Circular No. 22/TC-TCT guiding the implementation of the Ordinance and Decree of the State Council on income tax for high-income individuals.

CIRCULAR

Guidelines for Implementing the Ordinance of the State Council and the Decree of the Council of Ministers on Income Tax Collection for High-Income Individuals
Regarding the Ordinance of the State Council on income tax for high-income individuals (adjusted according to the Resolution of the State Council dated March 26, 1991) and Decree No. 119-HĐBT dated April 17, 1991 of the Council of Ministers detailing the implementation of the aforementioned Ordinance, the Ministry of Finance provides specific guidelines as follows:

 I- SCOPE OF APPLICATION

 

1. Taxpayers:

The taxpayers specified in Article 1 of Decree No. 119 dated April 17, 1991, detailing the implementation of the Ordinance on income tax for high-income individuals include:

All individuals holding Vietnamese citizenship and other individuals not holding Vietnamese citizenship but residing in Vietnam with taxable income (hereinafter referred to collectively as Vietnamese individuals);

Foreign individuals: including foreign experts, engineers, technicians, workers... coming to work in Vietnam, having taxable income generated in Vietnam.

2. Taxable income includes:

a) Regular taxable income consists of salaries, wages, and various allowances and bonuses that have the nature of salaries and wages such as regional allowances, price subsidies, special seniority allowances, seniority allowances exceeding the standard range, preferential allowances, responsibility position allowances, bonuses based on salary, productivity... all these incomes combined, with an average monthly income exceeding VND 500,000 for Vietnamese individuals and VND 2,400,000 for foreign individuals with income generated in Vietnam.

b) Irregular taxable income includes:

Incomes arising from over VND 1.5 million per occurrence in cash or in kind under various forms: income from technology transfer, technical design for construction, industrial design, and other services.

Lottery winnings income from over VND 10 million per occurrence.

Irregular income in cash or in kind sent back by individuals residing abroad, according to Article 2 of Decree No. 119-HĐBT dated April 17, 1991 of the Council of Ministers (temporarily not subject to taxation).

3. Non-taxable income includes:

Allowances for hazardous, difficult, dangerous conditions, regional allowances for mountainous and island areas, overtime allowances, travel expenses according to prescribed regulations, bonuses for technological improvements, inventions, and awards conferred by the state, national and international prizes;

Social welfare payments, retirement benefits, severance pay, relocation allowances, compensation for property insurance of individuals who have contributed to insurance (property insurance, life insurance...);

Profits of private household business owners and individual entrepreneurs subject to corporate income tax according to the Corporate Income Tax Law; income of agricultural households subject to agricultural tax according to the Agricultural Tax Ordinance;

Interest from savings deposits, interest from government bonds, shares, and promissory notes;

Proceeds from the sale of fixed assets owned by individuals;

Income from inheritance in cash or in kind;

Income in cases exempted from income tax as recorded in international treaties signed or joined by Vietnam;

Income of Vietnamese citizens dispatched for work, study, expert cooperation, labor cooperation abroad, with separate provisions.

II- BASIS FOR CALCULATING TAX

The basis for calculating income tax is taxable income and tax rates:

1. Regular income:

The regular income basis for calculating tax is the total regular income received in a year divided by twelve months.

For foreign individuals working in Vietnam for less than one year, the regular income basis for calculating tax is the total regular income generated in Vietnam, divided by the number of months with taxable income in the year. The taxable income of Vietnamese individuals working in forms with foreign investment, international organizations, foreign diplomatic agencies, and other foreign organizations in Vietnam is calculated based on salaries, wages, and other remuneration stipulated in their labor contracts and other remuneration received from these entities.

For Vietnamese individuals, the progressive tax rate table specified in Point 1 of Article 10 of the Income Tax Ordinance applies. For the portion of average monthly income exceeding VND 5 million, in addition to the maximum tax rate of 50% listed in the tax table, an additional tax rate of 30% is applied, making the combined tax rate 80% (50% + 30%) for the amount exceeding VND 5 million per month.

For foreign individuals with income generated in Vietnam, the progressive tax rate table specified in Point 2 of Article 10 of the Income Tax Ordinance applies.

Irregular taxable income is the income recorded in Point 2.b of Part I, calculated individually for each occurrence of income:

2. For non-regular income:

Income from technical design for construction and industrial design is calculated based on the value of the design contract;

Income from technology transfer is calculated based on the value of the transferred technology. For technology transfer contracts clearly specifying the value transferred in kind, the taxable income is the difference between the value of the transferred technology and the value transferred in kind.

Income from lottery winnings over VND 10 million per occurrence is taxed on a per-occurrence basis.

Irregular income is subject to the progressive tax rate table specified in Article 12 of the Income Tax Ordinance. Specifically, for technology transfer income over VND 1.5 million per occurrence, a unified rate of 5% is applied on the total taxable income; for lottery winnings over VND 10 million per occurrence, a unified rate of 10% is applied on the total winnings.

3. Determination of taxable income:

(Including both regular and irregular income).

(Including both regular and irregular income).

