Yes, foreigners working in Vietnam are required to pay Personal Income Tax (PIT). The tax obligations depend on whether the individual is classified as a tax resident or non-resident, determined primarily by the duration of their stay.
Tax Residents vs. Non-Residents
- Tax Residents: Expats who stay in Vietnam for 183 days or more in a 12-month period, or those with permanent residence or long-term rental contracts, are classified as tax residents.
- Tax rate: Progressive rates from 5% to 35% depending on income levels.
- Non-Residents: Expats who stay fewer than 183 days in a 12-month period are non-residents.
- Tax rate: Fixed rate of 20% on income sourced from Vietnam.
Taxable Income
Sources of taxable income include salaries, wages, business income, capital gains, dividends, and real estate sales, among others.
Exemptions and Deductions
- Personal Deductions:
- Individual deduction: VND 11 million/month
- Family deduction: VND 4.4 million/month per dependent
- Tax-Free Income: Inheritance from relatives, pensions from social insurance, and certain foreign remittances.
- Allowances for Foreigners: Round-trip airfare, relocation costs, school fees for children, and mid-shift meals are tax-exempt.
Tax Filing and Deadlines
- Annual Tax Finalization Deadline:
- March 31, 2025, for organizations
- April 30, 2025, for individuals directly filing
- Leaving Vietnam: Expats must finalize their PIT before departure or authorize their employer to handle it.
Charitable Donations
Contributions to recognized charities or educational initiatives are deductible, but only up to the taxable income for that year.
Foreigners should seek expert guidance for compliance due to the complexity of Vietnam’s PIT system.
