How to calculate personal income tax for foreigners who are individuals residing in Vietnam

For foreigners, to determine taxable income, it will be based on whether the individual is a resident or non-resident to determine tax obligations arising in Vietnam. Next, Anpha will guide you how to calculate personal income tax for foreigners.

Taxable income of a resident individual is income generated within and outside the territory of Vietnam, regardless of where the income is paid or where the income is received.

1. Conditions are a foreign resident individual

A foreign individual only needs to meet one of the following conditions to be determined as a resident:

• Foreign individuals present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the first day of arrival in Vietnam;
• Have a permanent residence listed in the permanent residence card or a temporary residence upon registration issued by a competent agency under the Ministry of Public Security;
• Rent a house to live in Vietnam with a rental term of 183 days or more in the tax year according to the provisions of housing law.

2. How to calculate personal income tax for foreign residents

For individuals who are foreigners working in Vietnam - determined to be resident individuals, the enterprise shall deduct tax according to the partially progressive tax schedule according to the formula:

In there:

- Total income: total salary received by the individual during the tax period arising within and outside the territory of Vietnam.

- Tax exemptions:

• Expenses for business trips, telephone charges, and stationery (clearly stated in the company's regulations);
• Cost of uniforms paid to employees must not exceed 5,000,000 VND/person/year; clothing expenses in kind;
• Income from exceeding the normal working day rate from overtime/shift work;
• Expenses for transportation of workers to and from work and back to their residence;
• Payment for training according to the employer's plan to improve qualifications and skills to suit the job;
• Expenditure on return airfare once a year;
• Tuition fees for employees' children, from preschool to high school - are paid by the unit;
• Lunch fee is waived personal income tax maximum: 730,000 VND/month, some expenses for collective use of employees in kind;
• Expenditures on airfare for business trips for employees whose jobs require rotation;
• Expenses include filial piety and wedding ceremonies.

- Deductions:

• Personal deduction: 11,000,000 VND/month and is calculated as personal deduction from January or from the month of arriving in Vietnam for the first time to the month the contract ends or leaves Vietnam in the tax year - fully calculated. by month;
• Dependent deduction: 4,400,000 VND/month;
• Deduction of insurance payments from employees' salaries with the following deduction rates in 2022: Retirement fund (8%); Health insurance (1.5%);
• Deductions include study encouragement, charitable and humanitarian contributions.

- Tax rate - partially progressive tax schedule: