Personal income tax calculation
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|Social Insurance (8%)||0|
|Health Insurance (1.5%)||0|
|Unemployment Insurance (1%)||0|
|Salary Before Tax||0|
|Personal Deduction||- 11.000.000|
|Personal Income Tax||0|
|Total Salary Received After Tax||0|
Personal Income Tax Detail
|5% - Upto 5 Mil. VND||0|
|10% - From 5 Mil. to 10 Mil. VND||0|
|15% - From 10 Mil. to 18 Mil. VND||0|
|20% - From 18 Mil. to 32 Mil. VND||0|
|25% - From 32 Mil. to 52 Mil. VND||0|
|30% - From 52 Mil. to 80 Mil. VND||0|
|35% - Above 80 Mil. VND||0|
Introducing VTJ's New Personal Income Tax Calculator for 2023
Understanding Personal Income Tax
Personal Income Tax (PIT), often referred to as individual income tax, is the amount of money individuals are required to deduct from their salaries and other sources of income, and then contribute to the state budget after applying eligible deductions.
PIT isn't imposed on all income earners; instead, it's levied on individuals with an income exceeding a certain threshold. This mechanism helps narrow the income gap between different social classes.
Why is PIT Important?
Paying personal income tax serves several crucial purposes, such as funding government services and public infrastructure, supporting social welfare programs, and ensuring fair distribution of resources. It's an essential contribution every citizen makes toward the development and maintenance of the nation.
Personal Income Tax Calculator
Before calculating personal income tax, it's important to determine the category of individuals who are required to pay. This categorization involves two main groups: resident individuals and non-resident individuals.
Resident individual means a person who satisfied one of the two 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 Viet Nam or
Having a place of permanent residence in Viet Nam:
Case 1: Having a place of permanent residence in Vietnam which is a registered place of permanent residence.
Case 2: Rented house for dwelling in Vietnam under term rent contract of 183 days or more in a tax year.
Calculation of Personal Income Tax for Resident Individuals
So, how is personal income tax calculated? Let's refer to the following information to accurately calculate the level of personal income tax.
A. For individuals who have signed labor contracts for 03 months or more:
PERSONAL INCOME TAX PAYABLE = TAXABLE INCOME x TAX RATE
* Explanation of the formula:
Taxable income = Income subject to tax - Deductions
Income subject to tax = Total income - Income items exempt from Personal Income Tax
Total income is determined according to the regulations in Article 2 Section 2 of Circular 111/2013/TT-BTC and Articles 1, 2, 3, 4, 5 of Article 11 of Circular 92/2015/TT-BTC.
Income items exempt from tax are determined to be income from salary, night shift allowance, overtime payment higher than regular payment, and overtime payment for work during hours specified by the law. (Refer to Point i, Article 3 of Circular 111/2013/TT-BTC).
* Deductions include family deductions:
For the taxpayer: Family deduction amount is 11 million VND/month, 132 million VND/year.
For dependents: The family deduction amount is 4.4 million VND/person/month.
Additionally, family deductions also include insurance premiums, and voluntary pension fund contributions as instructed in Article 2, Section 9 of Circular 111/2013/TT-BTC. And contributions to charitable, humanitarian, and educational funds as instructed in Article 3, Section 9 of Circular 111/2013/TT-BTC.
