The definition of taxable employment income is broad and includes all cash remuneration and benefits-in-kind. However, various items are not subject to tax, including:
- Payments for telephone charges and stationery costs.
- Payments for business trips.
- Overtime premium (i.e. the additional payment above the normal wage, not the full amount of the overtime/night shift payment).
- One-off allowance for relocation (i) from Vietnam for Vietnamese working overseas, (ii) to Vietnam for expatriates working in Vietnam, and (iii) to Vietnam for Vietnamese residing overseas on a long-term basis and returning to Vietnam to work.
- Daily commute for employees from home to workplace and vice versa.
- Once per year home leave round trip airfare for expatriate employees and Vietnamese working overseas.
- School fees up to high school in Vietnam/overseas for children of expatriates/Vietnamese working overseas.
- Mid-shift meals, lunch (subject to a cap if paid in cash).
- Certain benefits in kind provided on a collective basis (e.g. membership fee, entertainment, healthcare).
- Airfares for employees working on a rotation basis in a number of industries (e.g. petroleum, mining).
- Employer’s contributions to certain local and overseas non-mandatory insurance scheme without pay-out of accumulated premiums to the employees (such as medical insurance, accident insurance, etc.).
- Certain allowances/benefits paid by an employer for special occasions, such as wedding and funeral (subject to a cap).
- The taxable value of employer-provided accommodation (including associated utilities and service charges paid as part of the house rental) is limited to 15% of total taxable income (excluding rental) if this is less than the actual housing cost.
Conditions and restrictions are applicable to the above exemptions.
Statutory SI, HI, and UI employer contributions do not constitute a taxable benefit to the employee.
Share awards and stock options are subject to tax upon sale. At the time of sale, PIT is payable on:
- Employment income (progressive tax rates for tax residents and 20% flat tax rate for non-residents); and
- Non employment income on sale of shares (0.1% of the sales proceeds).
The filing requirements of tax on equity compensation are complex, you are strongly recommended to seek further advice before taking action.
Taxable non-employment income includes:
- Business income (including rental income in excess of VND100 million/year);
- Investment income (e.g. interest, dividends);
- Gains on sale of shares;
- Gains on sale of real estate;
- Inheritances in excess of VND10 million;
- Winning prizes/gifts in excess of VND10 million (excluding income from winnings at casinos);
- Income from copyright/franchising/royalties/receiving gifts in excess of VND10 million.
Non-employment income is taxed separately at rates different from those applicable to employment income (see the Taxes on personal income section).
Non-taxable income includes:
- Interest earned on deposits with credit institutions/banks and on life insurance policies.
- Compensation paid under life/non-life insurance policies.
- Retirement pensions paid under the SI law (or the foreign equivalent).
- Income from the transfer of properties between various direct family members.
- Inheritances/gifts between various direct family members.
- Monthly retirement pensions paid under voluntary insurance schemes.
- Income of Vietnamese vessel crew members working for foreign shipping companies or Vietnam international transportation companies.
- Income from winnings at casinos.