the Vietnamese
territory.
1.2. Having a place of habitual residence in Vietnam in either of the following two cases:
1.2.1. Having a registered place of permanent
residence under the law on residence;
a. For Vietnamese citizens: The registered
place of permanent residence means a fixed place where a citizen habitually and
permanently resides for an indefinite time and for which he/she has made a
residence registration under the law on residence.
b. For foreigners: The place of habitual
residence of a foreigner means a place registered and indicated in his/her card
of permanent residence or temporary residence issued by a competent agency of
the Ministry of Public Security.
1.2.2. Having a rented house for dwelling in Vietnam under the law on housing, under a rent contract with a term of 90 days or more in a
tax year, specifically:
a. An individual who has not yet found any or
has no place of registered permanent residence or is not issued a card of
permanent residence or temporary residence under the above guidance, but rents
a house under a rent contract for a total of 90 days or more in a tax year is
also considered a resident individual, even in case he/she rents several
places.
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2. A non-resident individual means a person
who does not satisfy any of the conditions specified in Clause 1 above.
3. In some specific cases, taxpayers are
identified as follows:
3.1. For individuals earning incomes from
business activities (below referred to as business individuals)
3.1.1. In case only one person is named in a
business registration, he/she is a taxpayer.
3.1.2. In case more than one person are named
in a business registration (a group of business individuals) and jointly
conduct business activities, every member whose name is stated in the business
registration is a taxpayer.
3.1.3. In case many members of a household
jointly conduct business activities but only one of them is named in a business
registration, the person whose name is stated in the business registration is a
taxpayer.
3.1.4. In case an individual or a household
actually conducts business activities without business registration (or
practice license), the individual currently conducting business activities is a
taxpayer.
3.1.5. For activities of leasing houses or
business spaces without business registration, persons who are named as house
owners or land use rights holders are taxpayers. In case more than one person
are named as house co-owners or land use rights co-holders, every individual
whose name is stated in house ownership or land use rights certificates is a
taxpayer.
3.2. For individuals earning other taxable
incomes
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3.2.2. In case of assignment or licensing of
a protected object under the Intellectual Property Law or the Technology
Transfer Law which is jointly owned or co-authored by many individuals, every
individual who jointly owns or authors this object and earns an income from the
assignment or licensing is a taxpayer.
3.2.3. In case of a commercial franchise by
individuals under the Commercial Law in which the commercial franchisor
consists of many individuals, every individual earning an income from the
commercial franchise is a taxpayer.
4. Taxpayers under the guidance in Clauses 1
and 2, Section I above include:
4.1. Vietnamese nationals, including those
sent on working missions, study tours or as guest workers abroad and earning
taxable incomes.
4.2. Non-Vietnamese nationals who earn
taxable incomes, including foreigners working in Vietnam and foreigners not
present in Vietnam but earning taxable incomes in Vietnam.
II. TAXABLE INCOMES
Under Article 3 of the Law on Personal Income
Tax and Article 3 of Decree No. 100/2008/ND-CP, incomes liable to personal
income tax include:
1. Incomes from business activities
Incomes from business activities are those
earned from production or business activities in the following domains:
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1.2. Independent professional ativities of
individuals in domains and sectors for which they are licensed or issued
practice certificates under law.
1.3. Agricultural production, forestry, salt
making, aquaculture or fishing activities which fail to satisfy the conditions
on tax exemption specified in Clause 6, Section III, Part A of this Circular.
2. Incomes from salaries or wages
2.1. Incomes from salaries or wages are
incomes received by employees from their employers in monetary or non-monetary
form, including:
2.1.1. Salaries, wages and amounts of salary
or wage nature.
2.1.2. Allowances and subsidies, including
cost-of-living allowances received by employees, except some allowances and
subsidies specified at Point 2.2 below.
2.1.3. Remuneration received in the form of
brokerage commission, payments for participation in scientific and technical
researches; payments for participation in projects or schemes; royalties for
book or newspaper article authorship or document translation; payments for
teaching activities, art and cultural performances, physical training and sport
competitions; and charges for advertising services and other services.
2.1.4. Sums of money earned for participation
in professional societies or associations, business associations, boards of
directors or control boards of enterprises, project management units,
management boards, corporate councils and other organizations.
2.1.5. Other monetary or non-monetary
benefits other than salaries and wages enjoyable by employees and paid by
employers to or on behalf of their employees, specifically:
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b. Insurance premiums for employees which
employers are not obliged to purchase under law.
c. Membership fees for individuals such as
golf course or tennis court membership cards, membership cards for members of
cultural, art, physical or sport clubs.
d. Other services for individuals in
healthcare, entertainment, sports, recreation, beauty care activities.
e. Other benefits provided by employers to
their employees under law, such as payments during weekends or holidays;
charges for consultancy or tax declaration services; payment of wages for
chauffeurs, cooks and other household servants under contracts, except expenses
for stationery, telephone, working mission allowance and uniform.
2.1.6. Monthly, quarterly, annual or
irregular monetary or non-monetary bonuses or rewards, 13th month’s salary,
including also bonus securities, except bonuses and rewards specified at Point
2.3 below. In case employees are given bonus stocks, the bonus value shall be
determined according to the bonus level stated in accounting books of
bonus-paying units.
The above incomes which serve as a basis for
determination of taxable incomes are incomes before personal income tax is
withheld (pre-tax incomes). In case actually earned incomes are exclusive of
personal income tax (after-tax incomes), these incomes must be converted into
pre-tax incomes according to Appendix No. 01/PL-TNCN to this Circular.
2.2. Allowances and subsidies which are
deductible upon determination of taxable incomes from salaries or wages
include:
2.2.1. Allowances for persons with
meritorious service to the revolution under the law on preferential treatment
of persons with meritorious service, including allowances and subsidies for war
invalids, diseased soldiers and fallen heroes’ next of kin; allowances and
subsidies for revolutionary activists; allowances and subsidies for armed
forces heroes, labor heroes or heroic Vietnamese mothers.
2.2.2. Defense or security allowances as
provided for by law.
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a. Hazard or danger allowances for persons
working in branches, occupations or jobs at places where exist hazardous or
dangerous elements;
b. Allowances for attraction of laborers to
work in new economic zones, economic establishments and offshore islands with
particularly difficult living conditions.
c. Region-based allowances as provided for by
law for persons working in remote and deep-lying areas or areas with bad
climate conditions.
2.2.4. Subsidies provided for by the Social
Insurance Law and the Labor Code:
a. Subsidies for sudden difficulties,
subsidies for laborers having labor accidents or suffering from occupational
diseases.
b. Lump-sum maternity or child adoption
subsidies.
c. Subsidies for working capacity reduction.
d. Lump-sum retirement subsidies, monthly
survivorships.
e. Severance and job loss or unemployment
subsidies.
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2.2.5. Subsidies for combat of social evils
under law.
The above allowances, subsidies and allowance
and subsidy levels which are deductible upon determination of taxable incomes
for incomes from salaries or wages comply with guiding documents of competent
state agencies and are uniformly applicable to all taxpayers and economic
sectors.
In case documents guiding allowances,
subsidies and allowance and subsidy levels are applicable to the state sector,
other economic sectors and business establishments may base themselves on the
list of allowances and subsidies and allowance and subsidy levels guided for
the state sector to make deduction. If allowances and subsidies are paid higher
than the specified allowance and subsidy levels, excessively paid amounts shall
be accounted as taxable incomes.
2.3. Rewards which are deductible upon
calculation of taxable incomes from salaries or wages:
2.3.1. Rewards accompanying titles conferred
by the State, including also those accompanying emulation titles and other
forms of commendation and reward under the law on emulation and commendation,
specifically:
a. Rewards accompanying emulation titles,
including National Emulator, Emulator of ministerial, branch, central
organization, provincial or municipal level; Grassroots Emulator, Outstanding
Laborer, Outstanding Soldier;
b. Rewards accompanying various forms of
commendation and reward, including orders and medals of all classes.
c. Rewards accompanying state honorary tides,
such as Heroic Vietnamese Mother, People’s Armed Forces Hero, Hero, People’s
Teacher, Physician or Artist.
d. Rewards accompanying the Ho Chi Minh Prize
or State Prize.
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f. Rewards accompanying certificates of
merits.
Competence to issue commendation and reward
decisions and reward levels accompanying emulation titles and commendation
forms above must comply with the Emulation and Commendation Law.
2.3.2. Rewards accompanying international or
national prizes recognized by the Vietnamese State.
2.3.3. Rewards for technical renovations,
innovations or inventions recognized by competent state agencies.
2.3.4. Rewards for detection of and reporting
on illegal acts to competent state agencies.
3. Incomes from capital investment
Incomes from capital investment are those
earned in the following forms from activities of providing loans to or
purchasing shares from or contributing capital to production or business
establishments for production or business activities:
3.1. Interests on loans provided to
organizations, enterprises, households, groups of business individuals or
individuals under loan agreements (except deposit interests received from banks
or credit institutions).
3.2. Profits or dividends received for equity
contribution.
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3.4. Increased value of contributed capital
amounts received upon the dissolution of enterprises, transformation of
operation models, merger or consolidation of enterprises or capital withdrawal
(excluding recovered principal capital amounts).
3.5. Incomes from interests of bonds, bills
and other negotiable instruments issued by domestic organizations (including
foreign organizations licensed to be established and operate in Vietnam), except incomes from interests of bonds issued by the Vietnamese Government.
3.6. Incomes from capital investment in other
forms, including contribution of capital in kind, reputation, land use rights,
creations or inventions.
3.7. Incomes from dividend values paid in the
form of share certificates.
4. Incomes from capital transfer
Incomes from capital transfer are profits
received from transfer of capital of individuals in the following cases:
4.1. Incomes from transfer of contributed
capital amounts in limited liability companies, partnerships, joint-stock
companies, business cooperation contracts, cooperatives, economic organizations
or other organizations.
4.2. Incomes from transfer of securities,
including incomes from transfer of share certificates, bonds, fund certificates
and other securities specified in the Securities Law.
4.3. Incomes from capital transfer in other
forms.
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Incomes from transfer of real estate are
earnings from transfer of real estate, including:
5.1. Incomes from transfer of land use
rights.
5.2. Incomes from transfer of rights to use
land and assets attached to land. Assets attached to land include:
5.2.1. Residential houses;
5.2.2. Infrastructure and construction works
attached to land;
5.2.3. Other assets attached to land,
including farms produce, forest or fishery products (plants or animals).
5.3. Incomes from transfer of the right to
own or use residential houses.
5.4. Incomes from transfer of the right to
lease land or water surface.
5.5. Other incomes earned from transfer of
real estate.
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Incomes from won prizes means sums of money
or objects received by individuals in the following forms:
6.1. Lottery winnings paid by lottery
companies that issue lotteries.
6.2. Sales promotion winnings in all forms
for goods or service purchasers.
6.3. Lawful betting winnings.
6.4. Lawful casino winnings.
6.5. Winnings in prized games and contests
and other forms of lucky draw organized by economic organizations,
administrative or non-business agencies, mass organizations and other
organizations or individuals.
7. Incomes from copyright
Incomes from copyright are those earned from
assignment or licensing of objects of intellectual property rights under the
Intellectual Property Law or from technology transfer under the Technology
Transfer Law, specifically:
7.1. Objects of intellectual property rights
specified in Article 3 of the Intellectual Property Law and relevant guiding
documents, including:
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7.1.2. Objects of industrial property rights,
including inventions, industrial designs, layout designs of semi-conductor
integrated circuits, business secrets, marks, trade names and geographical
indications.
7.1.3. Objects of rights to plant varieties,
which are plant varieties and propagating materials.
7.2. Objects of technology transfer specified
in Article 7 of the Technology Transfer Law, including:
7.2.1. Technical know-how.
7.2.2. Technical knowledge about technologies
in the form of technological plans or processes, technical solutions, formulas,
technical parameters, drawings, technical diagrams, computer programs or data.
7.2.3. Solutions to production
rationalization and technological renewal.
Incomes from assignment or licensing of
objects of intellectual property rights or from technology transfer as
specified above include incomes from re-assignment or re-licensing.
8. Incomes from commercial franchising
Commercial franchising is a commercial
activity whereby the franchisor permits and requests the franchisee to conduct
by him/her/itself the goods sale and purchase or service provision under
conditions set out by the franchisor.
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9. Incomes from inheritance
Incomes from inheritance are those received
by individuals under testaments or the law on inheritance estate, including the
following kinds of asset:
9.1. For inheritances being securities, they
include share certificates, bonds, bills, fund certificates and other kinds of
securities specified in the Securities Law.
9.2. For inheritances being capital holdings
in economic organizations or business establishments, they include capital
contributions to limited liability companies, joint-stock companies,
cooperatives, partnerships, business cooperation contracts; capital in private
enterprises, proprietorships, associations or funds licensed to be established
under law or whole business establishments being private enterprises or
proprietorships.
9.3. For inheritances being real estate, they
include land use rights, right to use land with assets attached to land, right
to own houses, condominium apartments, right to lease land or water surface.
9.4. For inheritances being other assets
subject to compulsory ownership or use right registration applicable to state
management agencies, they include automobiles, motorbikes (motorcycles), ships,
boats and aircraft.
10. Incomes from gifts
Incomes from gifts are those received by
individuals from domestic or foreign organizations and individuals in the form
of the following assets:
10.1. For gifts being securities, they
include share certificates, bonds, bills, fund certificates and other kinds of
securities specified in the Securities Law.
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10.3. For gifts being real estate, they
include land use rights, right to use land with assets attached to land, right
to own houses, condominium apartments, right to lease land or water surface.
10.4. For gifts being other assets subject to
compulsory ownership or use right registration applicable to state management
agencies, they include automobiles, motorbikes (motorcycles), ships, boats and
aircraft.
III. TAX-EXEMPT
INCOMES
Under Article 4 of the Law on Personal Income
Tax and Article 4 of Decree No. 100/2008/ND-CP, tax-exempt incomes and dossiers
serving as a basis for determination of tax-exempt incomes are as follows:
1. Incomes from transfer of real estate
between spouses; parents and their children; adoptive parents and their adopted
children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law;
grandparents and their grandchildren; or among blood siblings.
A tax exemption dossier for each specific
case is as follows:
1.1. For real estate transferred between
spouses, one of the following papers are required: a copy of the household
registration book or the marriage certificate or the court ruling on divorce or
re-marriage (for the case of house division due to divorce or consolidation of
house ownership due to re-marriage).
1.2. For real estate transferred between
parents and their children, either of the following papers is required: a copy
of the household registration book (if they share the same household
registration book) or copy of the birth certificate.
