Personal income tax for non-resident foreigners in Vietnam

1. What is a non-resident individual?

Foreigners who do not meet the conditions of a resident individual are determined to be a non-resident individual.

Foreign individuals are non-resident individuals with income from salaries and wages arising within the territory of Vietnam and must pay personal income tax according to regulations.

2. How much salary must be taxed?

Non-resident individuals are not eligible for family deductions, so as long as they have taxable income, they will have to pay personal income tax (taxable income > 0 will have to pay tax).

In other words, As long as there is income from salaries or wages, taxes will be payable with a tax rate of 20%/taxable income; In case of charitable contributions, study promotion, humanitarian contributions, insurance contributions, and voluntary retirement funds according to regulations, this amount can be deducted.

3. How to calculate tax for non-resident individuals

Clause 1, Article 18 of Circular 111/2013/TT-BTC stipulates that the personal income tax amount for non-resident individuals is determined according to the following formula:

Personal income tax payable = 20% x Taxable income

Taxable income in this case is determined by the total salary, remuneration, wages, and other income of the nature of wages and salaries that the taxpayer receives during the tax period.

In particular, the taxable income of a non-resident individual is determined as the case of taxable income from the salary or wages of a resident individual, specifically:

- The time to determine personal income taxable income for income from salaries and wages is the time the organization or individual pays the income.

- The time to determine personal income taxable income for accumulated insurance product premiums is the time the insurance enterprise or intellectual fund management company voluntarily pays the insurance premium.

Determining taxable income from wages and salaries in Vietnam in case a non-resident individual simultaneously works in Vietnam and abroad but cannot separate the income arising in Vietnam is done. according to the prescribed formula. 

Note: Other taxable income (pre-tax income) arising in Vietnam mentioned above is other monetary or non-monetary benefits that employees enjoy in addition to wages and salaries paid by the employer. to pay or pay on behalf of the employee.