How to calculate personal income tax for foreigners in Vietnam

Accordingly, depending on each specific case, the personal income tax calculation method for foreigners will follow different patterns. So, in this article, LSX will explain “How to calculate personal income tax for foreigners in Vietnam?”.

Legal grounds

• Circular 111/2013/TT-BTC
• Circular 92/2015/TT-BTC

Personal income tax for resident individuals

Foreigners are resident individuals

Hence the regulations under Clause 1, Article 1, Circular 111/2013/TT-BTC, a resident individual is a person who meets one of the following conditions:

• Present in Vietnam for 183 days or more in 12 consecutive months from the first day of presence in Vietnam; of which arrival and departure dates is the first day.
  • The date of arrival and departure shows on the certification of the immigration authority on the passport; (or travel document) of the individual upon arrival and departure from Vietnam.
  • In case of entry and exit on the same day, it will be the first day of residence.
  • An individual’s presence in Vietnam means his/her presence in the Vietnamese territory.

• Having a regular place of residence in Vietnam in one of the following two cases:
  • Having a regular place of residence according to the provisions of the law on residence. The place of permanent residence is the place of permanent residence stated in the permanent residence card; or the place of temporary residence when applying for a temporary residence card issued by a competent agency of the Ministry of Public Security.
  • Having a rented house to live in in Vietnam according to the provisions of the law on housing, with the term of the lease contract from 183 days or more in the tax year.

In case foreigners did not sign a labor contract or sign a labor contract of less than 3 months

Following point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC; a resident who does not sign a labor contract or signs a labor contract for less than 3 months; has a total income of 2 million VND/time or more must withhold tax at the rate of 10% on income.

In other words, individuals who do not sign a labor contract or sign a labor contract for less than 3 months; but earn an income from salary or gong each time receiving from VND 2 million or more must pay 10% tax.

In case foreigners having labor contracts from 03 months or more

The tax calculation formula is as follows:

Personal income tax payable = Taxable income x Tax rate

Then, after calculating taxable income, in order to determine the payable tax amount on income from salaries and wages; the taxpayer applies the partial tax calculation method, the abbreviated tax calculation method for the right object.

Employees who sign labor contracts for 3 months or more only have to pay tax when they have an income of 11 million VND/month or more (132 million VND/year); in case they have no dependents.

Personal income tax for non-resident individuals

Basically, a non-resident individual is an individual who does not meet the conditions of the aforementioned resident.

Personal income tax payable on income from salaries and wages of non-residents is determined as follows:

Payable income tax = 20% x Taxable income

In which, taxable income from salaries and wages of non-residents is determined as for taxable incomes from salaries and wages of resident individuals.

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