* Tax rates:
Tax rates for income from salary and wages for individuals who have signed labor contracts for 03 months or more are applied progressively in tiers, as follows:
|Tier||Taxable Income / Year (million VND)||Taxable Income / Month (million VND)||Tax Rate (%)|
|1||Up to 60||Up to 5||5|
|2||Over 60 to 120||Over 5 to 10||10|
|3||Over 120 to 216||Over 10 to 18||15|
|4||Over 216 to 384||Over 18 to 32||20|
|5||Over 384 to 624||Over 32 to 52||25|
|6||Over 624 to 960||Over 52 to 80||30|
|7||Over 960||Over 80||35|
Please refer to the additional simplified formula for calculating personal income tax and the standard formula for calculating personal income tax in the table below:
|Tier||Taxable Income / Month||Tax Rate (%)||Calculate Tax Amount|
|Method 1||Method 2|
|1||Up to 5 million VND||5||0 VND + 5% of Taxable Income||5% of Taxable Income|
|2||Above 5 million VND to 10 million VND||10||0.24 million VND + 10% of Taxable Income above 5 million VND||10% of Taxable Income - 0.25 million VND|
|3||Above 10 million VND to 18 million VND||15||0.75 million VND + 15% of Taxable Income above 10 million VND||0.75 million VND + 15% of Taxable Income above 10 million VND|
|4||Above 18 million VND to 32 million VND||20||1.95 million VND + 20% of Taxable Income above 18 million VND||20% of Taxable Income - 1.65 million VND|
|5||Above 32 million VND to 52 million VND||25||4.75 million VND + 25% of Taxable Income above 32 million VND||25% of Taxable Income - 3.25 million VND|
|6||Above 52 million VND to 80 million VND||30||9.75 million VND + 30% of Taxable Income above 52 million VND||30% of Taxable Income - 5.85 million VND|
|7||Above 80 million VND||35||18.15 million VND + 35% of Taxable Income above 80 million VND||35% of Taxable Income - 9.85 million VND|
* How much salary is taxable?
Individuals without dependents are required to pay income tax when their total income from salaries and wages exceeds 11 million VND per month (this income is already deducted for mandatory insurance contributions as per regulations and other contributions such as charitable donations).
You can refer to the income tax payment threshold table in the following chart:
|Num||Number of Dependents||Income from Salary and Wages per Month||Total Annual Income from Salary and Wages|
|1||No dependents||> 11 million VND||> 132 million VND|
|2||1 dependent||> 15.4 million VND||> 184.8 million VND|
|3||2 dependents||> 19.8 million VND||> 237.6 million VND|
|4||3 dependents||> 24.2 million VND||> 290.4 million VND|
|5||4 dependents||> 28.4 million VND||> 343.2 million VND|
Note: The income figures in the table are income after deducting the following:
Mandatory insurance contributions, charitable donations, education support, and voluntary retirement fund contributions.
Non-taxable income items such as allowances, lunch allowances, and transportation allowances.
B. For individuals who do not have an employment contract or have an employment contract for less than 3 months:
The formula for personal income tax for individuals who do not have an employment contract or have had an employment contract for less than 3 months is as follows:
PERSONAL INCOME TAX PAYABLE = 10% X TOTAL INCOME BEFORE DEDUCTIONS
Non-resident individuals refer to foreign individuals who do not meet the residency criteria set out in Article 2 of the Law on Personal Income Tax 2007.
A. Formula for Calculating Personal Income Tax for Non-Resident Individuals
PERSONAL INCOME TAX PAYABLE = TAXABLE INCOME X 20% TAX RATE
In this case, the taxable income from salary and wages for non-resident individuals is determined as it is for resident individuals subject to personal income tax from salary and wages.
* Some important points to note:
The time of payment by an organization or individual is considered the time of personal income tax liability for salary and wages.
The time of payment of insurance premiums by insurance companies, and voluntary retirement fund management companies is considered the time to determine the personal income tax liability for the premium amounts of insurance products with accumulation.
B. Formula for Determining Personal Income Tax Liability from Salary and Wages in the Case of Non-Resident Individuals Working Both in Vietnam and Abroad, but Unable to Separate Income Earned in Vietnam
* For foreign individuals not present in Vietnam:
TOTAL INCOME EARNED IN VIETNAM = (NUMBER OF DAYS WORKING FOR WORK IN VIETNAM / NUMBER OF WORKING DAYS IN THE YEAR) * GLOBAL SALARY AND WAGE INCOME (BEFORE TAX) + OTHER TAXABLE INCOME (BEFORE TAX) EARNED IN VIETNAM
Note: The total number of working days in the year is calculated according to the regulations of Vietnam's Labor Law.
