Voluntary expatriation is always a thrilling transition. As an expat living in another country, you have all the novel and fun-filled experiences to encounter, and it is nothing different for anyone in Vietnam.
Vietnam is a beautiful country that is full of life, vibrant energy, and profound exquisiteness. It has a divine culture that is all mind-blowing, especially touching on its history. Expats are having an easy time in this country, bearing in mind its expenditure that is on the low end.
As if it is not enough, expats will be spoilt for choice when it comes to abundant work opportunities. The ever-burgeoning market is just the tip of the iceberg. Expats in Vietnam know that this is simply a little heaven on earth.
However, with all this comes rules and regulations that must be adhered to and a set of responsibilities to carry home. Among them is paying taxes. This is a crucial obligation for all expats living in Vietnam, as it is a clear indication that you are loyal to the government. It also saves you the trouble of being in the wrong.
No foreigner would want to be on the wrong side of the law. So how do expats go about paying their taxes in Vietnam? Well, let’s look at everything pertaining to personal taxes that expats need to pay while living in Vietnam.
For starters, expats are classified under two categories:
- Tax resident
These categories dictate how each expat in Vietnam will be required to pay their personal income tax. In this write-up, we will bring you up to speed with how expats under each category pay their taxes.
Guillaume Rondan from Movetoasia.com offers a remote service to help Expats paying their taxes in Vietnam. If you are living as a self employed in Vietnam and looking for a reliable accountant to declare your personal taxes, you just need a Smartphone to get it done.
Non-Resident Expat in Vietnam
A non-resident expat is considered to be living in Vietnam for approximately 183 days or less in 12 consecutive months. He or she doesn’t have a permanent place of residence in Vietnam. Therefore, there is a specific guide on how they are expected to pay their personal income tax.
A non-resident expat in Vietnam will only have tax deducted from income that is earned while living in this country. Therefore, this means that whatever income that is acquired outside Vietnam is not subject to a tax deduction. The general personal income tax goes up to 35%, but the non-resident expats are taxed at a flat rate of 20%, with income that is generated from non-employment sources taxed at a rate of 0.1% to 25%. The following is a breakdown of how different levels of personal income are taxed in Vietnam. It is important to note that both non-residents and tax residents are subject to the personal income tax.
Taxable income annually in Vietnamese Dong (VND)
As mentioned before, there are other sources of income that do not come from employment. They include:
- Income from business activities of producing goods – a tax rate of 5%
- Income from business activities of producing services – a tax rate of 2%
- Other activities such as manufacturing, construction, and transportation of goods – a tax rate of 2%
- Transfer of capital – a tax rate of 0.1%
- Transfer of real estate – a tax rate of 2%
- Income from investing in the capital – a tax rate of 0.1%
- Trade copyright and other activities – a tax rate of 5%
- Any income from inheritance, gifts which act as Collateral and lottery wins – a tax rate of 10%
Tax Resident foreigners living in Vietnam
These are expats living permanently in Vietnam. Any expat in Vietnam, who stays for more than the contracted 183 days in 12 months, which includes the arrival and departure days, counted as one, are classified as tax residents. Therefore, it is advisable to ensure that you are registered with the country’s relevant bodies as an expat in Vietnam. This will save you tons of troubles of having to pay for taxes, both in your home country and in Vietnam.
It is also essential to indicate an expat residential address in your residential cards. Unlike non-residents, permanent ones have all their income taxes regardless of whether the source is overseas or not. Tax residents are still subject to the Personal tax in Vietnam scheme (PIT).
A tax resident also has some tax imposed on their income that is generated from unemployed resources.
- Income from investing in trade copyright, capital and other authorized activities – a tax rate of 5%
- Revenue from the transfer of property – a tax rate of 25%
Other taxes for income from unemployed sources that are applied to non-resident expats are also applicable to tax residents.
