Personal income tax (PIT) is an important duty for 100% foreign-owned businesses in Vietnam. They must understand PIT rules to follow the law and benefit from state support.
PIT is a tax that individuals must pay on their income. However, foreign businesses often handle this tax for their employees. They report, deduct, and send the tax to the government.
Below, DNP Viêt Nam Law Firm Vietnam provides essential regulations related to PIT obligations for 100% foreign-invested enterprises:
1. Definition of Personal Income Tax (PIT):
PIT is a direct tax deducted from an individual’s salary or other income sources and remitted to the state budget after deductions.
2. PIT Taxpayers:
Legal Basis: Article 2 of the Personal Income Tax Law 2007 (amended and supplemented 2014)
- Resident individuals: Those with taxable income generated inside and outside Vietnam.
- Non-resident individuals: Those with taxable income generated within Vietnam.
3. PIT Tax Rates:
3.1. For Resident Individuals:
Legal Basis: Article 22 of the Personal Income Tax Law 2007 (amended and supplemented 2014)
PIT is applied based on a progressive tax scale ranging from 5% to 35%:
| Income Level (Annual) | Tax Rate |
| Up to VND 60 million | 5% |
| Over VND 60 million – 120 million | 10% |
| Over VND 120 million – 216 million | 15% |
| Over VND 216 million – 384 million | 20% |
| Over VND 384 million – 624 million | 25% |
| Over VND 624 million – 960 million | 30% |
| Over VND 960 million | 35% |
3.2. For Non-Resident Individuals
Legal Basis: Article 26 of the Personal Income Tax Law 2007 (amended and supplemented 2014)
A flat tax rate of 20% is applied to taxable income from wages and salaries.
4. PIT Calculation:
For Resident Individuals
Legal Basis: Article 7 of Circular 111/2013/TT-BTC
Formula:
PIT = Taxable Income × Applicable Tax Rate
Taxable Income = Gross Income – (Personal deductions + Insurance & Pension Contributions + Charity & Humanitarian Contributions) (if applicable).
Personal Deductions:
Legal Basis: Resolution 954/2020/UBTVQH14
- Self-deduction: VND 11 million/month (VND 132 million/year)
- Dependent deduction**: VND 4.4 million/month per dependent
For Non-Resident Individuals:
Formula:
PIT = Total Salary × 20%
Design by DNP Viet Nam Law Firm.
5. Tax Withholding and Remittance:
Legal Basis: Articles 24 and 33 of the Personal Income Tax Law 2007 (amended and supplemented 2014)
100% foreign-invested enterprises paying salaries must declare, withhold, remit PIT, and finalize employee tax obligations.
6. Tax Declaration and Finalization:
Tax Period:
Legal Basis: Article 7 of the Personal Income Tax Law 2007 (amended and supplemented 2014)
– Resident individuals: PIT is calculated on an annual basis.
– Non-resident individuals: PIT is calculated per taxable income transaction.
Tax Finalization Steps:
1. The entity preparing tax declaration files must submit the annual PIT finalization documents by the last day of the third month after the end of the calendar or fiscal year.
2. Tax Authority Processing:
– Direct submission: The tax authority reviews and processes the declaration.
– Electronic submission: The tax authority verifies and processes the documents through an electronic tax system.
In Conclusion, Foreign-invested enterprises in Vietnam must strictly comply with PIT regulations to ensure legal and efficient business operations. Enterprises can contact legal consultants at the provided hotline or email for more details and expert advice.
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DNP VIET NAM LAW FIRM
Contact:
🏢 Address: 5th Floor, 52 Nguyen Thi Nhung Street, Van Phuc estate, Hiep Binh Phuoc, Thu Duc City, Ho Chi Minh City, Viet Nam.
📩 Email: info@dnp-law.com.
📞 Hotline: 0987 290 273 (Đinh Văn Tuấn Lawyer).
Website: https://www.dnp-law.com/