For out-of-wedlock children, a copy of a
competent authority’s decision on recognition of parent and child is required.
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1.4. For real estate transferred between
paternal grandparents and their grandchildren, the following papers are
required: a copy of the birth certificate of the grandchild and a copy of the
birth certificate of his/her father; or a copy of the household registration
book showing the relationship between the paternal grandparent and the
grandchild.
1.5. For real estate transferred between
maternal grandparents and their grandchildren, the following papers are
required: a copy of the birth certificate of the grandchild and a copy of the
birth certificate of his/her mother; or a copy of the household registration
book showing the relationship between the maternal grandparent and the
grandchild.
1.6. For real estate transferred between
blood siblings, the following papers are required: a copy of the household
registration book or copies of the birth certificates of the transferor and the
transferee showing their relationship and the fact that they have the same
father and mother or the same father and different mothers or the same mother
and different fathers, or other papers evidencing their blood ties.
1.7. For real estate transferred between
fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law, the
following papers are required: a copy of the household registration book
showing the relationship between the father-in-law, the mother-in-law and the
daughter-in-law or the son-in-law; or copies of the marriage certificate and
the birth certificate of the husband or the wife to serve as a ground for
identifying the relationship between the transferor being the husband’s father
or mother and the daughter-in-law or the wife’s father or mother and the
son-in-law.
In case of transfer of real estate eligible
for tax exemption as specified above in which the transferor has no birth
certificate or household registration book, there must be the commune-level
People’s Committee’s certification of the relationship between the transferor
and the transferee to serve as a basis for determination of tax-exempt incomes.
2. Incomes from transfer of residential
houses or rights to use residential land and assets attached to residential
land of individuals in case the transferor has only one residential house or
the sole right to use residential land in Vietnam.
2.1. An individual having only one
residential house or the sole right to use residential land specified at this
Point is an individual transferor who has the ownership of only one house or
the right to use only one land lot in Vietnam, regardless of whether a house
has been built on that land.
2.2. In case of transfer of a residential
house under a joint ownership or a residential land plot subject to the same
use right, only individuals who do not have the ownership of residential houses
or the right to use residential land in other localities are entitled to tax
exemption. Individuals sharing the ownership of the same residential house or
the right to use the same land lot may own other residential houses or have the
right to use other land lots without enjoying tax exemption.
2.3. In case a husband and a wife are named
in the same certificate of residential house ownership or the right to use the
same land lot, which is the only house or land lot under their joint ownership,
and they also separately own or have the right to use other houses or land
lots, when the residential house or land lot under their joint ownership is
transferred, only husband or wife who has no own residential house or land lot
is entitled to tax exemption. Husband or wife who already has his/her own
residential house or land lot is not entitled to tax exemption.
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2.5. Bases for determination of tax-exempt
income from transfer of the sole residential house or residential land lot
shall be declared by the transferor himself/herself who shall take
responsibility for the truthfulness of his/her declaration. If the declaration
is detected untruthful, personal income tax shall be retrospectively collected
and a fine for the tax fraud shall be imposed under the Law on Tax Administration.
3. Incomes from the value of land use rights
of individuals who are allocated land by the State without having to pay land
use levy or with reduced land use levy under law:
3.1. For individuals entitled to land use
levy exemption or reduction upon land allocation, when transferring land areas
eligible for land use levy exemption or reduction, cost prices of transferred
land areas shall be determined according to the price set by the
provincial-level People’s Committee at the time of land allocation.
3.2. A tax exemption dossier comprises a copy
of a competent authority’s land allocation decision clearly stating the land
use levy exemption or reduction level.
4. Incomes from receipt of inheritances or
gifts that are real estate between spouses, parents and their children;
adoptive parents and their adopted children; fathers-in-law or mothers-in-law
and daughters-in-law or sons-in-law; grandparents and their grandchildren; or
among blood siblings.
Tax exemption dossiers for these cases are
similar to those for cases of real estate transfer specified in Clause 1,
Section III, Part A of this Circular.
5. Incomes from conversion of use purposes of
agricultural land areas allocated by the State to households and individuals
for production.
5.1. For households and individuals directly
engaged in agricultural production and converting use purposes of their
agricultural land areas for agricultural production rationalization, incomes
from agricultural land conversion are tax-exempt.
5.2. A tax exemption dossier comprises a
written agreement on land conversion between involved parties certified by a
competent authority.
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For cases of real estate transfer specified
in Clauses 1, 2, 3, 4 and 5, Section III above under Point 2.5, Clause 2,
Section II, Part D of this Circular, real estate transferors shall carry out
procedures for tax exemption.
6. Incomes of households and individuals
directly engaged in agricultural or forest production, salt making,
aquaculture, fishing and trading of aquatic resources not yet processed into
other products or preliminarily processed aquatic products.
Households and individuals directly engaged
in agricultural or forest production, salt making, aquaculture, fishing and
trading of aquatic resources not yet processed into other products or
preliminarily processed aquatic products and have tax-exempt incomes must
satisfy the following conditions:
6.1. They have lawful land or water surface
use or lease rights for production, and being directly engaged in agricultural
or forest production, salt making or aquaculture.
For the case of sublease of land or water
surface from other organizations or individuals, written land or water surface
lease contracts under law are required.
For fishing activities, certificates of
lawful ownership or charter parties of ships or boats for fishing purposes are
required and households and individuals must be directly engaged in fishing
activities.
6.2. They actually reside in localities where
agricultural or forest production, salt making or aquaculture activities are
conducted.
Localities where agricultural or forest
production, salt making or aquaculture activities are conducted specified at
this Point are urban districts, rural districts, towns or provincial cities
(collectively referred to as district-level administrative units) or adjacent
districts where production activities are conducted.
Particularly for fishing activities, the
condition on places of residence is not required.
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6.3.1. Unprocessed or preliminarily processed
farm produce include those which are sun-dried, heat-dried, cleaned or freshly
preserved with chemicals, peeled, sorted and packaged.
6.3.2. Unprocessed or preliminarily processed
husbandry and aquatic products include those which are sun-dried, heat-dried,
cleaned, frozen, salted, sorted and packaged.
7. Incomes from interests on deposits at
banks or credit institutions or interests from life insurance policies.
7.1. Tax-exempt deposit interests under this
Point are interests received by individuals from their deposits at banks or
credit institutions. All cases of receipt of deposit interests not from credit
institutions established and operating under the Credit Institutions Law are
not exempt from tax.
7.2. Interests from life insurance policies
are interests received by individuals under life insurance policies issued by
insurance companies.
7.3. Bases for determination of tax-exempt
incomes for above interests are as follows:
7.3.1. Savings books (or savings cards) of
individuals, for incomes from deposit interests.
7.3.2. Vouchers of payment of interests from
life insurance policies, for incomes from these interests.
8. Incomes from foreign exchange remittances
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8.2. Bases for determination of tax-exempt
incomes from foreign exchange remittances include papers evidencing sums of money
received from abroad and vouchers of payment by organizations which pay these
sums of money on behalf of remitters (if any).
9. Salary or wage amounts paid for night
shift or overtime work, which are higher than those paid for day shifts or
prescribed working hours under the Labor Code:
9.1. Salary or wage amounts paid for night
shift or overtime work which are higher than those paid for day shift, are
exempt from tax based on actually paid salary or wage amounts for night shift
or overtime work minus those paid for ordinary workdays.
Example: An individual has his/her wage of
VND 20,000/hour paid for ordinary workdays under the Labor Code.
- In case he/she performs overtime work on an
ordinary workday and gets an overtime pay of VND 30,000/hour, his/her
tax-exempt income will be:
VND 30,000/hour - VND 20,000/hour = VND
10,000/hour
- In case he/she performs overtime work on a
weekend or holiday and gets an overtime pay of VND 40,000/hour, his/her
tax-exempt income will be:
VND 40,000/hour - VND 20,000/hour = VND
20,000/hour
9.2. Employing units shall make a list
showing working time in the night shift or overtime work and wage amounts for
the night shift or overtime work already additionally paid to laborers. This
list shall be sent to the tax office together with dossiers of declaration for
tax finalization.
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For laborers who participate in social
insurance and retire under retirement regulations, their incomes from pensions
paid by the Social Insurance are tax-exempt.
Individuals residing in Vietnam are eligible for exemption from personal income tax on pensions paid by foreign
countries under the social insurance laws of these countries.
11. Incomes from scholarships, including:
11.1. Scholarships granted from the state
budget, including scholarships granted by the Education and Training Ministry,
provincial/ municipal Education and Training Services or public schools or
other kinds of scholarship originating from the state budget.
11.2. Scholarships granted by domestic and
foreign organizations under their study promotion programs.
11.3. Agencies granting scholarships to
individuals shall keep scholarship granting decisions and scholarship payment
vouchers.
Individuals who receive scholarships directly
from foreign organizations shall keep documents and vouchers proving that their
received incomes are scholarships granted by these foreign organizations.
12. Incomes from indemnities paid under life
insurance policies, non-life insurance policies, compensations for labor
accidents, compensations paid by the State and other compensations as provided
for by law are exempt from personal income tax.
12.1. Incomes from indemnities paid under
life insurance policies or non-life insurance policies are sums of money
received by individuals and paid by life or non-life insurance organizations to
the insured under signed insurance policies.
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12.2. Incomes from compensations for labor
accidents are sums of money received by laborers from their employing agencies
or social insurance funds for accidents occurring in their working process.
Bases for determination of incomes from
compensations for labor accidents are compensation documents or decisions of
employing agencies or courts and vouchers of payment of compensations for labor
accidents.
12.3. Incomes from compensations paid by the
State and other compensations as provided for by law.
12.3.1. Incomes from compensations paid by
the State are sums of money received by individuals as compensations for damage
to these individuals’ interests caused by wrongful administrative sanctioning
decisions of competent persons or state agencies; incomes from compensations
for persons victimized by unjust or wrongful decisions of competent authorities
conducting criminal procedures against them.
12.3.2. Bases for determination of incomes
from compensations paid by the State are competent states agencies’ decisions
compelling agencies or individuals that made wrongful decisions to pay
compensations and compensation payment vouchers.
13. Incomes received from charity funds
licensed or recognized by competent state agencies and operating for charity,
humanitarian or non-profit study promotion purposes.
Charity funds specified in this Clause are
those established and operating under the Government’s Decree No. 148/2007/ND-CP
of September 25, 2007, on organization and operation of social funds and
charity funds.
Bases for determination of tax-exempt incomes
received from charity funds are these charity funds’ decisions on delivery of
these incomes and vouchers of payment of sums of money or handover of objects
from charity funds.
14. Incomes received from governmental or
non-governmental foreign aid for charity or humanitarian purposes approved by
competent state agencies.
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IV. TAX REDUCTION
Under Article 5 of Decree No. 100/2008/ND-CP,
taxpayers that face difficulties caused by natural disasters, fires, accidents
or severe diseases and affecting their tax payment ability may be considered
for tax reduction corresponding to the extent of damage they suffer from but
not exceeding payable tax amounts.
1. Determination of tax amounts to be reduced
1.1. Tax reduction shall be considered based
on the calendar year. Taxpayers that face difficulties caused by natural
disasters, fires, accidents or severe diseases in a year will be considered for
reduction of their tax amounts payable in that year.
1.2. Payable tax amount of a taxpayer serving
as a basis for tax reduction consideration is total personal income tax amount
payable by that taxpayer in a tax year, including:
1.2.1. Personal income tax amounts already
paid or withheld for taxable incomes calculated according to the whole income
tariff specified in Article 23 of the Law on Personal Income Tax.
1.2.2. Payable personal income tax amounts
for incomes from business activities and incomes from salaries or wages.
1.3. The basis for determination of the
extent of damage eligible for tax reduction is total actual expenses for
remedying damage minus compensations received from insurance organizations (if
any), or from accident-causing organizations or individuals (if any).
1.4. To-be-reduced tax amounts are determined
as follows:
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1.4.2. In case the payable tax amount in a
tax year is smaller than the damage, to-be-reduced tax amount will be the
payable tax amount.
2. Dossiers and procedures for tax reduction
consideration
2.1. For taxpayers facing difficulties caused
by natural disasters or fires
Taxpayers facing difficulties caused by
natural disasters or fires eligible for tax reduction consideration shall send
to tax offices directly managing them tax reduction dossiers, each comprising:
- An application for tax reduction, made
according to a set form (not printed herein).
- A written record stating the extent of
property damage, made by a competent agency or a written certification of
damage made by the commune-level People’s Committee of the locality where the
natural disaster or fire occurs.
- A voucher of compensation payment by an
insurance organization (if any) or an agreement on compensation by the fire-causing
person (if any).
- Vouchers of payment of expenses directly
relating to the remedying of the natural disaster or fire.
- A declaration for finalization of personal
income tax (if the taxpayer is subject to compulsory tax finalization).
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Taxpayers encountering accidents and entitled
to tax reduction shall send to tax offices directly managing them tax reduction
dossiers, each comprising:
- An application for tax reduction, made
according to a set form (not printed herein).
- A document or a written record certifying
the accident, with the police office’s certification or the heath agency’s
certification of degree of injury.
- Papers evidencing the indemnification by
the insurance organization or the compensation agreement of the
accident-causing person (if any).
- Vouchers of payment of expenses directly
relating to the remedying of the accident.
- A declaration for personal income tax
finalization (if the taxpayer is subject to compulsory tax finalization).
2.3. For taxpayers suffering from severe
diseases
2.3.1. Taxpayers suffering from severe
diseases and eligible for tax reduction consideration under
this guidance are those who contract diseases which can, unless medical
treatment prescribed
by health agencies or doctors is provided, dangerously affect or directly
threaten their life.
2.3.2. Persons suffering from severe diseases
and eligible for tax reduction consideration shall send to tax offices directly
managing them tax reduction dossiers, each comprising:
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- A copy of the medical record or the medical
examination book.
- Documents evidencing expenses for medical
examination and treatment issued by the health agency; or invoices of purchase
of curative medicines enclosed with doctor’s prescriptions.
- A declaration for personal income tax
finalization (if the taxpayer is subject to compulsory tax finalization).
3. Competence to issue tax reduction
decisions
Competent to issue tax reduction decisions
are heads of tax offices directly managing taxpayers.
V. CONVERSION OF
TAXABLE INCOMES INTO VIETNAM DONG
1. Incomes liable to personal income tax must
be calculated in Vietnam dong. Incomes received in a foreign currency must be
converted into Vietnam dong at the average exchange transaction rate on the
inter-bank foreign exchange market at the time of income generation.
Any foreign currency without an announced
exchange rate with Vietnam dong must be converted into Vietnam dong through another foreign currency with an exchange rate with Vietnam dong.
