Ho Chi Minh City is one of the cities with the largest number of foreign enterprises and investors coming to invest and do business in our country. Therefore, foreign individuals who are managers or foreign employees when working in Vietnam must have the obligation to pay personal income tax to the Vietnamese State as if they were paying personal income tax in their own country. However, how will the procedures for tax finalization service for foreigners in Ho Chi Minh be carried out?
Table of contents
Personal income tax is often defined as follows: “Personal income tax is a tax directly imposed on taxpayers’ income from salaries and other sources, except for tax-exempt incomes and reduction based on family circumstances”.
Personal income tax is one of the basic taxes that all countries and territories around the world apply. The tax rates applied in each country will have certain differences, but the mechanism, content, and method of calculating income tax are all recognized and applied similarly by all countries. This creates a common awareness for all citizens of all countries that regardless of the income generated in any country in the world, they are obliged to carry out personal income tax procedures.
In Vietnam, pursuant to Article 2 of the Law on Personal Income Tax 2007, personal income taxpayers include individuals residing in Vietnam with income within or outside the territory of Vietnam and individuals not residing in Vietnam but with income in Vietnam.
Under Clause 10, Article 3 of the Law on Tax Administration 2019, it is stated that: “Tax statement means the calculation of tax accrued in a tax year or over the period from the beginning of a tax year to the termination of taxable activities, or over the period during which taxable activities occur as prescribed by law.” Thus, it can be simply understood that tax finalization in general is the process of calculating and declaring the amount of tax that an individual or enterprise must pay to the tax authority based on income, business transactions, or assets in a specific accounting period.
Under Point d, Clause 6, Article 8 of Decree 126/2020/ND-CP detailing several articles of the Law on Tax Administration 2019, the subjects required to carry out personal income tax finalization procedures are as follows:
Thus, under this regulation, there is no distinction between individuals and organizations with Vietnamese nationality. Therefore, all individuals and organizations with other nationalities (foreign individuals and organizations) are also naturally obliged to pay personal income tax to the Vietnamese State according to this regulation and satisfy other conditions as prescribed by law.
Under Circular 111/2013/TT-BTC and Circular 119/2014/TT-BTC, the conditions for foreign employees working or generating income in Vietnam to fulfill their tax obligations to the Vietnamese State are:
Foreign individuals who do not meet the conditions for individuals residing in Vietnam under the above regulations will be non-resident individuals.
The method of calculating personal income tax for foreign individuals in Vietnam with a labor contract of 3 months or more is similar to the method of calculating tax for Vietnamese citizens, which is to calculate tax according to progressive rates.
Personal income tax payable = Tax rate X taxable incomes
Mức thuế suất cụ thể như sau:
| Tax level | Assessable income
(year) |
Assessable income
(month) |
Tax rate |
| 1. | Under 60 million | Under 5 million | 5% |
| 2. | From 60 million – 120 million | From 5 million – 10 million | 10% |
| 3. | From 120 million – 216 million | From 10 – to 18 million | 15% |
| 4. | From 216 million – 384 million | From 18 million – 32 million | 20% |
| 5. | From 384 million – 624 million | From 32 million – 52 million | 25% |
| 6. | From 624 million – 960 million | From 52 million – 80 million | 30% |
| 7. | Over 960 million | Over 80 million | 35% |
Currently, personal income tax finalization procedures for foreigners can be carried out in 02 ways: (1) Foreigners directly carry out the procedures (can authorize individuals or accounting service organizations to carry out tax finalization procedures) and (2) Authorize organizations or individuals to pay income.
The agency that receives personal income tax dossiers for foreigners in Ho Chi Minh City is:
The deadline for submitting annual tax declarations is mentioned in Article 44 of the Law on Tax Administration 2019 as follows:
It should be noted that April 30 is an annual holiday, so foreign individuals need to pay personal income tax before April 30 to ensure their maximum legal rights and obligations.
Above are the tax finalization services for foreigners in Ho Chi Minh of Viet An Law. If you need advice on legal issues related to tax finalization procedures, please contact Viet An Law for the best support.
