Vietnamese
Personal income tax (PIT) is a popular type of tax, at the same time, this is an important revenue to the state budget. However, not everyone knows what is personal income tax and who must pay the personal income tax.
1. What is the personal income tax?
Although personal income tax is a very popular type of tax and there are many legal documents guiding the adjustment of this type of tax. However, this document has no explanation of the personal income tax.
Pursuant to the Law on Tax administration 20129, personal income tax can be prescribed as follows:
Personal income tax means an amount compulsorily payable to the state budget by an organization, a household, a business household, or an individual in accordance with the tax laws.
Besides, the personal income tax is applicable to business households and individuals that generate a turnover of over VND 100 million from production and business activities in a calendar year.
2. Subjects of the personal income tax
Pursuant to Article 2, Law on Personal Income Tax 2007, personal income taxpayers include residents who earn taxable incomes inside and outside the Vietnamese territory and non-residents who earn taxable incomes inside the Vietnamese territory.
- Resident means a person who satisfies one of the following conditions:
+ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;
+ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.
- Non-resident means a person who does not satisfy any of the conditions
3. Who must pay the personal income tax?
Not all must pay the personal income tax in accordance with law provisions of the Law on Personal Income Tax, for both residents and non-residents.
Or speaking in other ways, individuals who are entitled to the tax must pay personal income tax, except for incomes from real estate and business (different conditions for these types of incomes).
(1) Incomes from salaries and wages
Reduction for the taxpayer without dependent, which is VND 11 million/month (VND 132 million/year);
Note:
- Above incomes are extracted from compulsory insurance premiums (including premiums of social insurance, health insurance, unemployment insurance, and occupational liability insurance for occupations subject to compulsory insurance); charity, humanitarian or study promotion donations.
-Reduction for each dependent of the taxpayer, which is VND 4.4 million/month for the income from salaries and wages is over VND 15.4 million.
(2) Incomes from business
In accordance with Clause 2, Article 4, Circular No. 40/2021/TT-BTC prescribes that business households and business individuals that generate a turnover of over VND 100 million from production and business activities in a calendar year must pay PIT and VAT
Note: For business households and business individuals that carry out business activities in groups, the turnover level of up to VND 100 million per year for identifying an individual exempt from VAT and PIT shall be determined for the sole (1) representative of the group of individuals or households in the tax year.
(3) Incomes from transfer of real estate
Incomes from the transfer of real estate include Incomes from the transfer of rights to use land and assets attached to land; Incomes from the transfer of right to own or use residential houses; incomes from the transfer of right to lease land or water surface; Other incomes earned from transfer of a real estate in any form.
Accordingly, the payable tax for taxpayers is 2%.
(4) Incomes from won prizes
Lottery winnings; Sales promotion winnings; Betting winnings; Winnings in prized games and contests and other forms of winning.
The taxpayer must pay the tax on income from won prize, inheritance, or gift which is equal to his/her taxable income multiplied by the tax rate of 10%.
Note: Taxable income from inheritance or gift is the inheritance or gift value in excess of VND 10 million upon each time of income receipt by a non-resident in Vietnam.
(5) Incomes from gifts
Incomes from inheritances that are securities, capital holdings in economic organizations or business establishments, real estate, and other assets subject to ownership or use registration.
The taxpayer must pay the tax which equals his/her taxable income multiplied by the tax rate of 10%.
Note: A taxable income from a won prize is the prize value in excess of VND 10 million received by a taxpayer upon each time of winning.
Here is the answer to the question What is the personal income tax? Who are the taxpayers of personal income tax?