2. A taxable income received in non-cash form
(a product or service) must be converted into Vietnam dong at the market price
of that product or service or of products or services of the same or similar
type at the time of income generation.
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1. For resident individuals
1.1. Annual tax period is applicable to
incomes from business activities, salaries or wages.
If in a calendar year, an individual is
present in Vietnam for 183 days or more, the tax year is the calendar year.
For an individual who is present in Vietnam
for less than 183 days in a calendar year but his/ her period of presence in
Vietnam is 183 days or more if counted in twelve consecutive months from the
first day of his/her presence in Vietnam, the first tax year is twelve
consecutive months from the first day of his/her presence in Vietnam. From the
second year on, the tax year will be the calendar year.
Example: Mr. X, a Japanese national, arrives
in Vietnam on May 15, 2009. He is present in Vietnam for a total 140 days in
2009 and more than 43 days in 2010 by May 14, 2010. His first tax year will be
counted from May 15, 2009, to the end of May 14, 2010. His second tax year will
be counted from January 1, 2010, to the end of December 31, 2010.
1.2. Tax period upon each time of income
generation is applicable to incomes from capital investment; incomes from
capital transfer; incomes from real estate transfer; incomes from won prizes;
incomes from copyright; incomes from commercial franchising; incomes from
inheritances; and incomes from gifts.
1.3. Tax period upon each transfer or annual
tax period is applicable to securities transfer. Individuals who apply the
annual tax period shall register with tax offices at the beginning of the year.
2. For non-resident individuals
Tax period applicable to non-resident
individuals shall be counted upon each time of income generation and applicable
to all their taxable incomes.
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Part B.
TAX
BASES FOR RESIDENT INDIVIDUALS
I. TAX BASES FOR
INCOMES FROM BUSINESS ACTIVITIES AND INCOMES FROM SALARIES OR WAGES
Tax bases for incomes from business
activities and incomes from salaries or wages are taxed income and tax rate.
Taxed incomes are taxable incomes minus the
following amounts:
- Compulsory social insurance premiums under
law, including social insurance, health insurance, professional liability
insurance for some professions subject to compulsory insurance and other
compulsory insurance premiums under law.
- Reductions based on family circumstances.
- Contributions to charity funds,
humanitarian funds and study promotion funds.
Taxable incomes of individuals who earn
taxable incomes from both business activities and salaries or wages will be the
total of taxable incomes from business activities and taxable incomes from salaries
or wages.
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Taxable incomes from business activities are
determined to be turnover minus reasonable expenses directly related to the
generation of taxable incomes in a tax period.
For individuals who earn incomes from both
business activities and capital investment or transfer or real estate transfer
(except real estate being fixed assets used for business purposes), incomes
from copyrights, commercial franchising, inheritances or gifts, these incomes
will not be calculated as incomes from business activities but these
individuals shall pay personal income tax for each separate income under this
Circular’s guidance.
Taxable income from business activities for
each specific case is determined as follows:
1.1. For business individuals who fail to
conduct accounting using invoices and documents on tax payment by the
presumptive method, their incomes liable to personal income tax shall be
determined according to the following formula:
Taxable income in a
tax period
=
Turnover assessed
in a tax period
x
Ratio of assessed
taxable incomes
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1.2. For business individuals who can account
only goods or service sales turnover and cannot account and determine expenses,
their incomes liable to personal income tax shall be determined according to
the following formula:
Taxable income in a
tax period
=
Turnover for
calculation of taxable income in a tax period
x
Ratio of assessed
taxable incomes
In which, turnover for calculation of taxable
income shall be determined according to invoice- and document-based accounting
books and consistent with turnover used for value-added tax calculation.
The General Department of Taxation shall
specify the taxable income-turnover ratio for application to business
individuals who cannot account expenses or fail to conduct cost-accounting.
1.3. For business individuals who fully
conduct the invoice- and document-based accounting, their taxable incomes shall
be determined according to the following formula:
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=
Turnover for
calculation of taxable income in a tax period
-
Reasonable expenses
for generation of incomes in a tax period
+
Other taxable
incomes in a tax period
In which:
- Turnover and expenses shall be determined
according to invoice- and document-based accounting books. For business
individuals who are subject to value-added tax, their turnover serving as a
basis for determination of taxable income must be consistent with turnover used
for value-added tax calculation.
- Other taxable incomes are those earned in
business activities, such as fines for contract breaches or late payment; bank
interests during the period of payment; interests on sale of goods on deferred
or installment payment; proceeds from sale of fixed assets, discarded materials
or faulty products.
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Turnover for calculation of taxable incomes
from business activities means the total of sales, processing remuneration,
commissions, goods or service provision charges generated in a tax period,
including also price subsidies and surcharges enjoyed by business individuals,
regardless of whether such turnover has been collected or not.
a. The time of determination of turnover for
calculation of taxable incomes is determined as follows:
- For goods, it is the time of transfer of
goods ownership or the time of making goods sale invoices.
- For services, it is the time of completion
of services or the time of making service provision invoices.
In case invoices are made before the time of
transfer of goods ownership (or completion of services), the time of
determination of turnover is the time of making invoices or vice versa.
b. In some cases, turnover for calculation of
taxable incomes is determined as follows:
- For goods sold on installment payment, it
is determined based on selling prices of goods sold on lump-sum payment
exclusive of deferred payment interest;
- For goods or services sold on deferred
payment, it is selling prices of goods or services sold on lump-sum payment
exclusive of deferred payment interest.
In case the installment or deferred payment
under a purchase and sale contract is made through many tax periods, turnover
is the sum of money receivable from the purchaser in a tax period exclusive of
installment or deferred payment interest within the time limit stated in the
contract.
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- For goods or services made by business
individuals for exchange, donation, presentation as gifts, equipping or giving
as bonuses to laborers, turnover is determined based on selling prices of the
same or equivalent goods or services on the market at the time of exchange,
donation, presentation as gifts, equipping or giving as bonuses to laborers.
- For goods or services made by business
individuals for use in their production or business activities, turnover is
expenses for making such goods or services.
- For goods processing activities, turnover
is total sum of money earned from processing activities, covering remuneration,
costs of fuel, power and auxiliary materials and other expenses for the goods
processing.
- For commissioned sale agents that sell
consigned goods at prices fixed by their principals being business individuals,
turnover is commissions enjoyable under agency or goods consignment contracts.
- For lease of assets, turnover is rent
periodically paid by the lessee under the lease contract.
In case the lessee pays rent in advance for
many years, turnover for calculation of taxable incomes may be allocated to the
number of years of advance rent payment or determined based on lump-sum rent.
In case the lessee pays rent in advance for
many years and bears all costs arising in the course of asset use, turnover for
calculation of taxable incomes case be allocated to the number of years of
advance rent payment but the lesser shall promptly calculate the tax amount
payable for each year and pay tax for the whole duration for which the rent is
collected in advance.
- For construction and installation
activities, turnover is the value of the work or work item or work volume to be
tested for handover. In case the construction and installation contractor is
not the material, machinery and equipment supply contractor, turnover for tax calculation
is the sum of money earned from construction and installation activities
exclusive of the value of materials, machinery and equipment.
- For transport activities, turnover is total
sum of money earned from the transportation of passengers, luggage or cargoes.
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Deductible reasonable expenses are those
actually paid and directly related to the generation of turnover and taxable
incomes in a tax period and accompanied with invoices and vouchers under law.
Reasonable expenses are determined as
follows:
a. Salaries, wages, allowances, subsidies,
remunerations and other payments to laborers under labor contracts or
collective labor agreements under the Labor Code.
Salaries or wages exclude those of
individuals who are heads of business households or members of business groups
named in their business registrations.
Working outfit or attire allowance to be paid
to laborers must not exceed VND 1,000,000/ year.
b. Expenses for raw materials, materials,
fuels, energy and goods actually used for the production and trading of goods
or provision of services related to the generation of turnover and taxable
incomes in a period, which shall be calculated according to their reasonable
consumption rates and actual ex-warehousing prices determined by business
households or individuals themselves, for which they shall take responsibility
before law.
The value of lost supplies, assets, capital
or goods is not allowed to be accounted as a reasonable expense, except losses
caused by natural disasters, fires, epidemics, diseases and other force majeure
circumstances ineligible for compensation.
For supplies and goods used for both personal
consumption and business activities, only the value of parts used for business
activities may be accounted as expenses.
c. Expenses for depreciation, regular repair
and maintenance of fixed assets used for the production and trading of goods or
provision of services:
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+ They are used for production or business.
+ They are accompanied with sufficient
invoices, vouchers and other lawful papers evidencing that they are owned by
business individuals.
+ They are managed, monitored and accounted
in accounting books of business individuals under current management and
cost-accounting regulations.
- The fixed asset depreciation level is
accounted as a reasonable expense under regulations on management, use and
depreciation of fixed assets.
- Fully depreciated fixed assets which are
further used for production or business may not be further depreciated.
For fixed assets used for both business
purpose and another purpose, deductible depreciation expenses shall be based on
the extent of their utility for business activities and their common use level.
d. Paid interests on loans for goods
production and trading or service provision activities directly related to the
generation of turnover and taxable incomes.
Loan interest rates are actual interest rates
specified in contracts for borrowing loans from banks or credit institutions.
If loans are borrowed from entities other than banks and credit institutions,
loan interests shall be paid based on loan contracts but must not be 1.5 times
higher than the prime interest rate announced by the State Bank of Vietnam at the time of loan provision.
Paid loan interests are exclusive of
interests paid on loans contributed as capital to setting up establishments of
business individuals.
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- Payment of electricity, water and telephone
charges; purchase of stationery; hiring of auditors; legal consultancy and
designing service charges; asset insurance premiums; charges for technical
services and other services provided from outside.
- Expenses for acquisition of assets other
than fixed assets, covering purchase and use of technical documents, invention
patents, technology transfer licenses and trademarks, which are gradually
allocated to business expenses.
- Rents for fixed assets operating under rent
contracts. In case fixed asset rent is paid in lump sum in advance for many
years, such rent shall be gradually allocated to production or business
expenses according to the number of years of fixed asset use.
- Charges for services purchased or hired
from outside in direct service of activities of producing and trading in goods
or providing services, which are evidenced by vouchers and invoices under
regulations.
- Expenses for sale of goods and services,
covering preservation, packaging, transportation, loading and unloading,
warehousing and warranty of products and goods.
f. Taxes, charges, fees, land rents payable
under law for goods production and trading or service provision activities,
including:
- License tax, export tax, import tax, excise
tax, royalty tax, agricultural land use tax, house and land tax, land rent.
- Value-added tax allowed by law to be
accounted as expenses.
- Charges and fees actually remitted by
business establishments into the state budget under the law on charges and
fees.
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h. Other expenses directly related to the
generation of turnover and taxable incomes accompanied with vouchers and
invoices under regulations.
2. Taxable incomes from salaries or wages
2.1. Taxable incomes from salaries or wages
are determined to be total salary, wage or remuneration amounts and other
income amounts of salary or wage nature received by taxpayers in a tax period
under the guidance in Clause 2, Section II, Part A of this Circular.
2.2. Time of determination of taxable incomes
Time of determination of taxable incomes from
salaries or wages is the time when employers pay salaries or wages to their
employees.
3. Determination of reductions
3.1. Reduction based on family circumstances
Under Article 19 of the Law on Personal
Income Tax and Article 12 of Decree No. 100/2008/ND-CP, the reduction based on
family circumstances shall be effected as follows:
3.1.1. Reduction based on family
circumstances is a sum of money deductible from taxable incomes from business
activities, salaries or wages of a taxpayer being a resident individual before
tax calculation.
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3.1.2. Levels of reduction based on family
circumstances
a. Reduction for a taxpayer himself/herself
is VND 4 million/month or VND 48 million/ year. The reduction level of VND 4
million/ month is an average for the whole year, regardless of whether there
are some months in the tax year in which he/she earns no income or earns less
than VND 4 million/month.
b. Reduction for each dependant of a
taxpayer, which is VND 1.6 million/month given from the month in which the
taxpayer’s obligation to nurture the dependant arises.
3.1.3. Principles for calculation of family
circumstance-based reduction for dependants
- Only taxpayers who have made tax
registrations and been granted tax identification numbers may get family
circumstance-based reduction for their dependants. Particularly for the tax
year of 2009, taxpayers without tax declarations may temporarily be entitled to
family circumstance-based reduction if they have registered for family
circumstance-based reduction and complete dossiers evidencing their dependants
under the guidance at Point 3.1.7, Clause 3, Section I, Part B of this
Circular.
- The family circumstance-based reduction for
dependants shall be effected on the principle that each dependant may be
counted only once for tax reduction for a taxpayer in a tax year. Reduction for
dependants shall be given from the month in which taxpayers’ obligation to
nurture these dependants arises.
In case several taxpayers are jointly obliged
to nurture a dependant, they shall reach agreement on registration of this
dependant for family circumstance-based reduction for one among them.
- Taxpayers shall declare the number of their
dependants for whom reduction is to be given and be held responsible before law
for the truthfulness of their declarations.
3.1.4. Dependants of a taxpayer include:
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- Children under 18 years old (fully
calculated in month).
Example: A child of Mr. Nguyen Van A was born
in July 1992. In this case, this child is counted as a dependant until the end
of June 2010.
- Disabled children of 18 years or older and
incapable of working.
- Children who are studying at universities,
colleges, professional secondary schools or job-training schools and have no
income or have incomes not exceeding the level specified at Point 3.1.5 below.
b. Spouse of the taxpayer who is beyond
working age or is of working age prescribed by law but disabled and incapable
of working or has no income or has incomes not exceeding the level specified at
Point 3.1.5 below.
c. Blood parents or parents-in-law of the
taxpayer who is beyond working age or is of working age prescribed by law but
disabled and incapable of working or has no income or has incomes not exceeding
the level specified at Point 3.1.5 below.
d. Other helpless individuals who are beyond
working age or are of working age prescribed by law but disabled and incapable
of working or has no income or has incomes not exceeding the level specified at
Point 3.1.5 below, and whom the taxpayer is obliged to directly nurture,
including:
- Blood siblings of the taxpayer.
- Paternal and maternal grandparents, aunts
and uncles of the taxpayer.
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- Other persons whom the taxpayer is obliged
to directly nurture under law.
3.1.5. The income level serving as a basis
for identifying dependants to be counted for reduction is an average monthly
income of VND 500,000 or less in a year from all income sources.
