Can buying life insurance in Vietnam be subject to PIT deduction?
Hello Lawyer, Can I ask if buying life insurance in Vietnam be subject to PIT deduction? I would like to thank you very much for answering my questions.
Thank you for sending us your question. When buying life insurance, people often have a lot of questions surrounding them. And one of the things when buying life insurance or vacation is whether when buying life insurance, can PIT be deducted?
To be able to find out about the issue of whether buying life insurance is subject to PIT deduction? LuatsuX invites you to refer to our article below.
Legal grounds
- Law on Insurance Business 2010 amended and supplemented 2019
- Personal Income Tax Law 2007 Amendments and Supplements 2012, 2014
- Circular 111/2013/BTC
Life insurance
According to the provisions of Clause 12, Article 3 of the Law on Insurance Business:
- Life insurance is a type of insurance in case the insured person lives or dies.
Currently, in Vietnam, there are the following types of life insurance:
Lifetime insurance;
Term life insurance;
Term insurance;
Mixed insurance;
Periodic payment insurance;
Investment-linked insurance;
Pension insurance.
Personal income tax
Currently, there is no exact and specific definition of what personal income tax (PIT) is. However, based on the provisions of the law recorded in the Personal Income Tax Law; Decrees, guiding circulars, can understand PIT as follows:
PIT is a direct tax, calculated on the taxpayer’s income after deducting tax-free income and deductions for family circumstances.
Who must pay personal income tax?
– Personal income tax payers are residents who have taxable incomes specified in Article 3 of this Law arising within and outside the Vietnamese territory and non-residents have taxable incomes specified in Clause 1 of this Article. Article 3 of this Law arises in the territory of Vietnam.
– A resident is a person who meets one of the following conditions:
Being present in Vietnam for 183 days or more in a calendar year or counting for 12 consecutive months from the first day of presence in Vietnam;
Having a regular place of residence in Vietnam, including having a registered place of permanent residence or having a rented house to live in in Vietnam under a fixed-term lease contract.
– A non-resident individual is a person who does not meet the conditions for personal residence.
Which income is subject to personal income tax?
– Personal income taxable income includes the following types of income, except for tax-exempt income specified in Article 4 of this Law:
Business income, including:
Income from production and trading of goods and services;
Incomes from independent practice activities of individuals who have licenses or practice certificates as prescribed by law.
Income from business in this regulation does not include income of business individuals with turnover of 100 million VND/year or less.
Incomes from salaries and wages, including:
Wages, wages and amounts of salary and wage nature;
Allowances and subsidies, except for: allowances and subsidies according to the provisions of the law on incentives for people with meritorious services; defense and security allowances; toxic or dangerous allowances for industries, occupations or jobs at workplaces with toxic and dangerous elements; attraction allowance, regional allowance as prescribed by law;
Unexpected hardship allowance, work accident and occupational disease allowance, one-time allowance for childbirth or child adoption, allowance for working capacity decline, lump-sum retirement allowance, survivorship allowance monthly allowances and other allowances in accordance with the law on social insurance; severance allowance, job loss allowance according to the provisions of the Labor Code; allowances of the nature of social protection and other allowances and subsidies not of the nature of salary or wages according to the Government’s regulations.
Income from capital investment, including:
Loan interest;
Share dividends;
Income from capital investment in other forms, except income from government bond interest.
Income from capital transfer, including:
Income from transfer of capital in economic organizations;
Income from securities transfer;
Income from capital transfer in other forms.
Income from real estate transfer, including:
Incomes from transfer of land use rights and properties attached to land;
Income from transfer of ownership or use of housing;
Incomes from the transfer of the right to rent land, the right to rent water surface;
Other income received from the transfer of real estate in any form.
Income from winning prizes, including:
Winning lottery prizes;
Winning prizes in the form of promotions;
Winning in the form of betting;
Winning prizes in games, contests and other forms of winning.
Income from royalties, including:
Incomes from the transfer or transfer of the right to use objects of intellectual property rights;
Income from technology transfer.
Franchise income.
Incomes from inheritance are securities, capital in economic organizations, business establishments, real estate and other assets subject to registration of ownership or registration of use.
Income from receiving gifts as securities, capital in economic organizations, business establishments, real estate and other assets subject to registration of ownership or registration of use.
Can buying life insurance be tax deductible?
According to the provisions of Article 4 of the Law on Personal Income Tax, the subjects who will be exempt from personal income tax are:
- Income from interest on deposits at credit institutions, interests from life insurance contracts.
- Income from life and non-life insurance contracts, compensation for occupational accidents, state compensation and other compensations as prescribed by law.
According to the provisions of Article 3 of Circular 111/2013/BTC, the subjects who will be exempt from personal income tax are:
g) Income from interest on deposits at credit institutions, foreign bank branches, interests from life insurance contracts; income from government bond interest.
g.2) Interest from life insurance contract is the interest received by an individual under the life insurance contract of insurance enterprises.
The basis for determining tax-free income for life insurance contract interest income is the proof of interest payment from the life insurance contract.
n) Income from indemnification of life insurance, non-life insurance, health insurance; compensation for labor accidents; compensation, support according to the provisions of the law on compensation, support and resettlement; compensation to the State and other compensations as prescribed by law. Specifically in some cases as follows:
n.1) Income from indemnification of life, non-life and health insurance contracts is the amount of money that an individual receives from a life, non-life or health insurance organization to a person the insured as agreed in the signed insurance contract. The basis for determining this compensation is the document or decision on compensation of the insurance organization or the court and the payment documents.
And also according to the provisions of Clause 2, Article 9 of Circular 111/2013/BTC:
a) Insurance contributions include: social insurance, health insurance, unemployment insurance, professional liability insurance for a number of professions requiring compulsory insurance participation.
Can buying life insurance be tax deductible? The answer is that buying life insurance will not be subject to PIT deduction because it does not belong to the deductible cases. However, as we have shown, the indemnified expenses from life insurance, or the interest from life insurance policy will be taxed.
Related articles:
- Procedures for registration of a personal tax code in Vietnam
- Vietnamese law on corporate income tax
- Do I have to pay PIT in Vietnam when I sell securities at a loss?
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So, please contact us immediately with questions about the “Can buying life insurance in Vietnam be subject to PIT deduction?”
Contact LSX Lawfirm
Finally, we hope this article is useful for you to answer the question: “Can buying life insurance in Vietnam be subject to PIT deduction?”. If you need any further information, please contact LSX Law firm: at +84846175333 or Email: [email protected]
Frequently asked questions
Diseases that life insurance does not cover are as follows:
Heart-related diseases including: valve replacement, myocardial infarction
Stroke
Polio fever
Hard liver disease
Kidney failure disease
Plant nerve cell disease
Malignant cancer
Traumatic brain injury
Pulmonary hypertension
Renal cyst disease
And other diseases depending on the list of each insurance company.
According to the form of contract:
Insurance is the main product that the participants negotiate and sign a contract with the insurance company.
Supplemental insurance is a by-product with separate terms designed to be attached to the main insurance policy, for the purpose of increasing the protection and comprehensive health care benefits for the insured.
Based on the insured object:
– Personal insurance is a product that protects a specific individual (in the contract called the insured) against risks related to accident, illness, and death.
– Group insurance is a product package deployed to protect the majority of participants. This product is often used by organizations and businesses to protect all employees against the risks of injury and death.
Conclusion: So the above is Can buying life insurance in Vietnam be subject to PIT deduction?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com