Finalizing personal income tax for foreigners is a very complicated business. Therefore, business organizations need to understand tax regulations to avoid errors. Viet An tax agent provides tax finalization service in Vietnam for foreigners quickly and accurately with the following sequence of steps.
Determining whether the foreign individual resides or does not reside
For foreign workers, it is necessary to first determine whether the foreigner is a resident or non-resident individual in Vietnam. The determination will be based on Clause 1, Article 1 of Circular 111/2013/TT-BTC:
A resident individual is a person who meets one of the following conditions:
- Being present in Vietnam for 183 days or more within a calendar year or within 12 consecutive months from the first day of presence in Vietnam, in which the arrival date and departure date are counted as one (01) day. Arrival and departure dates are based on the certification of the immigration authority on the individual’s passport (or laissez-faire) when arriving and leaving Vietnam. In case of entry and exit on the same day, it is counted as one day of residence.
Have a permanent residence in Vietnam in one of the following two cases:
- Permanent residence is the permanent residence stated in the Permanent Residence Card or the temporary residence when applying for a Temporary Residence Card issued by a competent agency under the Ministry of Public Security.
- Having a rented house to live in Vietnam according to the provisions of housing law, with the term of the lease contract being 183 days or more in the tax year.
Scope of determining taxable income of foreigners
- For foreigners who are resident individuals, taxable income is income generated within and outside the territory of Vietnam, regardless of where the income is paid and received.
- For non-resident individuals, taxable income is income generated in Vietnam, regardless of where the income is paid and received.
Finalization of personal income tax for resident foreigners
- Foreigners who are individuals residing in Vietnam will have to fully comply with regulations on tax finalization at the time of taxable income generation like Vietnamese citizens. Residents shall make PIT finalization when they have to pay additional tax or have overpaid tax amounts.
- Resident individuals being foreigners who terminate working contracts in Vietnam shall make tax finalization with tax authorities before leaving the country. The organization that pays personal income will be authorized to finalize PIT. The deadline for submitting personal income tax finalization dossiers in this case is the 45th day after the individual exits.
Personal income tax schedule applicable to foreigners residing
In case a foreigner residing in Vietnam signs a labor contract of 3 months or more
In case a foreigner residing in Vietnam signs a labor contract for 3 months or more, the PIT calculation on income from his/her salary or wages shall be calculated according to the partially progressive tax rate as follows:
(Unit: million VND)
| Tax scale |
Taxable income/year
(million VND) |
Taxable income/month
(million VND) |
Tax
ratio (%) |
| 1
2
3
4
5
6
7 |
To 60
Over 60 to 120
Above 120 to 216
Above 216 to 384
Above 384 to 624
Above 624 to 960
Over 960 |
Up to 5
Over 5 to 10
Over 10 to 18
Over 18 to 32
Above 32 to 52
Above 52 to 80
Over 80 |
5
10
15
20
25
30
35 |
In case a foreigner residing in Vietnam signs a labor contract of less than 3 months
In case a foreigner residing in Vietnam signs a labor contract of less than 3 months, the tax shall be calculated according to the full table x 10% tax rate.
Finalization of PIT for individuals who are foreigners and do not reside in Vietnam
Foreign workers who do not reside in Vietnam, ie, do not fully meet the conditions for residence in Vietnam above, must make PIT finalization according to the following regulations:
- An employee working in Vietnam means the presence of such individual in the Vietnamese territory for less than 183 days in a calendar year or for 12 consecutive months counting from the first day that person is present in Vietnam ( based on the date of entry stamped on the Passport).
- The foreign worker does not have a regular place of residence in Vietnam, does not register for a permanent residence in accordance with the law, or does not have a long-term rental contract in Vietnam.
Instructions on how to calculate tax for non-resident foreigners
- In case a non-resident foreign individual authorizes tax finalization: That individual has income at an organization with a contract for 3 months, at the time of PIT finalization, he will be able to authorize the organization to tax finalization. This organization rece will only make PIT finalization for the part of the income that is paid by the organization.
- In case the individual is a non-resident foreigner who directly finalizes the tax: That individual has income from salary, business, or from many taxable people and has an overpaid tax amount, or additionally pays or offsets other taxes. The next declaration period will finalize personal income tax by himself.
- Whether the labor contract of a foreigner who does not reside in Vietnam is signed for a term of less than 3 months or from 3 months or more, tax is calculated according to Full income x Tax rate of 20%.
Finalization of personal income tax for individuals who are foreigners in some special cases
In addition, for special cases where foreigners are present in Vietnamese territory for less than 183 days in the first calendar year but from 183 days in 12 consecutive months, personal income tax finalization shall be carried out according to the following procedures: separate regulations.
Customers have a demand for using the tax finalization service in Vietnam for foreigners, please contact Viet An Tax Agent for advice and support for personal income tax finalization services in the most fast, timely, and accurate way!
