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THE NATIONAL
ASSEMBLY
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 04/2007/QH12
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Hanoi,
November 21, 2007
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LAW
ON PERSONAL INCOME TAX
Pursuant to the 1992 Constitution of the Socialist
Republic of Vietnam, which was amended and supplemented under Resolution No.
51/2001/QH10;
The National Assembly
promulgates the Law on Personal Income Tax.
Chapter I
GENERAL
PROVISIONS
Article 1. Scope
of regulation
This Law provides for personal
income taxpayers, taxable incomes, incomes eligible for personal income tax
exemption or reduction, and personal income tax bases.
Article 2. Taxpayers
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2. Resident means a person who
satisfies one of the following conditions:
a/ Being present in Vietnam for
183 days or more in a calendar year or 12 consecutive months counting from the
first date of their presence in Vietnam;
b/ Having a place of habitual
residence in Vietnam, which is a registered place of permanent residence or a
rented house for dwelling in Vietnam under a term rent contract.
3. Non-resident means a person
who does not satisfy any of the conditions specified in Clause 2 of this
Article.
Article 3. Taxable
incomes
Incomes liable to personal
income tax include the following kinds of income, except for incomes eligible
for tax exemption specified in Article 4 of this Law:
1. Incomes from business
activities, including:
a/ Incomes from goods production
or trading or service provision;
b/ Incomes from independent
professional activities of individuals possessing practice licenses or
certificates in accordance with law.
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a/ Salaries, wages and amounts
of similar nature;
b/ Allowances, except for those
paid under legal provisions on preferential treatment of persons with
meritorious services; defense or security allowances; hazard or danger
allowances for persons working in branches, occupations or jobs at places where
exist hazardous or dangerous elements; allowances for attraction of laborers to
work in certain branches or in certain regions specified by law; allowances for
sudden difficulties, allowances for laborers having labor accident or suffering
from occupational disease, lump-sum maternity or child adoption allowances;
allowances for working capacity loss, lump-sum retirement allowances, monthly
survivorship allowances, severance and job loss allowances specified in the
Labor Code, other allowances paid by the Social Insurance, and allowances for
combat of social evils;
c/ Remuneration of all kinds;
d/ Sums of money earned for
participation in business associations, boards of directors, control boards,
management boards and other organizations;
e/ Other monetary or
non-monetary benefits received by taxpayers;
f/ Bonuses, rewards, except for
rewards accompanying honorary titles conferred by the State or international or
national prizes; rewards for technical renovations, creations or inventions
recognized by competent state agencies; rewards for detection and reporting of
illegal acts to competent state agencies.
3. Incomes from capital
investment, including:
a/ Interests;
b/ Dividends;
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4. Incomes from capital transfer,
including:
a/ Incomes from transfer of
capital holdings in economic organizations;
b/ Incomes from transfer of
securities;
c/ Incomes from transfer of
capital in other forms.
5. Incomes from transfer of real
estate, including:
a/ Incomes from transfer of
rights to use land and assets attached to land;
b/ Incomes from transfer of
right to own or use residential houses;
c/ Incomes from transfer of
right to lease land or water surface;
d/ Other incomes earned from
transfer of real estate.
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a/ Lottery winnings;
b/ Sales promotion winnings;
c/ Betting or casino winnings;
d/ Winnings in prized games and
contests and other forms of winning.
7. Incomes from copyright,
including:
a/ Incomes from assignment or
licensing of intellectual property objects;
b/ Incomes from technology
transfer.
8. Incomes from commercial
franchising.
9. Incomes from inheritances
that are securities, capital holdings in economic organizations or business
establishments, real estate and other assets subject to ownership or use
registration.
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The Government shall detail and
guide the implementation of this Article.
Article 4.
Tax-exempt incomes
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.
2. Incomes from transfer of
residential houses, rights to use residential land and assets attached to
residential land received by individuals who have only one residential house or
land plot each.
