Personal Income Tax (PIT) for foreigners in Vietnam is determined based on whether they are classified as resident individuals or non-resident individuals. Each category follows a different tax calculation method.
1️⃣ PIT for Foreigners Who Are Resident Individuals
1.1 When is a Foreigner Considered a Resident Individual?
According to Clause 2, Article 2 of the Personal Income Tax Law 2007, a foreigner is considered a resident individual if they meet one of the following conditions:
- They have been present in Vietnam for 183 days or more in a calendar year or within 12 consecutive months from their first day of presence in Vietnam.
- They have a permanent residence in Vietnam, including a registered permanent address or a rented house with a lease contract of 183 days or more.
📌 Reference: How to determine resident vs. non-resident status for tax purposes.
1.2 Salary Threshold for Paying Personal Income Tax
According to Resolution 954/2020/UBTVQH14 and Article 9 of Circular 111/2013/TT-BTC, foreign employees who sign labor contracts of 3 months or more are only required to pay PIT if their salary exceeds the following thresholds:
- 11 million VND/month (if they have no dependents).
- 15.4 million VND/month (if they have one dependent).
- For each additional dependent, the taxable threshold increases by 4.4 million VND/month.
📌 Example:
- A foreign worker earning 10 million VND/month does not need to pay tax.
- A foreign worker earning 16 million VND/month with one dependent needs to pay PIT.
1.3 How to Calculate PIT for Resident Foreigners?
Foreigners with labor contracts of 3 months or more are taxed progressively like Vietnamese employees. This means the tax rate increases as income rises, following a graduated tax scale.
📌 Formula:
PIT payable = Tax Rate × Taxable Income
🔹 Step 1: Calculate Taxable Income
Taxable Income = Total Income – Tax-exempt Income – Deductions
🔹 Step 2: Apply the Progressive Tax Rates
| Tax Bracket | Taxable Income (VND/month) | Tax Rate |
|---|---|---|
| 1st bracket | Up to 5 million | 5% |
| 2nd bracket | 5 – 10 million | 10% |
| 3rd bracket | 10 – 18 million | 15% |
| 4th bracket | 18 – 32 million | 20% |
| 5th bracket | 32 – 52 million | 25% |
| 6th bracket | 52 – 80 million | 30% |
| 7th bracket | Over 80 million | 35% |
📌 Example Calculation:
A foreign worker earns 20 million VND/month with no dependents:
- First 5M taxed at 5% → 250,000 VND
- Next 5M taxed at 10% → 500,000 VND
- Next 8M taxed at 15% → 1,200,000 VND
- Remaining 2M taxed at 20% → 400,000 VND
✅ Total PIT Payable: 2.35 million VND
📢 See full details: How to calculate PIT from salary step by step.
2️⃣ PIT for Foreigners Who Are Non-Resident Individuals
2.1 Who is Considered a Non-Resident?
A non-resident is a foreigner who does not meet the criteria of a resident individual.
📌 Key points:
- Non-residents only pay PIT on income earned in Vietnam.
- They do not qualify for deductions (such as dependents or personal exemptions).
2.2 Salary Threshold for Paying PIT for Non-Residents
Unlike resident individuals, non-residents must pay PIT on any taxable income (i.e., income greater than 0 VND).
- Flat tax rate: 20% of taxable income.
- Tax-exempt income includes charitable donations, insurance contributions, and voluntary pension funds.
📌 Example:
A non-resident earning 20 million VND/month in Vietnam must pay 20% PIT.
✅ PIT Payable = 20% × 20M = 4 million VND
2.3 How to Calculate PIT for Non-Residents?
📌 Formula:
PIT payable = 20% × Taxable Income
📢 Key Notes:
- Taxable income includes salary, bonuses, allowances, and benefits.
- PIT is calculated at the time income is paid by the employer.
- If the income cannot be separated between Vietnam and overseas earnings, PIT is calculated based on estimated Vietnam-based earnings.
📌 Example Calculation:
A foreign employee working in Vietnam earns 100 million VND but also receives income from overseas work.
- If Vietnam earnings = 60M, PIT is 20% × 60M = 12M VND.
- If total income cannot be separated, entire 100M is taxed at 20% → PIT payable 20M VND.
🔎 Key Differences Between Resident & Non-Resident PIT
| Criteria | Resident Individual | Non-Resident Individual |
|---|---|---|
| Taxable Income | Global income | Income earned in Vietnam only |
| Tax Rate | 5% – 35% (progressive) | Flat 20% |
| Personal Deductions | Yes (11M/month + dependents) | No |
| Taxable at Payment? | No, based on annual calculation | Yes, at the time of payment |
🎯 Final Thoughts: What Foreigners Need to Know About PIT in Vietnam
✅ Resident foreigners pay progressive tax rates (5% – 35%) but receive personal deductions.
✅ Non-resident foreigners pay a flat 20% tax on all income earned in Vietnam.
✅ Salary above 11M VND/month (resident) and 0 VND (non-resident) is taxable.
✅ Employers are responsible for withholding tax and submitting payments.
📢 Are you a foreign worker in Vietnam? Have questions about tax obligations? Drop a comment below!
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