* For foreign individuals present in Vietnam:
TOTAL INCOME EARNED IN VIETNAM = (NUMBER OF DAYS PRESENT IN VIETNAM / 365 DAYS) * GLOBAL SALARY AND WAGE INCOME + OTHER TAXABLE INCOME (BEFORE TAX) EARNED IN VIETNAM
Note: Other taxable income (before tax) earned in Vietnam is defined as benefits received by the employee in cash or non-cash, other than salary and wages, provided by the employer or on behalf of the employee.
* What Income Level Requires Tax Payment?
Non-resident individuals are not eligible for dependent deductions, so they only need to pay tax on taxable income (only when taxable income > 0).
Therefore, it's understood that only taxable income from salary and wages is subject to a 20% tax rate. Contributions for charitable purposes, scholarships, humanitarian purposes, insurance, and voluntary retirement funds according to regulations are deductible from this amount.
The simplest way to accurately calculate personal income tax is to use the Personal Income Tax Calculator provided by the tax authorities. You just need to input the necessary information, and the tool will calculate and provide an analysis of each cost component, helping you understand your tax liability better.
What are the allowances and benefits that are not subject to personal income tax?
According to the regulations in Clause B, Article 2 of Circular 111/2013/TT-BTC amended by Clause 1, Article 11 of Circular 92/2015/TT-BTC, the following allowances and benefits are not subject to personal income tax:
Monthly preferential allowances and one-time allowances as regulated by laws on preferential treatment for individuals with meritorious services.
Monthly allowances and one-time allowances for participants in resistance wars, protection of the homeland, international missions, and youth volunteers who have completed their duties.
Defense and security allowances; allowances for armed forces personnel.
Hazardous and dangerous allowances for occupations or jobs with hazardous or dangerous conditions.
Incentive allowances, regional allowances.
Emergency hardship allowances, occupational accident allowances, occupational disease allowances, one-time allowances for childbirth or adoption, maternity leave benefits, nursing benefits, post-maternity recovery benefits, allowances for decreased work capacity, one-time retirement allowances, monthly retirement pensions, resignation allowances, job loss allowances, unemployment allowances, and other allowances as regulated by the Labor Law and Social Insurance Law.
Allowances for socially protected individuals as regulated by law.
Special allowances for high-ranking leaders.
One-time allowances for individuals relocated to economically and socially difficult areas, one-time support for civil servants and officials working on sovereignty over islands and sea as regulated by law. One-time relocation allowances for foreign individuals coming to reside in Vietnam, Vietnamese individuals working abroad, and Vietnamese individuals residing abroad returning to work in Vietnam.
Allowances for healthcare personnel in villages and hamlets.
Industry-specific special allowances.
Is personal income tax required during probationary periods?
According to Clause 2, Article 3 of the Personal Income Tax Law, the portion of the income from salary and wages is subject to personal income tax.
Based on Circular 111/2013/TT-BTC by the Ministry of Finance guiding the implementation of the Personal Income Tax Law, in cases where income is two million (2,000,000) Vietnamese dong or more, a 10% tax is deducted from the total income.
* For example:
An employee on probation who receives 85% of the official salary of 3,500,000 VND will have 350,000 VND deducted. The actual received salary will be 3,150,000 VND.
Tax deduction timing: The company will deduct the personal income tax before paying the employee. The deducted tax will be remitted to the state budget according to regulations.
Are overtime pay and extra work pay subject to personal income tax?
According to the regulations in Clause 1, Article 3, Circular 111/2013/TT-BTC, income from working at night or overtime, when paid at a higher rate than regular working hours, is exempt from personal income tax. However, only the portion of income that exceeds the regular wage rate is exempt.
* For instance:
Mr. Smith has a regular hourly wage of 100,000 VND.
According to company policy, employees working overtime on regular workdays will be paid 150,000 VND per hour. Therefore, the portion exempt from personal income tax is: 150,000 VND - 100,000 VND = 50,000 VND per hour.
According to company policy, employees working overtime on weekends or holidays will be paid 200,000 VND per hour. Therefore, the portion exempt from personal income tax is: 200,000 VND - 100,000 VND = 100,000 VND per hour.
These are VTJ’s insights on personal income tax and the latest personal income tax calculator in 2023. We hope that through this article, you'll understand how to calculate personal income tax and ensure your rights and benefits.