| | | Personal Income Tax For Foreign Employees Methods Of Declaration And Payable Amount | | | Personal income tax declaration, settlement, and payment are very important tasks for not only the employer but also the employee, especially when a foreign employee is recruited and working in Viet Nam.
PERSONAL INCOME TAX
There are 09 typical taxable incomes:
1/ Incomes from business are incomes which earned from the production and sale, in particular: - Incomes from production and sale of goods and services that belong to all industries such as production, goods sale, construction, construction, restaurants, service provision including the lease of houses, right to use the land, water surface, and other property.
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2/ Incomes from wages and remunerations which paid to employees from employers, including: - Wages, remunerations and the other amounts paid as wages or remunerations in cash or not in cash.
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3/ Incomes from capital investment - Interest on the loans given to other organizations, enterprises, business households, business individuals and groups of business individuals according to loan contracts or agreements.
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4/ Incomes from capital transfer
- Profits from capital contributions to limited liability companies (including single-member limited liability companies), partnerships, cooperatives, business cooperation contracts, people's credit funds, economic organizations, and other organizations.
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5/ Incomes from real estate transfer
- Incomes from transferring rights to use land.
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TAX STATEMENT AND TAX SETTLEMENT
The payer of taxable incomes and the person that earns taxable incomes shall declare tax and settle tax in accordance with the local procedures. Rules for declaring tax in some cases:
Foreign employees who should directly declare tax at tax authorities. - The residents that earn incomes from wages and directly declare tax at tax authorities include: The residents that earn incomes from wages paid by international organizations, embassies, and consulates in Vietnam without withholding tax shall directly declare tax quarterly at tax authority; The residents that earn incomes from wages paid by overseas organizations and individuals shall directly declare tax quarterly at tax authorities.
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Foreign employees who will pay tax on the progressive method or applying the fixed rate
- To verify a proper method of personal income tax (PIT) declaration for expats, the tax officer will base on the passport, labor contract appointment letter/tax withheld receipts, rental contract.
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Typical case that tax statements made by payers of taxable income.
- The income payers that withhold personal income tax shall declare tax monthly or quarterly. The income payer might not declare tax if no personal income tax is withheld in the month or in the quarter.
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Typical case that tax statements made by residents that earn incomes from wages and business
- The residents, groups of residents that earn incomes from business and directly declare tax at tax authorities.
- The wage-earner shall request another organization or person to settle tax on their behalf
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Rules for settling tax in some cases:
- The resident that earns an income overseas and has pay personal income tax on that income overseas shall have the tax paid overseas deducted. The amount of tax deducted shall not exceed the tax payable on the income earned overseas according to Vietnam's tax table. The ratio is based on the ratio of income earned overseas to the total taxable income.
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TAX RATES
Who is the resident:
- The person has been present in Vietnam for 183 days or longer in a calendar year, or for 12 consecutive months from the day on which that person arrives at Vietnam (the date of arrival and date of departure are considered 01 day). The date of arrival and date of departure depends on the certification of the immigration agency on the passport (or laissez-passers) when that person enters and leaves Vietnam. If the person enters and leaves Vietnam within one day, it is considered a day of a resident.
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Tax rate and calculating tax incurred by none-residents
- The rate of personal income tax on incomes from wages earned by a non-resident equals the taxable income from wages multiplied by (x) 20% tax. The taxable income from wages earned by a non-resident is similar to that of a resident guided above.
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Tax rate and calculating tax incurred by residents on taxable incomes from business, wages
The basis for calculating tax on incomes from business, wages is the assessable income and tax rate. Assessable income equals taxable income minus (-) the following deductions:
Tax rate
- The rate of personal income tax on incomes from the business.
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