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Vietnam personal income tax brackets for employees

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Vietnam personal income tax brackets run in seven bands, from 5 percent to 35 percent, and they apply to monthly taxable pay. Taxable pay is what is left after you take off the personal deduction and any dependant deductions. This guide shows each band, the deductions, and one worked example.

The seven bands

Employment income of a tax resident is taxed on a progressive scale. Each slice of monthly taxable income is taxed at its own rate. You do not pay the top rate on all of your pay. You pay it only on the part that falls in that band.

  • Up to 5 million VND a month: 5 percent
  • Over 5 million, up to 10 million: 10 percent
  • Over 10 million, up to 18 million: 15 percent
  • Over 18 million, up to 32 million: 20 percent
  • Over 32 million, up to 52 million: 25 percent
  • Over 52 million, up to 80 million: 30 percent
  • Over 80 million: 35 percent

These bands come from Law No. 04/2007/QH12 on Personal Income Tax. Law No. 26/2012/QH13 changed it, and the amended law took effect on 1 July 2013, and the monthly band limits above have applied since then. Circular 111/2013/TT-BTC of 15 August 2013 explains how employers and taxpayers should apply them.

Sources: Law on Personal Income Tax No. 04/2007/QH12; Law No. 26/2012/QH13 amending it; Circular 111/2013/TT-BTC.

What is taxable pay

Taxable income is not the same as your salary. Start with your total taxable income for the month. This includes salary, wages, and most cash allowances and bonuses. Some items are not taxed, such as meal allowances within set limits and the extra pay for overtime work above normal hourly pay. Then subtract the deductions below. What remains is the figure you run through the bands.

You can also deduct the mandatory social, health and unemployment insurance that you pay as an employee before tax. Check your payslip, because employers usually calculate this for you.

Sources: Circular 111/2013/TT-BTC, guidance on the Law on Personal Income Tax.

The personal and dependant deductions

Since 1 July 2013, every taxpayer can deduct 9 million VND a month for themselves. For each registered dependant, you can deduct another 3.6 million VND a month. These amounts are set out in Circular 111/2013/TT-BTC.

A dependant can be a child, a spouse who cannot work, or a parent who has no income or only a very low one. You must register each dependant with the tax office and keep the supporting papers. Without registration, the deduction does not count.

Sources: Circular 111/2013/TT-BTC, guidance on the Law on Personal Income Tax.

A worked example

Suppose a resident employee earns 30 million VND a month in taxable income and has one registered dependant. To keep it simple, ignore insurance for now.

  • Deduct 9 million for yourself and 3.6 million for the dependant. Taxable pay is 17.4 million.
  • The first 5 million is taxed at 5 percent, which is 250,000.
  • The next 5 million is taxed at 10 percent, which is 500,000.
  • The last 7.4 million is taxed at 15 percent, which is 1,110,000.

The monthly tax is 1,860,000 VND. That is about 6.2 percent of the 30 million. The bands do the work, so the real rate is well below the top rate that applies.

Sources: the rates and deductions in the sections above.

Residents, non-residents and short contracts

You are a tax resident if you live in Vietnam 183 days or more in a calendar year, or in 12 consecutive months counted from the day you arrive. You are also a resident if you have a regular home in Vietnam. Residents use the seven bands.

Non-residents face a flat 20 percent rate on any employment income they earn in Vietnam. They do not get the deductions. Residents who work under a contract of less than three months, or with no contract, usually have 10 percent withheld from each payment of 2 million VND or more.

Sources: Law No. 04/2007/QH12 as amended; Circular 111/2013/TT-BTC.

Practical tips

Register your dependants early and keep copies of the papers. Ask your employer how it handles insurance and allowances. Keep your payslips. If you have more than one job, or other income, check whether you must file a year-end finalisation return with the tax office. Employers withhold tax from each monthly payslip, so most employees see only the net amount. Rules differ by case, so confirm with the tax department or a qualified adviser. This is general information, not tax advice.

Sources: Circular 111/2013/TT-BTC.