3.1.6. Disabled persons who are incapable of
working under the above guidance are those governed by the law on disabled
people, specifically:
Disabled persons who are incapable of working
are those with disabilities or insufficient bodily functions which render them
incapable of directly conducting production or business activities or those
with inborn defects or deformities which render them incapable of serving
themselves and are certified by a health agency of district or higher level or
stated in their declarations with the commune-level People’s Committee’s
certification of their disability and working incapability level.
3.1.7. Dossiers evidencing dependants
a. For children:
- For an under-18 child, one of the following
papers is required: a copy of his/her birth certificate or a copy of the
household registration book.
- For a child aged 18 years or older and
disabled and incapable of working, the following papers are required:
+ A copy of his/her birth certificate or the
household registration book.
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- For a child who is studying at a
university, college, professional secondary school or vocational training
school (including those studying overseas), the following papers are required:
+ A copy of his/her birth certificate or the
household registration book.
+ A copy of his/her student card or
declaration with his/her school’s certification or other papers proving that
he/she is studying at that university, college, professional secondary school
or vocational training school.
For adopted or out-of-wedlock children, in
addition to birth certificates, there must also be copies of competent state
agencies’ decisions on recognition of child adoption or decisions on
recognition of father, mother or child acknowledgement.
b. For spouses:
- For a wife or husband who is beyond working
age, one of the following papers is required: a copy of the household
registration book or the marriage certificate.
- For a wife or husband who is of working
age, in addition to the above papers, there must also be a copy of the
certification of a health agency of district or higher level or this
dependant’s declaration with the commune-level People’s Committee’s
certification of his/ her disability and working incapability level.
c. For blood parents or siblings:
- For a parent or sibling who is beyond
working age, one of the following papers is required: A copy of the household
registration book or copies of other relevant papers showing the familial
relation between the dependant and the taxpayer (blood father, mother, brother
or sister of the taxpayer).
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d. For paternal or maternal grandparents,
aunts, uncles, blood nieces and nephews, there must be lawful papers showing
the familial relation between the dependant and the taxpayer (paternal or
maternal grandfather, grandmother, aunt or uncle or blood niece or nephew) and
this dependant’s declaration with the certification of the taxpayer’s
responsibility to nurture this dependant by the People’s Committee of the
commune where the taxpayer resides.
Lawful papers specified above are any legal
documents identifying the familial relation between the taxpayer and the
dependant, such as copy of the household registration book (if they are named
in the same household registration book), copies of birth certificates, etc.,
showing this relation.
For dependants who are of working age, in
addition to the above papers, there must also be a copy of the certification of
a health agency of district or higher level or the dependant’s declaration with
the commune-level People’s Committee’s certification of his/her disability and
working incapability level.
e. If papers included in a dossier guided
above are copies, they must be notarized or certified by the commune-level
People’s Committee. If they are neither notarized nor certified, original
papers must be produced together with copies to tax offices for checking and
comparison.
f. Resident individuals being foreigners who
have no dossiers under the above case-by-case guidance are required to produce
similar legal documents to evidence their dependants.
3.1.8. Declaration for reduction for
dependants
Taxpayers that earn incomes of VND 4
million/month or less from business activities, salaries or wages are not
required to declare their dependants.
Taxpayers that earn incomes of more than VND
4 million/month from business activities, salaries or wages and nurture
dependants shall declare these dependants for family circumstance-based
reduction under the following guidance:
a. For taxpayers earning incomes from
salaries or wages:
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If the taxpayer enters into a labor contract
(or receives an employment decision) after January 30, the deadline for
registration of dependants is the last day of the month in which the labor
contract is entered into or the employment decision is issued.
- Taxpayers that register their dependants
for family circumstance-based reduction shall submit complete dossiers
evidencing these dependants made under the guidance at Point 3.1.7 above to tax
offices directly managing their income-paying agencies.
- Deadline and time limits for submitting
dossiers evidencing dependants are as follows:
+ For cases in which registrations for family
circumstance-based reduction are made at the beginning of 2009, the deadline
for dossier submission is June 30, 2009.
+ For cases in which registrations for family
circumstance-based reduction are made after January 30, 2009, the time limit
for dossier submission is three months from the date of reduction registration.
+ For cases in which there is an increase or
decrease in the number of registered dependants, the time limit for dossier
submission is three months from the date of registration of such increase or
decrease.
Past the above dossier submission deadline or
time limits, if taxpayers fail to submit dossiers to evidence their dependants,
they will not be entitled to reduction for dependants and adjustment of their
payable tax amounts.
- Income-paying agencies shall:
+ Receive taxpayers’ registrations of
dependants eligible for reduction.
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+ Transfer one registration for reduction for
a taxpayer’s dependant to the tax offices directly managing them. The deadline
for transfer is February 20 of the year in which reduction is effected. If a
registration for reduction is made after January 30 of the year in which
reduction is effected or a registration of change in dependants is made, the
deadline for transfer of the registration to the tax office directly managing
the income-paying agency is the 20th day of the month following the month in
which the registration is received.
b. For taxpayers earning incomes from
business activities
- They shall make declarations of their
dependants for family circumstance-based reduction together with declarations
for temporary tax payment applicable to business individuals who pay tax
according to declarations or with tax returns applicable to business individuals
who pay tax by the presumptive method.
- Those declare their dependants for family
circumstance-based reduction in declarations specified above at the beginning
of 2009 shall make complete dossiers to evidence their dependants under the
guidance at Point 3.1.7, Clause 3, Section I, Part B of this Circular and
submit them to district-level Tax Departments directly managing business
individuals before June 30, 2009.
- In case there is an increase or a decrease
in the number of dependants or business activities have just started, dossiers
evidencing dependants must be submitted within three months after these
dependants are stated in tax declarations.
- Past the above dossier submission deadline
or time limit, it taxpayers fail to submit dossiers to evidence their
dependants, they will not be entitled to reduction for their dependants and
adjustment of their payable tax amounts. For business individuals that pay
presumptive tax amounts, these presumptive tax amounts shall be readjusted.
3.1.9. A taxpayer shall submit a dossier to
evidence a dependant only once throughout the duration for which he/she enjoys
reduction, including the case in which the taxpayer changes his/her working
office or place of business.
Taxpayers that earn incomes from both business
activities and salaries or wages can choose and register either kind of income
for which the temporary family circumstance-based reduction is given for their
dependants under the above guidance. A taxpayer with many dependants for whom
the registered temporary reduction cannot be fully given for either kind of
income, temporary reduction shall be given for both kinds of income.
3.2. Reduction for charity, humanitarian or
study promotion donations
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a. Contributions to organizations or
establishments that care for or nurture children in special plights, disabled
people and helpless elderly people. These organizations or establishments must
be established and operate under the Government’s Decree No. 68/2008/ND-CP of
May 30, 2008, specifying conditions and procedures for the establishment,
organization, operation and dissolution of social relief establish-ments.
Documents evidencing contributions to organizations or establishments that care
for or nurture children in special plights, disabled people and helpless
elderly people are these organizations’ or establishments’ lawful receipts.
b. Contributions to charity funds,
humanitarian funds or study promotion funds established and operating under the
Government’s Decree No. 148/2007/ND-CP of September 25, 2007, on the
organization and operation of social funds and charity funds operating for
charity, humanitarian or study promotion purposes and not for profit purposes,
and other relevant documents on the management and use of financial aid.
Documents evidencing charity, humanitarian or
study promotion donations must be lawful receipts issued by central or
provincial-level organizations or funds.
3.2.2. Charity, humanitarian or study
promotion donations made in a year shall be counted for a reduction deductible
from taxable incomes of that year. In case the reduction for these donations
cannot be fully given in the year, these donations are not allowed to be
carried forward for deduction from taxable incomes of the subsequent tax year.
The maximum reduction must not exceed taxed incomes from salaries or wages and
incomes from business activities of the year in which charity or humanitarian
donations are made.
4. Tax rates
Personal income tax rates for incomes from
business activities, salaries or wages are applied according to the partially
progressive tariff under Article 22 of the Law on Personal Income Tax,
specifically:
Taxed incomes subject to this tariff are
incomes of resident individuals earning taxable incomes from business
activities and from salaries or wages after subtracting the family
circumstance-based reduction, compulsory insurance premiums, and charity,
humanitarian or study promotion donations.
5. Methods of tax calculation
Personal income tax on incomes from business
activities, salaries or wages is the total tax amount calculated according to
each grade of income and corresponding tax rate in the partially progressive
tariff, in which the tax amount calculated according to each grade of income is
determined to be taxed income within that grade of income multiplied by (x) the
corresponding tax rate.
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Taxed income per
year
(VND million)
Taxed income per
month
(VND million)
Tax rate
(%)
1
Up to 60
Up to 5
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2
Between over 60 and 120
Between over 5 and 10
10
3
Between over 120 and 216
Between over 10 and 18
15
4
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Between over 18 and 32
20
5
Between over 384 and 624
Between over 32 and 52
25
6
Between over 624 and 960
Between over 52 and 80
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7
Over 960
Over 80
35
Example: Mr. A is a resident individual who
earns in a month an income of VND 10 million from salaries or wages and is
obliged to nurture two under-18 children. In the month, he has to pay a
compulsory insurance premium equal to 5% and a health insurance premium equal
to 1% of his salary, but he makes no charity, humanitarian or study promotion
donation.
Mr. A’s personal income tax to be temporarily
paid in the month is determined as follows:
- Mr. A enjoys the following reductions
deductible from his taxable income:
+ Reduction for himself: VND 4 million;
+ Reduction for his two dependants (two
children): VND 1.6 million x 2 = VND 3.2 million;
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Total reductions: 4 + 3.2 + 0.6 = VND 7.8
million.
- His taxed income subject to the application
of the partially progressive tariff for calculation of the payable tax amount
is: VND 10 million - VND 7.8 million = VND 2.2 million.
- After reductions are deducted under
regulations, Mr. A’s taxed income falls into grade 1 of the partially
progressive tariff and his total payable tax amount in the month is:
VND 2.2 million x 5% = VND 0.11 million.
Example: Mr. B earns in a month an income of
VND 90 million from salaries or wages (after subtracting compulsory insurance
premiums) and is obliged to nurture two under-18 children. In the month, he
makes no charity, humanitarian or study promotion donation.
a. Mr. B’s personal income tax to be
temporarily paid in the month is determined as follows:
- Mr. B enjoys the following reductions:
+ Reduction for himself: VND 4 million;
+ Reduction for his two dependants: VND 1.6
million x 2 = VND 3.2 million;
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- His payable tax amount is calculated as
follows:
+ Grade 1: Taxed income up to VND 5 million
subject to the tax rate of 5%:
VND 5 million x 5% = VND 0.25 million
+ Grade 2: Taxed income of between over VND 5
million and 10 million subject to the tax rate of 10%:
(VND 10 million - VND 5 million) x 10% = VND
0.5 million
+ Grade 3: Taxed income of between over VND
10 million and 18 million subject to the tax rate of 15%:
(VND 18 million - VND 10 million) x 15% = VND
1.2 million
+ Grade 4: Taxed income of between over VND
18 million and 32 million subject to the tax rate of 20%:
(VND 32 million - VND 18 million) x 20% = VND
2.8 million
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VND 32 million and 52 million subject to the
tax rate of 25%:
(VND 52 million - VND 32 million) x 25% = VND
5 million
+ Grade 6: Taxed income of between over VND
52 million and 80 million subject to the tax rate of 30%:
(VND 80 million - VND 52 million) x 30% = VND
8.4 million
+ Grade 7: Taxed income of between over VND
80 million and 82.8 million subject to the tax rate of 35%:
(VND 82.8 million - VND 80 million) x 35% =
VND 0.98 million
Mr. B, with an income of VND 90 million in a
month, shall temporarily pay in the month, according to the partially
progressive tariff, the following personal income tax amount:
(0.25 + 0.5 + 1.2 + 2.8 + 5 + 8.4 + 0.98) =
VND 19.13 million
To facilitate the calculation, a simplified
method of calculation specified in an appendix to this Circular may be applied.
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6.1. According to the contributed capital
portion of each individual stated in the business registration; or,
6.2. Under the agreement among these
individuals; or,
6.3. According to per-capita average income
amount in case the business registration does not state contributed capital
portions or contains no agreement on division of incomes among individuals.
On the basis of taxable income of each
individual jointly conducting business activities determined on the above
division principle, each individual will enjoy family circumstance-based
reduction and reductions for charity, humanitarian and study promotion
donations and compulsory insurance premiums before his/her own taxed income and
payable personal income tax amount are determined.
Example: Mr. A, Mr. B and Mr. C are all named
in the same business registration and jointly conduct business activities (in a
group of business individuals).
- In case the business registration clearly
states the contributed capital portion of each individual: Mr. A: 50%, Mr. B:
30% and Mr. C: 20%; and assume that the personal income tax-liable income in
the year X is VND 300 million and each individual has two dependants and makes
no charity donation in the year. The personal income tax amount payable by each
individual is determined as follows:
- Step 1: To determine the taxable income of
each individual:
Mr. A: VND 300 million x 50% = VND 150
million
Mr. B: VND 300 million x 30% = VND 90 million
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- Step 2: To determine the taxed income of
each individual:
Mr. A: VND 150 million - [(VND 4 million x 12
months) + (VND 1.6 million x 2 dependants x 12 months)] = VND 63.6 million
Mr. B: VND 90 million - [(VND 4 million x 12
months) + (VND 1.6 million x 2 dependants x 12 months)] = VND 3.6 million
Mr. C: VND 60 million - [(VND 4 million x 12
months) + (VND 1.6 million x 2 dependants x 12 months)] = VND -26.4 million
So, Mr. C’s income in the year X is below the
personal income tax-liable level.
- Step 3: To determine payable personal
income tax amounts of individuals with tax-liable incomes:
According to the partially progressive
tariff:
Mr. A: (VND 60 million x 5%) + (VND 3.6
million x 10%) = VND 3.36 million
Mr. B: VND 3.6 million x 5% = VND 180,000.
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1. For incomes from capital investment
Tax bases for incomes from capital investment
are taxed income and tax rate.
1.1. Taxed income
Taxed income from capital investment is
taxable income received by an individual under the guidance in Clause 3,
Section II, Part A of this Circular.
1.2. Tax rate for incomes from capital
investment is 5% as specified in the whole income
tariff.
1.3. Time of determination of taxed income
Time of determination of taxed income for
income from capital investment is the time when an organization or individual
pays income to the taxpayer.
For incomes from capital investment specified
at Points 3.4 and 3.7, Clause 3, Section II, Part A of this Circular, the time
of determination of taxed income is the time when an individual actually
receives income from increased value of capital contribution or the time of
share certificate transfer.
In case an individual earns incomes from
overseas capital investment in any form, the time of determination of taxed
income is the time when he/she receives incomes.
