Vietnam

Employment income

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, such as:

• Payments for telephone charges and stationery costs.
• Payments for business trips.
• Overtime/nightshift 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.

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.

Equity compensation

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, so you are strongly recommended to seek further advice before taking action.

Non-employment income

Taxable non-employment income includes:

• Business income (including rental income in excess of VND 100 million/year).
• Investment income (e.g. interest, dividends).
• Gains on sale of shares.
• Gains on sale of real estate.
• Inheritances in excess of VND 10 million.
• Winning prizes/gifts in excess of VND 10 million (excluding income from winnings at casinos).
• Income from copyright/franchising/royalties/receiving gifts in excess of VND 10 million.  

Non-employment income is taxed separately at rates different from those applicable to employment income (see the Taxes on personal income section).

Exempt income

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.