3. Incomes from the value of
land use rights of individuals who are allocated land by the State.
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.
5. 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.
6. Incomes from conversion of
agricultural land allocated by the State to households and individuals for
production.
7. Incomes from interests on
deposits at credit institutions or interests from life insurance policies.
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9. Wages paid for night shift or
overtime work, which are higher than those paid for day shifts or prescribed
working hours in accordance with law.
10. Retirement pensions paid by
the Social Insurance.
11. Incomes from scholarships,
including:
a/ Scholarships granted from the
state budget;
b/ Scholarships granted by
domestic and foreign organizations under their study promotion programs.
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.
13. Incomes received from
charity funds licensed or recognized by competent state agencies and operating
for charity, humanitarian or non-profit purposes.
14. Incomes received from
governmental or non-governmental foreign aid for charity or humanitarian
purposes approved by competent state agencies.
Article 5.
Tax reduction
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Article 6.
Conversion of taxable incomes into Vietnam dong
1. A taxable income received in
a foreign currency must be converted into Vietnam dong at the average exchange
transaction rate on the inter-bank foreign exchange market announced by the
State Bank at the time of income generation.
2. A taxable income received in
the form of 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.
Article 7.
Tax period
1. For residents, tax period is
specified as follows:
a/ Annual tax period, which is
applicable to incomes from business, salaries and wages.
b/ Tax period upon each time of
income generation, which is applicable to incomes from capital investment;
incomes from capital transfer, except for incomes from securities transfer;
incomes from real estate transfer; incomes from prizes; incomes from copyright;
incomes from commercial franchising; incomes from inheritances; and gifts.
c/ Tax period upon each transfer
or annual tax period, which 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-residents, the tax
period counted upon each time of income generation is applicable to all their
taxable incomes.
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1. Tax registration,
declaration, withholding, payment, finalization and refund, handling of
violations of the tax law, and tax administration measures comply with legal
provisions on tax administration.
2. Individuals are entitled to
tax refund in the following cases:
a/ Their paid tax amounts are
larger than payable tax amounts;
b/ They have paid tax but their
taxed incomes do not reach a tax-liable level;
c/ Other cases decided by
competent state agencies.
Article 9. Application
of treaties
If a treaty to which the
Socialist Republic of Vietnam is a contracting party contains provisions on
personal income tax different from the provisions of this Law, the provisions
of that treaty prevail.
Chapter II
TAX
BASES FOR RESIDENTS
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Article 10.
Taxable incomes from business
1. A taxable income from
business is determined to be equal to turnover minus reasonable expenses
related to the generation of the taxable income from business in a tax period.
2. Turnover means the total of
sales, processing remuneration, commissions, goods or service provision charges
generated in a tax period from goods production and trading or service
provision.
The time of determination of
turnover is the time of transfer of ownership of goods or completion of
services or the time of making goods sale or service provision invoices.
3. Reasonable expenses related
to the generation of taxable incomes from business in a tax period include:
a/ Salaries, wages, remuneration
and other payments to laborers;
b/ Expenses for raw materials,
fuels, materials, energy and goods used for production or business, charges for
services purchased from outside;
c/ Expenses for depreciation,
regular repair and maintenance of fixed assets used for production or business;
d/ Paid interests;
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f/ Taxes, charges and fees
payable under law and allowed to be accounted as expenses;
g/ Other expenses related to the
generation of incomes.
4. The determination of turnover
and expenses is based on accounting norms, standards, regulations, documents
and books prescribed by law.
5. If many persons jointly
conduct business activities under the same business registration, taxable
income of each of them is determined according to one of the following
principles:
a/ In proportion to their
capital contributions stated in the business registration;
b/ Under their agreement stated
in the business registration;
c/ According to the average
per-capita income in case the business registration neither states their
capital contributions nor contains any agreement on income division among them.