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Payable personal income
tax amount
=
Taxed income
x
Tax rate of 5%
2. For incomes from capital transfer
2.1. For incomes from transfer of contributed
capital amounts
Tax bases for incomes from transfer of
contributed capital amounts are taxed income and tax rate.
2.1.1. Taxed income: taxed income from the
transfer of a contributed capital amount is taxable income determined to be the
transfer price minus (-) the purchase price of the contributed capital amount
and expenses related to the generation of capital transfer income.
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Transfer price means a sum of money received
by an individual under a capital transfer contract.
In case the transfer contract does not state
a payment price or the payment price stated in the contract is inconsistent
with the market price, the tax office may assess the transfer price in
accordance with the Law on Tax Administration and guiding documents.
b. Purchase prices
The purchase price of a contributed capital
amount is determined on a cases-by-cases basis as follows:
- In case of transfer of a contributed
capital amount for enterprise foundation, the purchase price is the value of
the capital amount at the time of capital contribution. The value of the
contributed capital shall be determined based on accounting books, invoices and
vouchers.
- For acquisitioned capital amounts, the
purchase price is the value of that capital amount at the time of acquisition.
The purchase price shall be determined based on die contract on acquisition of
contributed capital.
c. Related expenses to be subtracted upon
determination of taxable incomes from capital transfer are actually paid
expenses related to the generation of capital transfer incomes with lawful
invoices and vouchers, including:
- Expenses for completion of legal procedures
necessary for the transfer;
- Charges and fees paid by the transferor
into the state budget upon carrying out transfer procedures;
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2.1.2. Tax rate
The personal income tax rate for incomes from
transfer of contributed capital is 20% as specified in the whole income tariff.
2.1.3. Time of determination of taxed incomes
Time of determination of a taxed income is
the time when a capital transfer transaction is completed under law.
Time of completion of a capital transfer
transaction specified in this Clause is the time when parties to transaction
carry out procedures for declaring the transfer of ownership to the business
registration office or the enterprise managing the contributed capital.
2.1.4. Tax calculation method
Payable personal
income tax amount
=
Taxed income
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Tax rate of 20%
2.2. For incomes from securities transfer
Tax bases for incomes from securities
transfer are taxed income and tax rate.
2.2.1. Taxed incomes: A taxed income from a
securities transfer is determined to be the securities sale price minus (-) the
purchase price and expenses for the transfer.
a. The securities sale price is determined as
follows:
- For listed securities: The securities sale
price is the actual transfer price on the securities market at the time of
sale. The market price at the time of sale is the order-matching price
disclosed by the Stock Exchange or the Securities Trading Center.
- For securities of unlisted public companies
which have registered for trading at the Securities Trading Center, the securities sale price is the actual transfer price at the Securities Trading Center.
- For securities of companies not falling
into the above cases, the securities sale price is the transfer price stated in
the transfer contract or recorded in accounting books of the unit whose
securities are transferred at the time of sale.
If the contract does not state a transfer
price or states a transfer price lower than that recorded in accounting books of
the unit whose securities are transferred at the time of sale, the securities
sale price shall be determined according to accounting books of the
securities-issuing company at the time of sale.
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- For listed securities: The securities
purchase price is the purchase price actually paid at the Stock Exchange or the
Securities Trading Center.
- For securities of unlisted public companies
which have registered for trading at the Securities Trading Center, the securities purchase price is the purchase price actually paid at the Securities Trading Center.
- For securities purchased through auction,
the purchase price is the winning bid.
- For securities not falling into the above
cases, the securities purchase price is the price stated in the transfer
contract or recorded in accounting books of the unit holding securities at the
time of purchase.
If the price stated in the contract is higher
than that recorded in accounting books of the unit holding securities at the
time of purchase, the securities purchase price shall be determined according
to accounting books of the unit holding securities at the time of purchase.
c. Reasonable expenses to be subtracted upon
determination of taxable incomes from securities transfer are those actually
paid for securities transfer activities with invoices and vouchers under
regulations, including:
- Expenses for completion of legal procedures
necessary for the transfer;
- Charges and fees paid by the transferor
into the state budget upon carrying out transfer procedures;
- Securities depository charge prescribed by
the State Securities Commission and charge receipts of securities companies;
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- Other expenses evidenced by vouchers.
2.2.2. Tax rates and calculation methods
a. For securities-transferring individuals
who register for tax payment under the whole income tariff at the tax rate of
20%
Individuals who may apply the tax rate of 20%
for securities transfer must satisfy the following requirements:
- They register for application of the tax
payment method according to a set form with tax offices directly managing
securities companies at which they register to conduct trading or with
district-level Tax Departments in localities where they reside. The
registration deadlines are as follows:
+ In 2009, securities-trading individuals
shall make registration right at the beginning of the year and no later than
March 31, 2009.
+ From 2010 on, securities-trading individuals
shall make registration for tax payment in a year no later than December 31 of
the previous year.
- They make tax registration and are granted
tax identification numbers.
- They conduct the invoice- and voucher-based
accounting and can determine taxed incomes from securities transfer under
regulations.
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The method of calculation of the payable
personal income tax amount is as follows:
Payable personal
income tax amount
=
Taxed income
x
Tax rate of 20%
Securities-transferring individuals who have
registered for tax payment at the tax rate of 20% shall still temporarily pay
the tax at the tax rate of 0.1% of securities transfer price upon each time of
transfer.
b. For securities-transferring individuals
who do not register for tax payment under the whole income tariff at the tax
rate of 20%, the tax rate of 0.1% of securities transfer price upon each time
of transfer shall apply.
The method of calculation of the payable tax
amount is as follows:
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=
Transfer price
x
Tax rate of 0.1%
2.2.3. Time of determination of taxed incomes
Time of determination of taxed incomes from
securities transfer is specified as follows:
a. For listed securities, it is the time when
the Securities Trading Center or the Stock Exchange discloses exercise prices.
b. For unlisted securities which have been
registered for trading at the Securities Trading Center, it is the time when
the Securities Trading Center discloses exercise prices.
c. For securities not falling into the above
cases, it is the time when securities transfer contracts take effect. For
securities transfers without securities transfer contracts, the time of tax calculation
is the time of registration of change of securities owners’ names.
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Tax bases for incomes from real estate
transfer are taxed income and tax rate.
3.1.1. Taxed income is determined to be the
land use rights transfer price minus (-) the cost price and related reasonable
expenses.
3.1.2. Land use rights transfer prices
Land use rights transfer prices are actual
prices stated in transfer contracts at the time of transfer.
In case actual prices are unidentifiable or
prices stated in transfer contracts are lower than land prices stipulated by
provincial-level People’s Committees at the time of transfer, transfer prices
shall be determined according to land price brackets set by provincial-level
People’s Committees.
3.1.3. Cost prices: Land use rights transfer
cost prices are determined in some specific cases as follows:
a. For transfer of rights to use land areas
allocated by the State with the collection of land use levy or land rent, cost
prices are based on receipts of land use levy or land rent amounts collected by
the State.
b. For land use rights transferred from
organizations and individuals, cost prices are based on transfer contracts and
lawful vouchers of monetary payment for receipt of land use rights or land
lease right (if any).
Lawful vouchers of monetary payment are
receipts of land-selling organizations, via-bank money transfer vouchers or
receipts of payment between individuals.
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d. In case cost prices at the time of
purchase are unidentifiable or incorrectly identified, personal income tax
shall be calculated at the tax rate of 2% of transfer price.
3.1.4. Related expenses to be subtracted upon
determination of incomes from land use rights transfer are expenses related to
the transfer and actually paid with lawful invoices and vouchers, including:
a. Charges and fees prescribed by law,
related to the grant of land use rights and already paid by transferors into
the state budget;
b. Expenses for land revamp and ground
leveling (if any);
c. Other expenses directly related to the
transfer of land use rights, such as expenses for completion of legal
procedures for transfer or for hired ‘measurement services.
3.2. Taxed incomes from transfer of land use
rights associated with infrastructure or construction works on land.
3.2.1. Taxed incomes: A taxed income is
determined to be the transfer price minus (-) the cost price of the transferred
real estate and related reasonable expenses.
3.2.2. Transfer prices
Transfer prices are actual prices stated in
transfer contracts at the time of transfer.
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a. The value of transferred land, which is
determined according to the land price bracket set by the provincial-level
People’s Committee at the time of transfer;
b. The value of houses, infrastructure works
and architectures attached to land, which is determined as follows:
- Under the Construction Ministry’s
regulations on house value classification.
- Based on capital construction standards and
norms promulgated by the Construction Ministry.
- Based on the actual residual value of works
on land.
In case provincial-level People’s Committees
have promulgated tables of registration fee rates, the value of houses or
infrastructure works on land shall be calculated according to these tables.
3.2.3. Cost prices
Cost prices are determined based on prices
stated in transfer contracts at the time of purchase.
In case the land use rights cost price and
house value are unidentifiable or prices stated in purchase contracts are
higher than actual prices at the time of purchase, personal income tax shall be
calculated at the tax rate of 2% of transfer price.
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a. Charges and fees prescribed by law,
related to the grant of land use rights and already paid by transferors into
the state budget;
b. Expenses for land revamp and ground
leveling;
c. Expenses for building, renovation,
upgrading and repair of infrastructure and construction works on land;
d. Other expenses directly related to the
transfer, such as expenses for completion of legal procedures for transfer or
for hired measurement services.
3.3. Taxed incomes from transfer of the right
to own or use residential houses
3.3.1. Taxed incomes: A taxed income is
determined to be the sale price minus (-) the purchase price and related
reasonable expenses.
3.3.2. Sale prices are actual transfer prices
determined according to market prices and stated in transfer contracts.
In case sale prices stated in transfer
contracts are lower than market prices at the time of transfer, residential
house transfer prices shall be determined under the Construction Ministry’s
regulations on house classification or registration fee rates promulgated by
provincial-level People’s Committees.
3.3.3. Purchase prices shall be determined
based on prices stated in purchase contracts.
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3.3.4. Related expenses to be subtracted are
actually paid expenses for transfer with lawful invoices and vouchers,
including:
a. Charges and fees prescribed by law,
related to the grant of right to own houses and already paid by transferors
into the state budget;
b. Expenses for house repair, renovation and
upgrading;
c. Other expenses directly related to the
transfer.
3.4. Taxed incomes from transfer of the right
to lease land or water surface
A taxed income from transfer of the right to
lease land or water surface is determined to be the sublease rate minus (-) the
lease rate and related expenses.
3.4.1. Sublease rates:
Sublease rates are determined to be actual
rates stated in lease contracts at the time of transfer of the right to lease
land or water surface.
In case sublease unit rates stated in
contracts are lower than lease rates prescribed by provincial-level People’s
Committees by the time of sublease, sublease rates shall be determined
according to lease rate brackets set by provincial-level People’s Committees.
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In case lease rates are unidentifiable or
lease rates stated in contracts are higher than actual rates at the time of
lease, personal income tax shall be calculated at the tax rate of 2% of
transfer price.
3.4.3. Related expenses to be subtracted upon
determination of taxed incomes are actually paid expenses for transfer of the
right with lawful invoices and vouchers, including:
a. Charges and fees prescribed by law,
related to the right to lease land or water surface, and already paid by the
right transferor into the state budget;
b. Expenses for land or water surface revamp;
c. Other expenses directly related to the
transfer of the right to lease land or water surface.
3.5. Tax rates and tax calculation methods
3.5.1. Tax rates
The personal income tax rate applicable to
incomes from real estate transfer is 25% of taxed income.
In case cost prices and related expenses,
which serve as a basis for determining taxed incomes, are unidentifiable, the
tax rate of 2% of transfer price shall be applied.
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a. In case taxed incomes are identifiable,
personal income tax on incomes from real estate transfer is determined as
follows:
Payable personal
income tax amount
=
Taxed income
x
Tax rate of 25%
b. In case cost prices (purchase prices) of
transferred real estate and related expenses, which serve as a basis for
determining taxed incomes, are unidentifiable, personal income tax is
determined as follows:
Payable personal
income tax amount
=
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x
Tax rate of 2%
3.6. Time of determination of taxed incomes
Time of determination of taxed incomes from
real estate transfer is the time when the real estate transfer contract takes
effect under law.
3.7. For transfer of a real estate under
joint ownership, the tax shall be calculated separately for each co-owner.
Taxed income of each individual shall be determined based on total income from
the real estate transfer and the proportional division of the income to
co-owners. The proportional division of income shall be based on such lawful
documents as agreement on start-up capital contribution, testaments or court
rulings on division, etc. In case there is no such lawful document, the income
shall be equally divided.
4. For incomes from copyright
Tax bases for incomes from copyright
royalties are taxed income and tax rate.
4.1. Taxed incomes
A taxed income from a copyright royalty is an
income amount in excess of VND 10 million under an assignment or licensing
contract, regardless of the number of payment installments or times when a
taxpayer receives sums of money for the assignment or licensing of an intellectual
property object or the technology transfer.
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In case the object of an assignment or
licensing is under joint ownership, taxed income shall be divided to each
co-owner. The proportional division of income shall be based on the ownership
or use right certificate issued by a competent state agency.
4.2. The personal income tax rate for incomes
from copyright is 5% as specified in the whole income tariff.
4.3. Time of determination of taxed incomes
Time of determination of a taxed income from
copyright is the time when the copyright royalty is paid.
4.4. Tax calculation method
Payable personal
income tax amount
=
Taxed income
x
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5. For incomes from commercial franchising
Tax bases for incomes from commercial
franchising are taxed income and tax rate.
5.1. Taxed income:
A taxed income from commercial franchising is
an income amount in excess of VND 10 million under a commercial franchising
contract, regardless of the number of payment installments or times when a
taxpayer receives sums of money for franchising.
In case there are many contracts on
commercial franchising of the same object of commercial rights, taxed income is
the income amount in excess of VND 10 million counted on total incomes from all
of these contracts.
5.2. Tax rate
The personal income tax rate for incomes from
commercial franchising is 5% as specified in the whole income tariff.
5.3. Time of determination of taxed incomes
Time of determination of a taxed income from
commercial franchising is the time when the commercial franchising charge is
paid by the franchisee to the franchisor.
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Payable personal
income tax amount
=
Taxed income
x
Tax rate of 5%
6. For incomes from won prizes
Tax bases for incomes from won prizes are
taxed income and tax rate.
6.1. Taxed incomes
A taxed income from a won prize is the value
of the won prize in excess of VND 10 million received by a taxpayer upon each
time of prize winning, regardless of the number of times of prize money
receipt.