Exemption from Tax
As much as you are an expat in Vietnam, who wants to abide by the law, it is sometimes a sheer sigh of relief if some of what you own is not taxed. Some exemptions come with these taxes, regardless of being a resident or a non-resident expat in Vietnam. They are stipulated below:
- Income from the property transferred from, or to close family members, related either by blood or by adoption and marital partners, are not subject to tax. However, this is entirely different from the case of inheritance as it has distinguishable features.
- If you happen to be relocated as an expat to Vietnam by an organization you have been employed, there is a high possibility that you will be awarded some allowance to cater for your relocation. The Vietnamese government does not tax this. The allowance includes the flight tickets to and from the country, among several others.
- As an expat in Vietnam, you may have children who you may have come along with you, or they are back to your home country. The organization or company you may be working for may have offered to pay for your children’s tuition fees. This is also not subject to tax.
- As an expat, you may also have been offered training by your respective employer, in line with your responsibilities in the company. This is also exempted as you will be sponsored by the organization that has employed you.
- You may also be receiving some mini allowances, such as lunch allowance, telephone subscription, the company’s uniform, among others. These allowances are exempted, provided that they are categorized under the regulatory per diem amount as indicated in the state’s laws.
- Allowance generated from working overtime apart from the agreed regular working hours is also exempted. This is because if put together with your salary or wages, it may be higher than the average income you earn in intervals of an hour.
Vietnam, like almost every other country across the globe, has tax deductions. This is conducted according to the number of dependents you have and if they are considered as dependents, according to local laws. The deductions are at VND 3,600,000 for every recognized dependent. These are the categories of people who qualify to be dependents:
- Children who are below the age of 18. If they are above the age limit, they should be earning an income of VND 20,000 or less.
- Parents who are unable to work and earn income.
- Marital partners who are unable to work and earn income.
Tax Relief for Expats in Vietnam
For expats, nothing is as burdening as having to pay for taxes in both your home and a foreign country. Expats living in Vietnam have a reason to smile because it has already come into a double tax agreement with seventy other countries, such as Canada, China, Japan, just to name a few.
The agreement allows expats to go ahead and credit the taxes they have paid back at home. For this to be fully effective, you have to fill out the necessary documents correctly. These documents include your income tax return, your tax exemption form, your tax vouchers, and tax receipts. You will then submit them to the relevant official government receiver, confirm that you are an expat in Vietnam, and you have paid your taxes in your home country. Before that, you have to check with your embassy and establish if Vietnam has signed an agreement with your country.
Knowing when to Pay for your Taxes
Knowing when taxes are due will automatically save you the trouble of missing out on paying your taxes. For you to do so, you are highly recommended to check with the relevant authorities to know when your taxes are due. If you are an expat working with any organization in Vietnam, just like many others, it is now easier for you because your organization most probably is making direct deductions of taxes from your salary, and it will reflect on your payslip. Vietnamese banks such as Vietcombank provide in-house smartphone app to directly bill the tax department and pay your personal taxes. Everything can be done easily with a simple Smartphone.
If you have no other source of income, then you are good to go. If at all, you have any, you should notify the company to issue you with a Foreign-Invested Enterprise certificate. This certificate acts as proof that the company has notified the government that they have completed filing your taxes and can go ahead and deduct tax from your other sources of income.
Well, were you worried about how personal income tax is imposed on expats living in Vietnam? Worry no more. You are now well-informed about how this works. With this, you can comfortably enjoy your stay in Vietnam with friends and family, and contribute to Vietnam’s nascent economy.
Pay your taxes in Vietnam using a Smartphone
Being registered as a Vietnam resident for Expats living in Vietnam can be a good advantage if you want to pay your taxes in the country you are living in. Because the country growth, opportunities and job opportunities, it can be interesting for an Expat to live in and being fully registered to be eligible to a permanent resident card.
More and more remote services are opening to help Expats dealing with their taxes, visas and other paperwork. Helping Expats to overcome their challenges such as paying their personal taxes is a service Movetoasia.com handles by providing assistance and help to get a PIT (personal tax ID), declare and pay taxes on the behalf of foreigners living in Vietnam. Get in touch with Guillaume Rondan to use his smartphone remote service for foreigners living in Vietnam.