6. For business individuals who
fail to strictly comply with regulations on accounting, invoices and documents
and cannot measure turnover, expenses and taxable income, competent tax offices
shall predetermine turnover and the ratio of taxable income in order to
determine taxable income suitable to each industry or business line under the
law on tax administration.
Article 11.
Taxable incomes from salaries or wages
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2. Time of determination of a
taxable income from salary or wage is the time when an organization or
individual pays income to a taxpayer or when a taxpayer receives income.
Article 12. Taxable
incomes from capital investment
1. A taxable income from capital
investment is the total of incomes from capital investment specified in Clause
3, Article 3 of this Law and earned by a taxpayer in a tax period.
2. Time of determination of a
taxable income from capital investment is the time when an organization or
individual pays income to a taxpayer or when a taxpayer receives income.
Article 13.
Taxable incomes from capital transfer
1. A taxable income from capital
transfer is determined to be equal to the selling price minus the buying price
and reasonable expenses related to the generation of income from capital transfer.
2. If the buying price and
expenses related to the securities transfer are unidentifiable, taxable income
is determined to be the selling price of securities.
3. Time of determination of a taxable
income from capital transfer is the time when the capital transfer transaction
is completed in accordance with law.
The Government shall detail and
guide the implementation of this Article.
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1. A taxable income from real
estate transfer is determined to be equal to the real estate transfer price
upon the transfer minus the real estate buying price and related expenses,
specifically as follows:
a/ Real estate transfer price is
the contractual price at the time of transfer;
b/ Real estate buying price is
the contractual price at the time of purchase;
c/ Related expenses to be
subtracted are those recorded in vouchers and invoices lawfully, including
charges and fees related to land use rights as prescribed by law; expenses for
land revamp, house renovation, ground leveling; expenses for investment in
building residential houses, infrastructures and architectures on land; and
other expenses related to the real estate transfer.
2. If the buying price and
expenses related to the transfer of a real estate are unidentifiable, the
taxable income is determined to be the real estate transfer price.
3. The Government shall
stipulate principles and methods of determination of real estate transfer
prices in case transfer prices are unidentifiable or land use rights transfer
prices stated in contracts are lower than land prices promulgated by
provincial-level People’s Committees and effective at the time of transfer.
4. Time of determination of a
taxable income from real estate transfer is the time when the transfer contract
becomes effective in accordance with law.
Article 15.
Taxable incomes from won prizes
1. A taxable income from won
prize is the prize value in excess of VND 10 million received by a taxpayer upon
each time of winning.
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Article 16.
Taxable incomes from copyright
1. A taxable income from
copyright is an income in excess of VND 10 million earned by a taxpayer when
assigning or licensing an intellectual property object or transferring a
technology under a contract.
2. Time of determination of a
taxable income from copyright is the time when an organization or individual
pays income to a taxpayer.
Article 17.
Taxable incomes from commercial franchising
1. A taxable income from
commercial franchising is an income in excess of VND 10 million earned by a
taxpayer under a commercial franchising contract.
2. Time of determination of a
taxable from commercial franchising is the time when an organization or
individual pays income to a taxpayer.
Article 18.
Taxable incomes from inheritances or gifts
1. A taxable income from
inheritance or gift is the value of an inherited asset or a gift in excess of
VND 10 million received by a taxpayer upon each time of inheritance or gift
receipt.
2. Time of determination of a
taxable income is specified as follows:
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b/ For an income from gift, it
is the time when an organization or individual presents a gift to a taxpayer or
when a taxpayer receives the income.
Article 19. Reduction
based on family circumstances
1. Reduction based on family
circumstances means a sum of money deductible from pre-tax income from
business, salary or wage of a resident taxpayer. Reduction based on family
circumstances consists of the following two parts:
a/ Reduction for the taxpayer,
which is VND 4 million/month (VND 48 million/year);
b/ Reduction for each dependant
of the taxpayer, which is VND 1.6 million/month.