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A taxed income for some prized games is
specified as follows:
- For lottery prizes, it is the whole
monetary prize value in excess of VND 10 million received after a prize-winner
picking round without subtracting any expense.
- For sales promotion prizes in kind, it is
the value of the sales promotion product in excess of VND 10 million which is
monetized at the market price at the time of receipt without subtracting any
expense.
- For betting or casino prizes of various
kinds, it is the whole prize value in excess of VND 10 million received by the
bet maker without subtracting any expense.
- For prizes of prized games or contests, it
is calculated upon each time of prize receipt. The prize value is the whole
prize money in excess of VND 10 million received by a participant without
subtracting any expense.
6.2. The personal income tax rate for incomes
from won prizes is 10% as specified in the whole income tariff.
6.3. Time of determination of taxed incomes
Time of determination of a taxed income from
a won prize is the time when the organizer pays or gives the prize to the
winner.
6.4. Tax calculation method
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=
Taxed income
x
Tax rate of 10%
7. For incomes from inheritances or gifts
Tax bases for incomes from inheritances or
gifts are taxed income and tax rate.
7.1. Taxed incomes
A taxed income from inheritance or gift is
the value of an inherited asset or a received gift in excess of VND 10 million
upon each time of inheritance or receipt. The value of inherited assets or
received gifts shall be determined for each case, specifically as follows:
7.1.1. For inheritances or gifts being real
estate, the real estate value shall be determined as follows:
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b. For real estate being residential houses
and architectures on land, their value shall be determined based on competent
state management agencies’ regulations on classification of house values;
regulations on capital construction standards and norms promulgated by
competent state management agencies; and the residual value of houses and
architectures.
In case the real estate value cannot be
determined under the above regulations, registration fee rates prescribed by
provincial-level People’s Committees shall be based on.
7.1.2. For inheritances or gifts being
automobiles, motorbikes, ships and boats, the asset value shall be determined
based on tables of registration fee rates prescribed by provincial-level
People’s Committees by the time when individuals inherit assets or receive
gifts.
7.1.3. For inheritances or gifts being
capital holdings in economic organizations or business establishments, the
inheritance or gift value is the value of capital holdings based on accounting
books, invoices and vouchers at the time of inheritance or gift receipt. In
case there is no accounting book, invoice or voucher serving as a basis for
determining the capital holding value, that value shall be determined according
to market prices at the time of inheritance or gift receipt.
7.1.4. For inheritances or gifts being
securities: Income for calculation of tax on securities is the value of
securities at the time of ownership transfer, specifically as follows:
a. For listed securities: Their value shall
be based on their prices quoted at the Stock Exchange or the Securities Trading
Center on the date of inheritance or gift receipt or the day preceding that
date.
b. For securities of unlisted public
companies which have registered for trading at the Securities Trading Center:
Their value shall be based on prices quoted at the Securities Trading Center on
the date of inheritances or gift receipt or the day preceding that date.
c. For securities other than those specified
above: Their value shall be based on the value recorded in accounting books of
their issuing companies on the date of inheritance or receipt of gifts being
securities.
7.2. Tax rate: The personal income tax rate
for inheritances or gifts is 10% as specified in the whole income tariff.
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7.3.1. For incomes from inheritances: Time of
determination of taxed incomes from inheritances is the time when inheriting
taxpayers carry out procedures for transferring ownership or the right to use
assets.
7.3.2. For incomes from gifts: Time of
determination of taxed incomes from gifts is the time when organizations or
individuals present these gifts to taxpayers. In case of gifts from overseas,
time of determination of taxed incomes is the time when taxpayers receive these
gifts.
7.4. Method of calculation of payable tax
amounts
Payable personal
income tax amount
=
Taxed income
x
Tax rate of 10%
Part C.
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I. FOR INCOMES FROM BUSINESS ACTIVITIES
Under Article 25 of the Personal Income Tax
Law, personal income tax on incomes from business activities of non-resident
individuals is determined as follows:
1. Tax on incomes from business activities of
a non-resident individual is determined to be his/ her turnover from production
or business activities multiplied by (x) the specified tax rate.
2. Turnover is the total sum of money derived
from the provision of goods or services, including also expenses paid by the
goods or service purchaser on behalf of the non-resident individual but not
refunded to the goods or service purchaser.
Turnover from business activities of a nonresident
individual shall be determined in the same way as turnover serving as a basis
for calculating tax on incomes from business activities of resident individuals
under the guidance in Clause 1, Section I, Part B of this Circular.
If a contract between the goods or service
provider and purchaser does not cover personal income tax, the taxable turnover
that must be converted is the total sum of money in any form received by a
non-resident individual from the provision of goods or services in Vietnam,
regardless of places where business activities are conducted.
3. Tax rates
Personal income tax rates for incomes from
business activities of non-resident individuals are specified for different
production sectors or business lines as follows:
3.1. 1% for goods trading;
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3.3. 2% for production, construction,
transportation and other business activities.
In case a non-resident individual earns
turnover from different production sectors or business lines but cannot
separately account turnover from each sector or line, the applicable personal
income tax rate is the highest tax rate specified for the production sector or
business line in which he/she is actually engaged and applied to the whole
turnover.
II. FOR INCOMES FROM
SALARIES OR WAGES
1. Personal income tax on income from
salaries or wages of a non-resident individual is determined to be his/her
income from salaries or wages multiplied by (x) the tax rate of 20%.
2. Taxable income from salaries or wages of a
non-resident individual is the total of salary or wage amounts and income
amounts of salary or wage nature received by a non-resident individual in cash
or non-cash forms for job performance in Vietnam, regardless of income payers.
Personal income tax-liable incomes from
salaries or wages of non-resident individuals shall be determined in the same
way as personal income tax-liable incomes from salaries or wages of resident
individuals under the guidance in Clause 2, Section I, Part B of this Circular.
III. FOR INCOMES FROM
CAPITAL INVESTMENT
Personal income tax on income from capital
investment of a non-resident individual is determined to be the total sum of
money earned by that non-resident individual from his/her capital investment in
organizations or other individuals in Vietnam, multiplied by (x) the tax rate
of 5%.
Taxable incomes and time of determination of
personal income tax-liable incomes from capital investment of non-resident
individuals shall be determined in the same way as taxable incomes and time of
determination of personal income tax-liable incomes from capital investment of
resident individuals under the guidance in Clause 1, Section II, Part B of this
Circular.
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1. Personal income tax on income from capital
transfer of a non-resident individual is determined to be the total sum of
money earned by that nonresident individual from the transfer of his/her
capital holdings in Vietnamese organizations or individuals multiplied by (x)
the tax rate of 0.1 %, regardless of whether the transfer is made in Vietnam or
abroad.
Total sum of money earned by a non-resident
individual from the transfer of his/her capital holdings in Vietnamese
organizations or individuals is the total capital transfer value covering all
expenses, including cost price.
2. Total sum of money for transfer shall be
determined for each specific case as follows:
2.1. For transfer of capital holdings, it
shall be determined based on the transfer value stated in the transfer
contract.
In case the transfer contract does not state
any payment price or the payment price stated in the contract is incompatible
with the market price, the tax office may fix a transfer price under the Tax
Administration Law and guiding documents.
2.2. For transfer of securities, it shall be
determined based on the price of securities as follows:
2.2.1. For listed securities: The securities
sale price is the actual transfer price on the securities market at the time of
sale. The market price at the time of sale is the order-matching price
disclosed by the Stock Exchange or the Securities Trading Center.
2.2.2. For unlisted securities which have
been registered for trading at the Securities Trading Center: The securities
sale price is the trading price agreed upon under regulations of the Securities
Trading Center on the date of securities transfer.
2.2.3. For securities not falling into the
above cases: The securities sale price is the transfer price stated in the
transfer contract. If the transfer contract does not state any transfer price
or the transfer price stated in the contract is incompatible with the market
price, the tax office may fix a transfer price.
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V. FOR INCOMES FROM
REAL ESTATE TRANSFER
1. Personal income tax on income from a real
estate transfer in Vietnam of a non-resident individual is determined to be the
real estate transfer price multiplied (x) by the tax rate of 2%.
The transfer price of a real estate of a nonresident
individual is the total sum of money he/she earns from the real estate transfer
covering all transfer expenses, including cost price.
2. Transfer price of real estate of
non-resident individuals in each specific case is shall be determined by the
method applicable to resident individuals under the guidance in Clause 3,
Section II, Part B of this Circular.
VI. FOR INCOMES FROM
COPYRIGHT OR COMMERCIAL FRANCHISING
1. Tax on incomes from copyright
1.1. Tax on income from copyright of a
non-resident individual is determined to be equal to the income in excess of
VND 10 million earned from each contract on assignment or licensing of an
intellectual property object or technology transfer in Vietnam, multiplied by
the tax rate of 5%.
Incomes from copyright shall be determined
under the guidance in Clause 4, Section II, Part B of this Circular.
1.2. Time of determination of incomes from
copyright is the time when organizations or individuals pay incomes from
copyright transfer to taxpayers that are non-resident individuals.
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Incomes from commercial franchising shall be
determined under the guidance in Clause 5, Section II, Part B of this Circular.
2.2. Time of determination of incomes from
commercial franchising is the time when nonresident individuals earn incomes
from commercial franchising.
VII. FOR INCOMES FROM
WON PRIZES, INHERITANCES OR GIFTS
1. Tax on income from a won prize,
inheritance or gift of a non-resident individual is determined to be his/her
taxable income under the guidance in Clause 2 below multiplied by the tax rate
of 10%.
2. Taxable incomes
2.1. Taxable income from a won prize of a
non-resident individual is the prize value in excess of VND 10 million upon
each time of winning in Vietnam.
Incomes from won prizes of non-resident
individuals shall be determined under guidance in Clause 6, Section II, Part B
of this Circular.
2.2. Taxable income from an inheritance or
gift of a non-resident individual is the inheritance or gift value in excess of
VND 10 million upon each time of income receipt in Vietnam.
Incomes from inheritances or gifts of nonresident
individuals shall be determined under the guidance in Clause 7, Section II,
Part B of this Circular.
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3.1. For incomes from won prizes: Time of
determination of taxed incomes is the time when organizations or individuals in
Vietnam pay prize money to non-resident individuals.
3.2. For incomes from inheritances: Time of
determination of taxed incomes is the time when inheriting individuals carry
out procedures for transfer of estate ownership or use right.
3.3. For incomes from gifts: Time of
determination of taxed incomes is the time when gift-receiving individuals
carry out procedures for transfer of asset ownership or use right.
Part D.
TAX
REGISTRATION, WITHHOLDING, DECLARATION, FINALIZATION AND REFUND
I. TAX REGISTRATION
1. Entities obliged to make tax registration
Under Article 21 of the Tax Administration
Law; and Articles 2 and 8 of the Personal Income Tax Law, entities obliged to
make personal income tax registration include:
1.1. Income-paying organizations and
individuals, including:
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1.1.2. State administrative management
agencies at all levels.
1.1.3. Political organizations,
socio-political organizations and socio-professional organizations.
1.1.4. Non-business units.
1.1.5. International organizations and
foreign organizations.
1.1.6. Project management units,
representative offices of foreign organizations.
1.1.7. Other income-paying units.
In case income-paying agencies have
affiliated units which have the legal person status and conduct independent
cost-accounting, these units shall also make tax registration.
1.2. Individuals with personal income
tax-liable incomes, including:
1.2.1. Individuals who earn incomes from
production or business activities, including also independent professional
practitioners; agricultural production individuals and households ineligible
for personal income tax exemption; and individuals who earn incomes from
production or business activities and make personal income tax registration
concurrently with registration of other taxes.
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1.2.3. Other individuals with taxable
incomes, which are earned on a regular basis.
If entities specified at Points 1.1 and 1.2 above
have made tax registration and been issued tax identification numbers, they are
not required to make new registration. Issued tax identification numbers may
continue to be used in performing the personal income tax obligation. An
individual who earns many personal income tax-liable incomes shall make tax
registration only once. His/ her tax identification number may be used in
making tax declarations for all his/her incomes.
2. Tax registration dossiers
2.1. For business organizations and
individuals, tax registration dossiers comply with Point 2, Section I, Part II
of the Finance Ministry’s Circular No. 85/2007/TT-BTC of July 18, 2007, guiding
the implementation of the Tax Administration Law regarding tax registration.
For a group of business individuals who
contribute capital and jointly conduct business activities, its authorized
representative shall make tax registration under the guidance in Circular No.
85/2007/TT-BTC to get a tax identification number for himself/herself. The tax
identification number of the representative of the group of business
individuals may be used in making value-added tax, excise tax and license tax
declaration and payment for the whole group and for making the representative’s
own personal income tax declarations. Other capital-contributing members of the
group are still required to make tax registration in order to be issued their
own personal income tax identification numbers as for independent business
individuals.
2.2. For income-paying units other than
business organizations, tax registration dossiers comply with Point 2.10,
Section I, Part II of Circular No. 85/2007/TT-BTC.
2.2. For individuals who earn incomes from
salaries or wages, securities investment or capital transfer (including
securities transfer) and other individuals with taxable incomes, a tax
registration dossier comprises:
- A declaration for tax registration, made
according to a set form.
- A copy of the taxpayer’s identity card or
passport.
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3.1. For enterprises established and
operating under the Enterprise Law and business individuals, including also
independent professional practitioners: Places for filing of tax registration
dossiers are specified in Circular No. 85/2007/TT-BTC.
3.2. For administrative management agencies,
non-business units, mass organizations, political organizations, social
organizations and professional organizations, places for dossier filing are as
follows:
3.2.1. Central agencies, agencies under or
attached to ministries, branches, provincial-level People’s Committees, and
provincial-level agencies shall file their tax registration dossiers with
provincial-level Tax Departments.
3.2.2. Agencies under or attached to
district-level People’s Committees and district-level agencies shall file their
tax registration dossiers with district-level Tax Departments.
3.2.3. Diplomatic missions, international
organizations, representative offices of foreign organizations shall file their
tax registration dossiers with provincial-level Tax Departments in localities
where they are based.
3.3. Individuals who earn taxable incomes
from salaries or wages shall file their tax registration dossiers with their
income-paying units or tax offices directly managing their income-paying units.
In case individuals file their tax registration dossiers with their
income-paying units, the latter shall collect tax registration declarations of
registering individuals and submit them to their managing tax offices.
3.4. Individuals who earn other taxable
incomes shall file their tax registration dossiers with district-level Tax
Departments in localities where they reside.
3.5. Individuals who earn incomes from
different sources: business activities, salaries, wages and other taxable
incomes, may choose to file their tax registration dossiers with their
income-paying agencies or units or district-level Tax Departments in localities
where they conduct business activities.
II. TAX WITHHOLDING,
DECLARATION AND FINALIZATION
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1.1. Kinds of income subject to tax
withholding:
1.1.1. Incomes of non-resident individuals,
including also those who are not present in Vietnam;
1.1.2. Incomes of resident individuals:
a. Incomes from salaries or wages;
b. Incomes from capital investment;
c. Incomes from capital transfer or
securities transfer;
d. Incomes from won prizes of all kinds;
e. Incomes from copyright;
f. Incomes from commercial franchising.
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1.2.1. Withholding of tax on incomes from
salaries or wages of individuals who have labor contracts or are recruited to
work in a long-term and stable manner.
The withholding of tax on incomes from
salaries or wages shall be made on a monthly basis. Income-paying agencies
shall base themselves on salaries, wages and other salary or wage-based amounts
actually paid to their employees to make temporary family circumstance-based reductions
for taxpayers and their dependants according to taxpayers’ registrations. Based
on remaining incomes and the partially progressive tariff, income-paying
agencies shall calculate tax amounts and withhold calculated tax amounts for
remittance into the state budget.
Example: Mr. A is a resident individual
working for Company X, earning a regular income of VND 10 million from monthly
salary and nurturing two minor children.
Every month, Company X shall withhold
personal income tax of Mr. A as follows:
His income is eligible for a total family
circumstance-based reduction of VND 7.2 million/month, including:
- Reduction for himself: VND 4 million/
month.
- For his two dependants (two children): VND
1.6 million x 2 = VND 3.2 million/month.
His taxed income: VND 10 million - VND 7.2
million = VND 2.8 million/month.
His personal income tax amount to be
withheld: VND 2.8 million x 5% = VND 0.14 million/month.
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Before each time of payment of profits or
dividends to individual investors, organizations shall withhold personal income
tax. A tax amount to be withheld is determined to be the profit or dividend
amount to be paid multiplied by (x) the tax rate of 5%.
1.2.3. Withholding of tax on incomes from securities
transfer
All cases of securities transfer, regardless
of whether personal income tax is paid at the tax rate of 0.1% or 20%, are
subject to tax withholding before incomes are paid to transferors. A tax amount
to be withheld is determined to be the transfer price inclusive of transfer
expenses multiplied by (x) the tax rate of 0.1%.
Securities companies or commercial banks
where investors open their trading accounts shall withhold personal income tax.
For unlisted securities traded at the Stock Exchange or the Securities Trading
Center, issuing organizations shall withhold tax if they do not authorize
securities companies to manage shareholders’ lists.
1.2.4. Withholding of tax on incomes from
copyright or commercial franchising
Organizations and individuals that pay
incomes from copyright or commercial franchising shall withhold personal income
tax before paying those incomes. A tax amount to be withheld is determined to
be the income amount in excess of VND 10 million earned under each transfer contract
multiplied by (x) the tax rate of 5%. For a contract of a large value and to be
paid for in installments, the organization or individual that pays income shall
deduct, upon the first payment installment, VND 10 million from the payment
value and multiply the remainder by the tax rate of 5% for tax withholding. For
subsequent payment installments, personal income tax calculated based on total
amount of each payment installment shall be withheld.
1.2.5. Withholding of tax on incomes from won
prizes:
Organizations that pay prize money to prize
winners shall withhold personal income tax before paying those prizes. A tax
amount to be withheld is determined to be the prize value in excess of VND 10
million multiplied by (x) the tax rate of 10%.
1.2.6. Withholding of tax for non-resident
individuals who have taxable incomes
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1.2.7. Withholding of tax in some other cases
Organizations and individuals that pay wages,
remuneration or other sums of money to individuals performing services without
entering into labor contracts, such as emoluments, royalties for book
translators, payments for teachers and lecturers or allowances for members of
associations, boards of directors, members’ councils or management boards;
charges for provision of scientific, technical, cultural, sport, physical
training, construction engineering consulting and legal services of VND 500,000
or more each time, shall withhold personal income tax before paying incomes to
individuals under the following guidance:
- Withholding tax at the rate of 10% of
incomes, for individuals having tax identification numbers.
- Withholding tax at the rate of 20% of
incomes, for individuals having no tax identification numbers.
Organizations and individuals that pay
incomes from which tax has been withheld under the above guidance shall issue
tax withholding vouchers at the request of individuals from whom tax is
withheld. Tax offices shall supply tax withholding vouchers to income-paying
organizations or individuals upon their written requests (made according to a
set form).
2. Tax declaration
Organizations and individuals that pay
personal income tax-liable incomes and individuals who earn personal income
tax-liable incomes shall make tax declaration as follows:
2.1. Tax declaration by income-paying
organizations and individuals that withhold tax.
2.1.1. Monthly tax declaration
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a. For withholding of personal income tax on
incomes from salaries or wages, tax returns shall be made according to a set
form.
b. For withholding of personal income tax on
incomes from capital investment, securities transfer, copyright, commercial
franchising or won prizes, tax returns shall be made according to a set form.
c. For withholding of personal income tax for
non-resident individuals who earn incomes from salaries or wages or business
activities, tax returns shall be made according to a set form.
2.1.2. The deadline for filing a tax return
for a month is the 20th of the following month.
In case income-paying organizations or
individuals have a total withheld personal income tax amount of less than VND 5
million/month in each tax return, they may make and file tax returns on a
quarterly basis. The deadline for filing a tax return for a quarter is the 30th
of the first month of the following quarter.
2.1.3. Declaration for tax finalization
Organizations and individuals that pay
incomes subject to tax withholding, regardless of whether tax is actually
withheld or not, shall make personal income tax declaration for finalization
under the following specific provisions:
a. A dossier of declaration for tax
finalization comprises:
- A declaration for personal income tax
finalization, made according to a set form, and the following detailed lists:
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+ List of incomes from salaries or wages paid
to individuals who do not have labor contracts, made according to a set form.
- In case personal income tax is withheld on
incomes from capital investment, securities transfer, copyright, commercial
franchising or won prizes, there must be a declaration for personal income tax
finalization, made according to a set form, and detailed lists enclosed with
this declaration. Specifically as follows:
+ Detailed list of incomes from capital
investment, made according to a set form.
+ Detailed list of incomes from securities
transfer, made according to a set form.
+ Detailed list of incomes from copyright or
commercial franchising, made according to a set form.
+ Detailed list of incomes from won prizes,
made according to a set form.
b. The deadline for filing a dossier for tax
finalization for a calendar year is the 90th day after the end of that year.
2.1.4. Places for filing monthly or quarterly
tax declaration dossiers and tax finalization dossiers
a. For income-paying units that are
organizations or individuals engaged in production or business activities: Tax
declaration dossiers shall be filed with tax offices directly managing them.
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- Central agencies, agencies under or
attached to ministries, branches or provincial-level People’s Committees, and
provincial-level agencies shall file their tax declaration dossiers with
provincial-level Tax Departments.
- Agencies under or attached to
district-level People’s Committees and district-level agencies shall file their
tax declaration dossiers with district-level Tax Departments.
- Diplomatic missions, international organizations
and representative offices of foreign organizations shall file their tax
declaration dossiers with provincial-level Tax Departments in localities where
they are headquartered.
2.1.5. Deadline for tax payment
The deadline for payment of withheld tax
amounts and remaining tax amounts to be paid upon tax finalization is the
deadline for filing monthly or quarterly tax declaration dossiers and dossiers
for annual tax finalization.
2.2. Personal income tax declaration by
resident individuals earning incomes from business activities
2.2.1. Personal income tax declaration by
business individuals who have conducted the invoice and voucher-based
accounting (declaration-based tax payment):
a. Declaration for temporary payment of
personal income tax on a quarterly basis: Business individuals who have fully
conducted the invoice and voucher-based accounting shall temporarily determine,
on a quarterly basis, their taxable incomes and declare personal income tax
amounts to be temporarily paid according to a set form and file tax returns
with district-level Tax Departments directly managing them.
- The deadline for filing a tax return for a
quarter is the 30th of the first day of the first month of the following
quarter.
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+ Taxable income temporarily calculated in a
quarter, which is the turnover in the quarter minus (-) expenses temporarily
calculated in the quarter:
Turnover in the quarter is determined to be
goods or service sale turnover declared in the quarter and consistent with
turnover for value-added tax calculation and payment for the quarter.
Expenses temporarily calculated in the
quarter are those actually paid in relation to turnover in the quarter.
+ Taxed income temporarily calculated in a
quarter, which is determined to be taxable income minus (-) family
circumstance-based reductions calculated for the whole quarter.
Family circumstance-based reductions include
reduction for the business individual himself/ herself and reduction for
his/her dependants. The number of a business as individual’s dependants
eligible for temporary reduction is that declared by that business individual.
+ Personal income tax amount to be
temporarily paid for a quarter shall be determined according to the following
formula:
Tax amount to be
temporarily paid for a quarter
=
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x
Tax rate under the
partially progressive tariff applicable to monthly incomes
x
3
3
b. Declaration for tax finalization
- Individuals who earn incomes from business
activities and pay tax according to tax declarations shall make declaration for
tax finalization.
- A dossier for tax finalization comprises:
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+ Vouchers evidencing the tax amount already
temporarily paid in the year.
- Dossiers for tax finalization shall be
filed with district-level Tax Departments directly managing taxpayers.
- The deadline for filing a dossier for tax finalization
for a calendar year is the 90th day after the end of that year.
c. The deadline for tax payment is the
deadline for filing tax declaration dossiers.
2.2.2. Tax declaration by business
individuals who can account only turnover from but not expenses for business
activities: tax declaration dossiers, tax bases and tax payment deadline
applicable to these individuals are those applicable to business individuals
who have fully conducted the invoice and voucher-based accounting.
Particularly, for business expenses, they shall be assessed by tax offices.
2.2.3. Tax declaration by business
individuals or groups of business individuals that fail to conduct or
improperly conduct the invoice and voucher-based accounting and pay tax by the
presumptive method.
a. Tax declaration dossiers
Business individuals or groups of business
individuals that fail to conduct or improperly conduct the invoice and
voucher-based accounting shall make annual tax declaration (once a year)
according to a set form.
b. The deadline for filing a tax declaration
dossier for a year is the December 31 of the preceding year. Business
individuals or groups of business individuals that have newly commenced their
business activities shall file their tax declaration dossiers within 10 days
after the date of business commencement.
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- Based on business individuals’ declaration
of turnover and dependants eligible for family circumstance-based reduction,
tax offices shall coordinate with tax advisory councils in communes or wards in
inspecting and assessing turnover to serve as a basis for determination of
taxable incomes and presumptive personal income tax amounts payable or
exempted.
- Tax offices shall post up lists of business
individuals and their estimated taxable incomes, tax bases and tax amount
payable by each individual. Tax offices shall give notices of tax amounts
payable for the whole year and tax amounts to be temporarily paid for each
quarter, made according to a set form, to individuals liable to pay tax no
later than the last day of February.
Business individuals liable to pay tax shall
file dossiers to evidence their dependants under the provisions of Point 3.1.7,
Clause 3, Section I, Part B of this Circular.
- In case of a change in business scale,
business line or number of dependants in a year, a business individual shall
declare such change to the tax office for adjustment of the presumptive tax
amount as appropriate.
- For a group of business individuals: Based
on taxable income assessed for the whole group and the proportionally divided
income and declaration for family circumstance-based reduction of each member
of the group, the tax office shall calculate and give to each member a notice
of the presumptive tax amount payable for the whole year and tax amount to be
temporarily paid for each quarter, made according to a set form, no later than
the last day of February.
d. The place for filing tax declaration
dossiers is the district-level Tax Department in the locality where the
business individual or group of business individuals conducts business
activities.
e. The deadline for tax payment is the last
day of the quarter.
f. Individuals who earn incomes only from
business activities and pay personal income tax by the presumptive method are
not required to make tax finalization.
2.2.5. Tax declaration by individuals who
contribute capital to a business, jointly conduct business activities and are
named in the same business registration, including case of lease of a house or
business place under joint ownership (referred to as business group), fully
conduct the invoice and voucher-based accounting and pay tax by the declaration
method:
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- The business group’s representative shall
temporarily distribute taxable income to each individual member of the group
under Clause 6, Section I, Part B of this Circular on income distribution.
- The personal income tax amount to be
temporarily paid shall be calculated separately for each individual member of
the group based on the income temporarily distributed to him/her, his/ her
family circumstance and the tariff. Based on the personal income tax amount
temporarily calculated for each individual member, the business group’s
representative shall pay tax into the state budget according to each separate
budget remittance voucher for each member.
- The deadline for filing a tax declaration
dossier for a quarter is the 30th of the first month of the following quarter.
b. Declaration for tax finalization
- For a business group, the individual
representing the group shall make a dossier of declaration for tax finalization
according to a set form for determination of taxable income of the whole group
and taxable income of each individual member of the group. Taxable income of
each individual member shall be distributed under Clause 6, Section I, Part B
of this Circular.
- Each individual member of the business
group may receive one original of the group’s tax finalization declaration and
shall make his/her own declaration for tax finalization.
- A dossier of declaration for tax
finalization for each individual member of a business group comprises:
+ A declaration for tax finalization for the
business group, made according to a set form.
+ A tax return, made according to a set form
and its appendix made according to another set form.
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- The dossier of declaration for tax
finalization shall be filed with the district-level Tax Department in the
locality where the business group conducts its business activities.
c. The deadline for tax payment for a
business group and individuals of the group is the deadline for filing its tax
declaration dossier.
2.3. Declaration of personal income tax for
resident individuals earning incomes from salaries or wages
2.3.1. Monthly tax declaration
a. Individuals liable to make monthly tax
declaration
- Individuals receiving incomes from salaries
or wages paid by overseas organizations or individuals.
- Vietnamese individuals earning incomes from
salaries or wages paid by Vietnam-based international organizations, embassies
or consular offices.
Individuals earning incomes from salaries or
wages and not falling into the above cases are not required to make monthly tax
declaration.
b. The monthly tax declaration dossier is the
personal income tax return made according to a set form.
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- The place for filing a monthly tax
declaration dossier is the provincial-level Tax Department in the locality
where the declarant resides.
- The deadline for filing a monthly tax
declaration dossier for a month is the 20th of the following month.
d. Individuals earning a monthly income of
over VND 4 million and eligible for family circumstance-based reduction for
their dependants shall file their tax declaration dossiers directly with tax
offices and file registrations of their dependants together with tax
declaration dossiers for the first month of the tax year. Time of filing
dossiers evidencing dependants by these individuals is the time of dossier
filing applicable to individuals earning incomes from salaries or wages guided
in Item a, Point 3.1.8, Section I, Part B of this Circular.
