Vietnam Tax Laws – Bradford Jacobs

Tax Laws

With more than 20 years’ experience in the front rank of international payroll providers, Bradford Jacobs ensures our clients comply with every level of tax and employment law worldwide. Our ‘know-how’ is vital for foreign companies expanding into Vietnam.

Dealing with tax, payroll, and employment regulations for your staff from overseas is a tricky process. It poses major issues for companies seeking to develop their international profile. Vietnam is no exception. Vietnam’s multi-layered tax system became more complicated after changes to the Law on Tax Administration in 2020.

Also, employees’ entitlements and benefits were updated in the 2021 amended Labor Code. These changes added to an already complex picture.

Overview of Taxes in Vietnam

Tax TypePercentagesIncome Tax:Individual Annual Taxable (US$)Up to VDN 60 million (US$2,613)5%VDN 60 to 120 million (US$5,226)10%VDN 120 to 216 million (US$9,407)15%VDN 216 to 384 million (US$16,724)20%VDN 384 to 624 million (US$27,176)25%VDN 624 to 960 million (US$41,810)30%Above VDN 960 million35%

Joint tax returns for couples are not permitted in Vietnam.

Value Added Tax: Sales Tax is levied at 5% or 10% depending on goods and services supplied by producers and the sector they operate in but is zero on exported goods.

Business Income Tax: Individuals’ business income exceeding VND 100 million (US$4,400) becomes liable for Corporate Tax.

Corporate Income Tax: Standard Rate – 20% (Can vary between 40% and 50% for certain sectors)

Withholding Tax and Remittance Tax: Does not apply to dividends to foreign corporate investors, but individual investors are taxed at 5%.

Business License Tax (BLT): Indirect taxation via the BLT applies to all organizations, companies, and individuals in business, although exemption applies during the first year of business. Various rates apply:

Registered Capital in billion VND (US$43,960)Annual PremiumOver 10 billion3,000,000 (US$132)Under 10 billion2,000,000 (US$88)Branches, representative offices, public services1,000,000 (US$44)

Foreign Contractors’ Tax (FCT): May apply to some international companies operating in Vietnam, at rates between 0.1% and 10%.

Vietnamese Individual Tax – Single, Married

Vietnam residents are taxed on their worldwide income; foreigners are taxed at a flat rate of 20% on income earned in Vietnam.

The progressive bands on taxable income range from 5% up to 35%. Individuals become tax residents if they reside in-country for 183 days or more between January 1 and December 31 or for 12 months continuously after arriving in Vietnam.

Residences for foreigners include homes that are owned or leased for 183 days or more, hotel rooms, guest houses etc. that are covered by a Resident’s Card issued by the Ministry for Public Security.

Employment income is generally deducted at source by employers for remitting to the Vietnam Tax Agency. Generally, all types of income and remuneration – including benefits and payment in kind – are considered taxable. This would include royalties, commission, bonuses paid in stocks or shares for example.

Employers are also required to make declarations on behalf of their staff. Declarations must be made by the 20th of the following month, or the end of the next month following a quarter, or 90 days after the year end. Joint tax returns for married couples are not permitted.

Personal tax rates for residents

Income in Vietnamese Dong VDN (US$) in 2021

Annual taxable incomeTax rateUp to VDN 60 million (US$2,613)5%VDN 60 to 120 million (US$5,226)10%VDN 120 to 216 million (US$9,407)15%VDN 216 to 384 million (US$16,724)20%VDN 384 to 624 million (US$27,176)25%VDN 624 to 960 million (US$41,810)30%Above VDN 960 million35%

Exemptions include:

These are covered by the Labor Code and the Social Insurance Law and include such as:

• Overtime and night work pay which is higher than the normal daily rate
• Compensation for work-related accidents or illness and unemployment benefits
• Foreigners can claim one-off payments for such as relocation costs, school tuition fees and one annual return trip to their home country, not including family members
• VND 3.6 million per month (US$ 160) for each qualifying dependent
• Donations to approved charities, human aid organizations, approved education funds
• Compulsory insurance and social security contributions