2. The level of reduction based
on family circumstances applicable to dependants is determined on the principle
that each dependant may be counted only once for tax reduction for a taxpayer.
3. Dependants of a taxpayer
means persons a taxpayer is responsible for nurturing or taking care of,
including:
a/ His/her minor children or
disabled children who are incapable of working;
b/ Individuals who have no income
or have incomes not exceeding the prescribed level, including adult children
who are studying at a university, college, professional secondary school or
job-training establishment; his/her spouse who is incapable of working; his/her
parents who are beyond the working age or incapable of working; other
supportless persons whom the taxpayer has to directly nurture.
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Article 20.
Reduction for charity or humanitarian donations
1. Charity or humanitarian
donations are deductible from pre-tax income from business, salary or wage of a
resident taxpayer, including:
a/ Donations to organizations or
establishments that care for or nurture children in special plights, disabled
people and supportless elderly people.
b/ Donations to charity funds,
humanitarian funds or study promotion funds.
2. Organizations, establishments
and funds specified at Points a and b, Clause 1 of this Article must be those
licensed or recognized by competent state agencies and operating for charity,
humanitarian, study promotion or non-profit purposes.
Article 21.
Taxed incomes
1. A taxed income from business,
salary or wage is the total of taxable incomes specified in Articles 10 and 11
of this Law minus premiums of social insurance, health insurance and
professional liability insurance for some professions and jobs subject to
compulsory insurance and reductions specified in Articles 19 and 20 of this
Law.
2. Taxed incomes from capital
investment, capital transfer, real estate transfer, won prizes, copyright
royalties, commercial franchising, inheritances or gifts are taxable incomes
specified in Articles 12, 13, 14, 15, 16, 17 and 18 of this Law.
Section 2. TARIFFS
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1. The partially progressive
tariff applies to taxed incomes specified in Clause 1, Article 21 of this Law.
2. The partially progressive
tariff is specified below:
Tax grade
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
Article 23.
Whole income tariff
1. The whole income tariff
applies to taxed incomes specified in Clause 2, Article 21 of this Law.
2. The whole income tariff is
specified below:
Taxed
incomes
Tax
rate (%)
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5
b/ Incomes from copyright, commercial
franchising
5
c/ Incomes from prizes
10
d/ Incomes from inheritances,
gifts
10
e/ Incomes from capital
transfer specified in Clause 1, Article 13 of this Law
20
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0.1
f/ Incomes from real estate
transfer specified in Clause 1, Article 14 of this Law
25
Incomes from real estate
transfer specified in Clause 2, Article 14 of this Law
2
Article 24.
Responsibilities of income-paying organizations and individuals and
responsibilities of resident taxpayers
1. Responsibility to make tax
declaration, withholding, payment and finalization is specified as follows:
a/ Income-paying organizations
and individuals shall make tax declaration, withhold and remit tax into the
state budget, and make tax finalization for all kinds of taxable income they
pay to taxpayers;
b/ Individuals who have taxable
incomes shall make tax declaration, pay tax into the state budget and make tax
finalization for all their incomes in accordance with the law on tax
administration.
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3. The Government shall specify
tax withholding rates suitable to each kind of income specified at Point a,
Clause 1 of this Article.
Chapter III
TAX
BASES FOR NON-RESIDENTS
Article 25.
Tax on incomes from business
1. Tax on incomes from business
of a non-resident is determined to be equal to his/her turnover from production
or business activities specified in Clause 2 of this Article multiplied by the
tax rate specified in Clause 3 of this Article.
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 buyer on behalf of the non-resident but not
refunded to the goods or service buyer.
If a contract between the goods
or service provider and buyer does not specify personal income tax, the taxable
turnover that must be converted is the total sum of money in any form earned by
the non-resident from the provision of goods or services in Vietnam, regardless
of places where business activities are conducted.
