The Law on Personal Income Tax passed by the National Assembly on 20 November 2007 and effective from 1 January 2009 brings significant changes to the personal income tax applicable to individuals.
The types of income that are subject to personal income tax are as follows:
- employment income
- income from household business operation
- income from capital investments
- income from capital transfers
- income from real property transfers
- income being winnings or prizes
- income from franchises
- income from inheritance
- income from gifts.
The above types of income are assessed at different tax rates and subject to different tax compliance procedures.
The law provides unified tax rates applicable to Vietnamese and foreign national. The tax rates and tax thresholds for the above income vary depending upon whether the individual is a tax resident, or non-resident of Vietnam for tax purposes.
An individual, who is non-tax resident, is subject to a flat tax rate of 20 percent on employment income attributed to Vietnamese responsibilities only.
Vietnamese citizens and foreigners (non-Vietnamese citizens) who are deemed tax residents of Vietnam are subject to personal income tax on their worldwide income.
The official currency of Vietnam is the Vietnam Dong (VND).
Herein, the host country refers to the country where the expatriate is going on assignment. The home country refers to the country where the expatriate lives when they are not on assignment.