VIETNAM Law and Practice Contributed by: Thang Nguyen, Minh Nguyen and Nguyet Le, ACSV Legal
5. Tax Law 5.1 Taxes Applicable to Employees/ Employers PIT Scope PIT law applies, in principle, to both Vietnam - ese and foreign individuals who are residents in Vietnam or have income sourced from Vietnam. An individual is considered a resident if he/she: • (a) is present in Vietnam for 183 days or more in a calendar year or during a period of 12 consecutive months from the date of entry into Vietnam (can be checked from entry/exit stamps in passport); • (b) holds a temporary or permanent resident card with respect to foreigners, or a regular residential location registered as a permanent residence address in Vietnam with respect to Vietnamese citizens; or • (c) has an irregular residential location or loca - tions in Vietnam such as one or more hotel rooms and/or leased houses in Vietnam with aggregated lease terms of 183 days or more in a tax year. If these criteria are not met, an individual will be considered a non-tax resident in Vietnam. In cases (b) and (c) above, an individual may be considered a non-resident if he/she is present in Vietnam for less than 183 days in a tax year and able to prove that he/she is considered a resident of another tax jurisdiction. Taxable Income Generally, taxable income comprises ten main types: income from employment, business, capital investments, capital transfers, real estate transfers, winnings or prizes in excess of VND10 million, inheritances in excess of VND10 million, copyrights in excess of VND10 million, franchis -
ing royalties in excess of VND10 million, and gifts in excess of VND10 million. Tax Rates For employment incomes of residents, a pro - gressive system applies ranging from 5% to 35% depending on the annual or monthly tax - able income. As for non-tax residents, a flat rate of 20% is imposed on the income derived from Vietnam. For non-employment-related income, the rates vary from 0.1% to 20% subject to whether the taxpayer is a resident or non-resident and depending on the type of income; the way PIT is calculated also depends on the type of income. Nevertheless, if a resident performs services but does not have a labour contract, or the labour contract is of a term under three months with payments each time amounting to VND2 million or more in total, in general, 10% will be withheld and paid directly to the tax authorities. Mandatory (Social) Insurance Applicable subject Vietnamese employees and their employers are generally required to contribute to social insur - ance (SI), health insurance (HI), and unemploy - ment insurance (UI). Foreign employees and their employers, while exempt from UI contributions, may still be subject to SI and/or HI depending on specific statutory conditions. Under the 2024 Law on Social Insurance, the scope of mandatory SI coverage has been expanded to include additional groups beyond traditional employment relationships. These include: • registered household business owners, as prescribed by law;
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