3. Tax rates applicable to
incomes from business are specified for different production sectors or
business lines as follows:
a/ 1% for goods trading;
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c/ 2% for production,
construction, transportation and other business activities.
Article 26.
Tax on incomes from salaries or wages
1. Tax on income from salary or
wage of a non-resident is determined to be equal to his/her income from salary
or wage specified in Clause 2 of this Article multiplied by the tax rate of
20%.
2. Taxable income from salary or
wage of a non-resident is the total of salary or wage amounts received by a
non-resident for job performance in Vietnam, regardless of income payers.
Article 27.
Tax on incomes from capital investment
Tax on income from capital
investment of a non-resident is determined to be equal to the total sum of
money earned by a non-resident from his/her capital investment in organizations
or other individuals in Vietnam, multiplied by the tax rate of 5%.
Article 28.
Tax on incomes from capital transfer
Tax on income from capital
transfer of a non-resident is determined to be equal to the total sum of money
earned by a non-resident from the transfer of his/her capital portions in
Vietnamese organizations or individuals, multiplied by the tax rate of 0.1%,
regardless of whether the transfer is made in Vietnam or abroad.
Article 29.
Tax on incomes from real estate transfer
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Article 30.
Tax on incomes from copyright or franchising
1. Tax on income from copyright
of a non-resident 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%.
2. Tax on income from commercial
franchising of a non-resident is determined to be equal to the income in excess
of VND 10 million earned from each contract on commercial franchising in
Vietnam, multiplied by the tax rate of 5%.
Article 31. Tax
on incomes from won prizes, inheritances or gifts
1. Tax on income from won prize,
inheritance or gift of a non-resident is determined to be equal to his/her
taxable income specified in Clause 2 of this Article multiplied by the tax rate
of 10%.
2. Taxable income from won prize
of a non-resident is the prize value in excess of VND 10 million upon each time
of winning in Vietnam; taxable income from inheritance or gift is the
inheritance or gift value in excess of VND 10 million upon each time of income
receipt by a non-resident in Vietnam.
Article 32.
Time of determination of taxable income
1. Time of determination of
taxable income with respect to incomes specified in Article 25 of this Law is
the time when a non-resident earns an income or a goods sale or service
provision invoice is issued.
2. Time of determination of
taxable income with respect to incomes specified in Articles 26, 27, 30 and 31
of this Law is the time when an organization or individual in Vietnam pays an
income to a non-resident or when a non-resident receives an income from an
overseas organization or individual.
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Article 33. Responsibilities
of income-paying organizations and individuals and responsibilities of
non-resident taxpayers
1. Income-paying organizations
and individuals shall withhold and remit tax into the state budget upon each
time of payment of taxable incomes to taxpayers.
2. Non-resident taxpayers shall
make tax declaration and payment upon each time of generation of taxable income
in accordance with the law on tax administration.
Chapter IV
IMPLEMENTATION
PROVISIONS
Article 34.
Effect
1. This Law takes effect on
January 1, 2009.
2. To annul the following
documents and regulations:
a/ Ordinance No.
35/2001/PL-UBTVQH10 on Income Tax on High-Income Earners, which had a number of
articles amended and supplemented by Ordinance No. 14/2004/PL-UBTVQH11;
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c/ Provisions of Enterprise
Income Tax Law No. 09/2003/QH11 on enterprise income tax applicable to
individuals engaged in production or business activities, excluding private
enterprises;
d/ Other regulations on personal
income tax which are contrary to the provisions of this Law.
3. Individuals having incomes
eligible for tax incentives provided for in legal documents promulgated before
the effective date of this Law continue enjoying those incentives.
Article 35. Implementation
guidance
The Government shall detail and
guide the implementation of this Law.
This Law was passed on November 21,
2007, by the XIIth National Assembly of the Socialist Republic of
Vietnam at its 2nd session.
NATIONAL ASSEMBLY
Nguyen Phu Trong
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