Registrations of dependants and dossiers
evidencing dependants shall be filed with provincial-level Tax Departments with
which individuals have filed their tax declaration dossiers.
2.3.2. Declaration for tax finalization
a. An individual earning incomes from
salaries or wages shall make declaration for tax finalization in the following
cases:
- He/she has a tax amount payable in a year
larger than the tax amount withheld or temporarily paid in the year or has a
tax amount due in the year but neither has it withheld nor temporarily paid it.
- He/she wishes to have his/her tax amount in
a period refunded or cleared against the payable tax amount of the following
period.
Upon the expiration of their contracts for
working in Vietnam and before their departure, resident foreigners shall make
tax finalization with tax offices. Individuals other than those specified above
are not required to make declaration for tax finalization.
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- A declaration for tax finalization, made
according to a set form, and its annexes made according to set forms.
- Vouchers evidencing the tax amount already
withheld or temporarily paid in the year.
- For individuals receiving incomes from
international organizations, embassies, consular offices or overseas entities,
there must be documents evidencing or certifying sums of money paid by overseas
income-paying units or organizations enclosed with written certifications of
annual incomes, made according to a set form.
c. The deadline and place for filing tax
finalization dossiers
- The deadline for filing a tax finalization
dossier is the 90th day after the end of a calendar year.
- The place for filing a tax finalization
dossier is die tax office directly managing the income-paying unit.
For individuals who earn incomes from
salaries or wages and directly make monthly tax declaration, the place for
filing tax finalization dossiers is the place for filing monthly tax
declaration dossiers (provincial-level Tax Department).
2.4. Tax declaration by resident individuals
earning incomes from both business activities and salaries or wages
2.4.1. Tax declaration
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2.4.2. Tax finalization
a. An individual earning incomes from both
business activities and salaries or wages shall make declaration for tax
finalization in the following cases:
- He/she has a total monthly taxable income
of over VND 4 million.
- He/she files a dossier of request for tax
refund or clearing of his/her overpaid tax amount in the period against the payable
tax amount of the following period.
Upon the expiration of their contracts for
working in Vietnam and before their departure, resident foreigners shall make
tax finalization with tax offices. Individuals other than those specified above
are not required to make declaration for tax finalization.
b. A dossier of declaration for tax
finalization comprises:
- A declaration for tax finalization, made
according to a set form;
- Annexes to the declaration, made according
to set forms.
c. The place for filing a tax finalization
dossier is the district-level Tax Department in the locality where the
individual conducts business activities.
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2.5.1. Time of tax declaration: Individuals
earning incomes from real estate transfer, regardless of whether these incomes
are liable to or exempt from tax, shall make personal income tax declaration
dossiers and file them together with dossiers for transfer of the ownership of
or the right to use real estate.
2.5.2. A tax declaration dossier comprises:
- A personal income tax return applicable to
individuals transferring real estate, made according to a set form.
- A copy of the land use rights certificate
or copies of title documents of the house or works on land.
- The real estate transfer contract.
- In case the individual wishes to pay tax at
the tax rate of 25% of income from the real estate transfer, he/she shall
additionally produce valid documents evidencing the following expenses:
+ Cost price of the real estate.
+ Expenses for building or renovating the
house and works on land.
+ Paid charges and fees.
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- For cases of real estate transfer eligible
for personal income tax exemption, there must be papers to serve as a basis for
identifying these cases as eligible for tax exemption in specific cases guided
in Clauses 1, 2, 3, 4 and 5, Section III, Part A of this Circular.
2.5.3. Places for filing tax declaration
dossiers: Individuals shall file their tax declaration dossiers together with
real estate transfer dossiers with the real estate-managing agency. For
localities in which the inter-branch one-stop-shop mechanism is not yet
applied, dossiers shall directly filed with district-level Tax Departments in districts
where transferred real estate exist.
Based on personal income tax declaration
dossiers for real estate transfer, tax offices shall check and determine
payable tax amounts and give notices thereof, made according to a set form, to
taxpayers within three (3) working days after the receipt of complete dossiers.
Tax notices shall be handed directly to taxpayers or sent together with
dossiers through the competent real estate-managing agency. For individuals
exempt from tax, tax offices shall give certifications in such individuals’
declarations and forward them to the real estate-managing agency.
The real estate-managing agency shall carry
out procedures for transferring the ownership of or the right to use real
estate only when receiving vouchers evidencing the payment of personal income
tax or tax offices’ certification that incomes from real estate transfer are
exempt from tax.
2.5.4. The deadline for tax payment shall be
that stated in tax notices.
2.6. Tax declaration for incomes from capital
transfer
Individuals earning incomes from capital
transfer (except for incomes from securities transfer) shall make and file tax
returns with tax offices under the following provisions:
2.6.1. Time of making tax declaration:
Individuals earning incomes from capital transfer shall make personal income
tax declaration concurrently with carrying out procedures for transferring the
ownership of capital amounts to other organizations or individuals under law.
2.6.2. A tax declaration dossier comprises:
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- A copy of the capital transfer contract.
- Vouchers evidencing expenses related to the
determination of income from capital transfer.
2.6.3. The place for filing tax declaration
dossiers: Personal income tax declaration dossiers for incomes from capital
transfer shall be filed with tax offices directly managing business
establishments where capital transfer transactions are conducted or with district-level
Tax Departments in localities where capital transferors (sellers) reside.
2.6.4. The deadline for tax payment shall be
stated in tax notices, made according to a set form.
2.6.5. Competent state management agencies or
enterprises having their capital transferred shall carry out procedures for
transferring the capital ownership to the transferees only when receiving
vouchers evidencing the payment of personal income tax on capital transfer.
2.7. Tax declaration by individuals earning
incomes from securities transfer
2.7.1. A securities-transferring individual
who has made tax registration with a tax office shall pay personal income tax
under the whole income tariff at the tax rate of 20% of income and shall make
tax finalization in the following cases:
a. His/her payable tax amount calculated at
the tax rate of 20% is larger than that temporarily withheld at the tax rate of
0.1 % in the year.
b. He/she requests tax refund or clearing of
the overpaid tax amount against the following year’s payable tax amount.
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- A declaration for tax finalization, made
according to a set form.
- A detailed list of securities transferred
in the year, made according to a set form.
- Invoices and vouchers evidencing expenses related
to the securities transfer.
- Vouchers evidencing the tax amount withheld
in the year.
2.7.3. Places for filing tax finalization
dossiers are tax offices directly managing securities companies with which
individuals have registered for trading or district-level Tax Departments of
localities where individuals reside.
2.7.4. The deadline for filing a tax
finalization dossier is the 90th day after the end of a calendar year.
2.8. Tax declaration for incomes from
inheritances or gifts
Individuals earning incomes from inheritances
or gifts shall make tax declaration upon each time of receiving incomes from
inheritances or gifts. Particularly for inheritances or gifts being real
estate, they shall make tax declaration under the guidance at Point 2.5, Clause
2, Section II, Part D of this Circular.
2.8.1. A tax declaration dossier comprises:
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- Copies of legal papers evidencing the right
to receive the inheritance or gift.
2.8.2. Places for filing tax declaration
dossiers are district-level Tax Departments of localities where heirs or gift
recipients reside.
Based on these tax declaration dossiers, tax
offices shall check and calculate tax amounts payable by heirs or gift
recipients into the state budget. For case of incomes of under VND 10 million
from inheritances or gifts.
State management agencies and concerned
organizations shall carry out procedures for transferring the ownership of
securities, capital holdings and assets which must be registered as
inheritances or gifts for heirs or gift recipients only when they receive
vouchers evidencing tax payment by individuals liable to pay tax.
2.8.3. The deadline for filing tax
declaration dossiers
Individuals earning incomes from inheritances
or gifts shall file their tax declaration dossiers concurrently with carrying
out procedures for transferring the ownership of or the right to use assets
received as inheritances or gifts.
2.8.4. The deadline for tax payment shall be
stated in tax notices made according to a set form.
2.9. Tax declaration by resident individuals
with incomes generated abroad
2.9.1. Resident individuals with incomes
generated abroad shall make tax declaration and payment under the Personal
Income Tax Law.
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2.9.2. Tax declaration for each kind of
income is as follows:
a. Tax declaration for incomes from salaries
or wages and incomes from business activities
Individuals who are residents in Vietnam and
earn incomes from salaries, wages or business activities abroad shall make
personal income tax declaration under the guidance in Clause 2, Section II,
Part D of this Circular.
b. Tax declaration for other taxable incomes
(incomes from capital investment, capital transfer, real estate transfer,
copyright, commercial franchising, won prizes, inheritances, gifts).
- The time limit for making declaration is 10
days after the generation or receipt of incomes. For individuals who are abroad
when their incomes are generated or received abroad, die time limit for making
tax declaration is 10 days after their entry into Vietnam.
- A tax declaration dossier comprises:
+ A tax return, made according to a set form,
for taxable incomes from capital investment, copyright, commercial franchising
or won prizes generated abroad.
+ A tax return, made according to a specific
form set for incomes from real estate transfer, securities transfer,
inheritances or gifts in Vietnam.
The above tax returns must be enclosed with
vouchers evidencing payment of incomes and personal income tax abroad which
will serve as a basis for determination of incomes and personal income tax amounts
paid abroad.
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2.10. Tax declaration by a resident
individual who earns incomes from business activities, salaries or wages and is
present in Vietnam for less than 183 days counted within the first calendar
year but more than 183 days counted within 12 consecutive months from the first
day of his/her presence in Vietnam.
- The first tax year: He/she shall make tax
declaration and file the tax finalization dossier no later than the 90th day
after the last day of the period of full 12 consecutive months.
- The second tax year: He/she shall make tax
declaration and file the tax finalization dossier no later than the 90th day
after the end of the calendar year.
The payable tax amount for the second tax
year may be cleared against the tax amount already paid in the first tax year
corresponding to the overlapping period between the two tax years.
The duplicated tax amount to be cleared
against the payable tax amount for the second tax year is determined as
follows:
Double tax amount to be cleared
=
Payable tax amount
for the first tax year
x
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12
Example: Mr. A comes to work in Vietnam from
May 1, 2009 (the date shown in his passport) and earns taxable incomes in
Vietnam.
Assuming that during the period from May 1,
2009, to December 31, 2009, Mr. A is present in Vietnam for a total of 160 days
and during the period from January 1, 2010 to April 30, 2010, he is present in
Vietnam for a total of 30 days. Under regulations, the period of Mr. A’s
presence in Vietnam in 2009 is not enough for him to be identified as a
resident individual (160 days < 183 days). However, for the reason that the
total number of days of his presence in Vietnam counted within 12 consecutive
months (from May 1, 2009, to April, 30, 2010) is 190 days (160 days plus 30
days), Mr. A can still be identified as a resident individual.
The first tax year of Mr. A is counted from
May 1, 2009, to the end of April 30, 2010, and he shall file his tax
finalization dossier no later than the 90th day after April 30, 2010.
The second tax year of Mr. A is counted from
January 1, 2010, to the end of December 31, 2010, and he shall file his tax
finalization dossier no later than the 90th day after December 31, 2010.
The payable tax amount for the second tax
year of Mr. A will be cleared against the tax amount paid in the first year for
the overlapping period between the two tax years, including four months
January, February, March and April.
So, Mr. A’s duplicated tax amount in 2009 to
be cleared against his payable tax amount for 2010 shall be determined as
follows:
Duplicated tax
amount to be cleared
=
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x
4 months
12
3. Tax refund
3.1. An individual is entitled to tax refund
in the following cases:
3.1.1. His/her paid personal income tax
amount for a tax period is larger than the tax amount payable for that tax
period.
3.1.2. He/she has paid personal income tax
but his/her taxable income is below the taxable level.
3.1.3. Other cases under decisions of
competent state agencies.
Personal income tax refund is applicable only
to individuals who have made tax registration and had tax identification
numbers.
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- An application for tax refund, made
according to form No. 01/HTBT attached to the Finance Ministry’s Circular No.
60/2007/TT-BTC of June 14, 2007.
- A copy of the applicant’s identity card or
passport.
- The personal income tax return for
finalization.
- Personal income tax withholding vouchers or
receipts.
- Documents evidencing the expiration of the
applicant’s working period, such as decision on retirement or resignation,
written record of liquidation of the labor contract, and list of days of residence
in Vietnam (if any).
- A power of attorney in case of authorized
declaration for tax refund (if any).
3.3. Places for filing tax refund dossiers
- Individuals earning incomes from salaries,
wages or securities transfer shall file their tax refund dossiers with tax
offices directly managing their income-paying units.
- Individuals earning incomes from business
activities shall file their tax refund dossiers with district-level Tax
Departments in localities where they conduct business activities.
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3.4. Handling of tax refund dossiers
The receipt of tax refund dossiers and the
responsibility to handle tax refund dossiers comply with the guidance in
Section II, Part G of the Finance Ministry’s Circular No. 60/2007/TT-BTC of
June 14, 2007.
3.5. Tax refund procedures
After examining and considering tax refund
dossiers valid, tax offices shall issue and send tax refund decisions to the
State Treasury of the same level and to individuals eligible for tax refund.
Upon receiving tax refund decisions of tax
offices, the State Treasury of the same level shall refund tax amounts to
eligible individuals.
Part E
ORGANIZATION
OF IMPLEMENTATION
1. This Circular takes effect 15 days after
its publication in "CONG BAO" and applies from January 1, 2009.
To annul regulations guiding income tax on
high-income earners, corporate income tax applicable to business households and
individuals, and land use rights transfer tax applicable to individuals
transferring land use rights.
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3. Problems related to income tax on
high-income earners, corporate income tax applicable to business households and
individuals, and land use rights transfer tax arising before January 1, 2009,
shall be settled in accordance with the tax laws and ordinances and the
Government’s and the Finance Ministry’s guiding documents which are effective
at the time such problems arise.
4. Individuals who are currently entitled to
personal income tax (income tax on high-income earners) incentives as stated
in their investment preference certificates, investment licenses or provided
for in the Government’s or the Prime Minister’s regulations before the
effective date of the Law on Personal Income Tax will continue enjoying those incentives
till the end of the incentive duration.
5. In case a treaty to which the Socialist
Republic of Vietnam is a contracting party contains provisions on personal
income tax different from the guidance in this Circular, that treaty’s
provisions prevail.
Any problems arising in the course of
implementation should be reported to the Ministry of Finance (the General
Department of Taxation) for study and solution.
FOR THE MINISTER OF
FINANCE
VICE MINISTER
Nguyen Cong Nghiep
ATTACHED
FILE
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