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5 issues to declare personal income tax for foreigners
As Vietnam becomes more integrated into the global economy, a growing number of foreigners choose to live and work here. Their earnings from salaries and wages are subject to personal income tax in accordance with Vietnamese law. The following introduces 5 issues to declare personal income tax for foreigners.
Regulations on declaring personal income tax for foreigners
Declaring Personal Income Tax (PIT) for foreigners in Vietnam requires compliance with specific legal regulations. Below are the main points regarding this regulation:
1. Subjects of declaration
Resident foreigners: Individuals who stay in Vietnam for 183 days or more in a calendar year or 12 consecutive months.
Non-resident foreigners: Individuals who do not meet the above residence conditions, that is, the stay period is less than 183 days in a year.
2. Taxable income
Income from salary and wages: Includes salaries, bonuses, allowances, and other income received from labor activities in Vietnam.
Income from capital investment: Profits from investments, including dividends and interest.
Income from capital transfer: Profits from transferring shares, contributed capital.
Income from real estate transfer: Profits from transferring real estate in Vietnam.
3. Applicable tax rates
Resident individuals: Apply the progressive tax table with rates from 5% to 35%, depending on income level.
Non-resident individuals: Apply a fixed tax rate of 20% on total taxable income.
4. Declaration procedures
Tax declaration form: Must fill in the PIT declaration form according to the form prescribed by the tax authority. This form includes information on income, deductions, and tax payable.
Supporting documents: Include income documents, invoices, and documents related to tax deductions (if any).
5. Deadlines for declaration and payment
Tax declaration: Declare periodically by month or quarter, depending on the regulations of the tax authority.
Tax payment: Taxes must be paid on time as prescribed, usually on the 20th of the month following the month income arises.
6. Exemptions and other regulations
Tax exemptions: Some cases may be exempt from PIT according to Double Taxation Avoidance Agreements (DTA) that Vietnam has signed.
Invoices and documents: Income and expenses must be proven by valid invoices and documents to ensure accurate and legal declaration.
Complying with PIT declaration regulations not only helps foreigners avoid legal risks but also ensures their tax rights and obligations in Vietnam.
Read the article “4 Steps to Calculate Personal Income Tax for Foreigners” to know more details.
Conditions for declaring personal income tax for foreigners
Foreigners need to meet a number of conditions to declare personal income tax (PIT) in Vietnam, specifically as follows:
Determining residency status
Foreigners residing in Vietnam for 183 days or more in a calendar year or 12 consecutive months must declare and pay PIT according to the progressive tax schedule.
Non-resident foreigners who do not meet the above residency conditions will declare and pay tax at a fixed rate of 20% on total taxable income.
Classification of taxable income
Income from salaries and wages: Includes salaries, bonuses, and other allowances received from employment in Vietnam.
Income from capital investment: Profits from investments, including dividends and interest.
Income from capital transfer: Profit from the transfer of shares and capital contributions in companies in Vietnam.
Income from real estate transfer: Profit from the sale and transfer of real estate in Vietnam.
Prepare necessary documents and records
Invoices and vouchers: Income and expenses must be proven by valid invoices and vouchers according to the provisions of Vietnamese law.
Tax declaration: It is necessary to fill in the personal income tax declaration form correctly and completely according to the prescribed form, including information on income, tax deductions (if any), and the amount of tax payable.
Deadline for tax declaration and payment
Tax declaration: Make tax declarations periodically on a monthly or quarterly basis, depending on the regulations of the tax authority.
Tax payment: Tax must be paid on time according to regulations, usually on the 20th of the month following the month in which the income is generated.
Instructions for filling out the personal income tax return for foreigners
- Step 1: Prepare documents
– Income documents (invoices, payroll, labor contracts, etc.)
– Tax deduction documents (if any)
– Personal information (Full name, nationality, passport number, address in Vietnam)
- Step 2: Fill in the items in the return
Personal information section:
Full name: Fill in your full name as shown on your passport or ID card.
Nationality: Enter your current nationality.
Passport number: Enter your passport number or equivalent ID card number.
Resident address: Provide your residential address in Vietnam and permanent address in your country of origin.
Income information section:
Income from wages and salaries: Clearly state the total income from wages and salaries during the tax return period, including wages, bonuses, and other allowances.
Income from capital investment: If any, specify profits from investments such as dividends and interest.
Income from capital transfer: Specify profits from the transfer of shares and capital contributions.
Income from real estate transfer: Specify profits from the sale or transfer of real estate in Vietnam.
Tax deductions:
Tax deductions: Fill in tax deductions if any (such as social insurance, health insurance, expenses related to income).
Exemptions: If tax is exempted or reduced according to regulations or international agreements, fill in the relevant information.
Tax calculation:
Calculate tax payable: Based on income and deductions to calculate the amount of personal income tax payable.
Provide total tax: Specify the total tax payable and the amount paid (if any).
- Step 3: Submit the declaration
Submit the declaration: The personal income tax return must be submitted to the local tax authority where you reside or work. You can submit directly or via the electronic system “Thue dien tu” if permitted.
Tax payment deadline: Make a declaration and pay taxes on time as prescribed, usually on the 20th of the month following the month in which income is generated.
- Step 4: Check and store
Check information: Make sure that all information is filled in correctly and completely.
Keep copies: Keep copies of the declaration and related documents for comparison and filing.
Accurately filling out the personal income tax return will help ensure that you fully comply with your tax obligations and avoid possible legal problems. If you need further assistance, contact the tax authority or tax consultants for detailed instructions.
Can personal income tax be paid in foreign currency?
Currently, according to Vietnamese law, taxpayers are only allowed to pay taxes in Vietnamese currency.
This is stipulated in:
- Law on Personal Income Tax 2003 (amended in 2019): Clause 1, Article 15 stipulates, "Taxpayers are only allowed to pay taxes in Vietnamese currency".
- Circular 200/2014/BTC of the Ministry of Finance guiding the implementation of the Law on Personal Income Tax: Clause 1, Article 33 stipulates, "Taxpayers pay taxes in Vietnamese currency".
However, in some special cases, taxpayers may be allowed to pay taxes in foreign currency.
Specifically:
- According to the regulations of the State Bank of Vietnam on foreign exchange management, foreigners are allowed to pay in foreign currency for services provided by Vietnam, including taxes.
- According to the international agreement that Vietnam has signed, the two sides can agree to allow tax payment in foreign currency.
Some common problems
What should be noted in the taxable income section of the personal income tax return?
Foreigners need to declare all taxable income, including income from salaries, wages, and other income generated in Vietnam during the tax period.
Do they need to declare deductions when filling out the personal income tax return?
Yes, foreigners need to declare deductions such as family deductions, social insurance, health insurance, and charitable contributions, if any, to calculate personal income tax accurately.
Refer to Corporate Secretary Service to let Thele.blog supports you in tax declaration.
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