Income tax shall be calculated in Vietnamese Dong. For income in foreign currency, it shall be converted to Vietnamese Dong at the buying rate published by the State Bank at the time of income generation. In cases where the State Bank of Vietnam has not announced the exchange rate for certain foreign currencies, such rates shall be determined by the Minister of Finance.

For income in kind, it shall be calculated based on the average market price in the locality at the time of income generation, as specified by the Tax Department.

Income tax is determined based on taxable income and the prescribed tax tables (with attached guidelines for calculating tax).

III- ORGANIZATION AND REPORTING OF INCOME TAX PAYMENTS

1. ORGANIZATION OF PAYMENT:

Based on Article 13 of the Council of Ministers' Decree detailing the implementation of the Ordinance on Income Tax for High-Income Individuals, provincial and municipal Tax Departments are authorized to delegate to organizations and individuals who pay income to taxpayers the responsibility to withhold income tax and remit it to the state budget.

Organizations and individuals granted such authority shall be responsible for collecting income tax according to the guidance of the tax authorities and shall be entitled to a fee calculated as a percentage of the withheld income tax paid into the National Treasury, as stipulated below:

For non-recurring income: 1%

For recurring income: 0.5%.

The fee amount shall be used to cover expenses related to tax payment documentation and to compensate organizations and individuals granted the authority to withhold and remit income tax.

2. Reporting and Payment of Income Tax:

2.a) Reporting and Payment of Income Tax on Recurring Income:

Income tax on recurring income is calculated annually and reported monthly. At year-end or upon expiration of the employment contract during the year, the organization authorized to withhold and remit tax and the taxpayer must reconcile and settle the tax with the tax authority. The tax is to be paid once or twice a month coinciding with the payment of income, but no later than the 15th day of the following month.

Organizations and individuals authorized to collect tax must prepare a declaration listing the number of people, actual income, tax payable for each person, deduct the tax before paying income, and remit the withheld income tax to the National Treasury after retaining the fee as stipulated in Point 1, Section III of this Circular.

Annually, no later than January 31, organizations authorized to collect tax must submit a declaration list of taxpayers to the tax authority. If there are changes in the number of taxpayers or taxable income during the year, supplementary declarations must be submitted promptly. By February 28 of the following year or within 30 days after the end of the contract, they must reconcile and settle the tax payable for the year with the tax authority.

2.b) Reporting and Payment of Income Tax on Non-Recurring Income: Income tax on non-recurring income is paid per occurrence and must be paid within 15 days, with a maximum deadline of 30 days from the date of income generation.

Organizations and individuals authorized to collect tax must prepare a declaration listing the number of people, income, and tax payable for each occurrence, deduct the tax before paying income, and retain the fee on the amount deducted before transferring the tax to the National Treasury.

In cases where individuals with income pay taxes directly without going through authorized organizations, the taxpayer must file a declaration with the tax authority within five days from the date of income generation. The tax authority is responsible for reviewing the declaration, collecting the income tax, issuing a tax receipt, and depositing the tax into the National Treasury within 15 days from the date of tax collection.

3. Responsibilities of Taxpayers:

3.a) For Recurring Income:

Individuals subject to income tax must declare their income tax at the beginning of the first month of the year (January of the Gregorian calendar) or the first month of income generation, and send it to the tax authority, place of permanent residence, and the income-paying entity. If there are changes in income during the year (such as salary increases, promotions, etc.), additional income declarations must be filed. Monthly income tax payments are made through authorized organizations, with tax deducted before income is paid. At year-end, a declaration of total annual income received and settlement of annual income tax payable must be prepared.

3.b) For Non-Recurring Income:

When non-recurring income occurs, such as technical design fees or technology transfer fees, the individual must file a declaration of income tax with the authorized organization (if through an authorized organization) or directly with the tax authority immediately upon income generation, and no later than five days thereafter. The individual is responsible for paying the income tax to the authorized organization or tax authority.

4. Responsibilities of Organizations and Individuals Authorized to Collect Tax:

Organizations and individuals authorized to collect tax have the responsibility to:

Maintain accounting books and records related to tax calculation, declaration, deduction of tax and fees, and remittance to the National Treasury.

Accept declarations, verify, and confirm declarations from taxpayers and forward them to the tax authority.

Aggregate declarations, prepare consolidated statements, deduct income tax, and remit it to the National Treasury within 30 days from the date of income generation.

Issue tax receipts for individuals when withholding income tax. For recurring income, tax receipts must also be issued at year-end reconciliation or contract settlement.

Be subject to inspection and guidance by the tax authority, implement tax reporting systems, transfer declarations, settle tax payments, and report the fees received according to the tax authority's regulations.

5. Responsibilities of Tax Authorities:

Provincial and municipal Tax Departments are responsible for coordinating with relevant agencies in their jurisdiction to identify taxpayers and authorize entities that pay income to collect tax.

Guide, inspect the calculation of tax, deduction of tax payment into the State Treasury; announce the rate of remuneration to be received, settle the amount of remuneration based on actual circumstances.

Implement the notification, settlement of annual tax payments or upon expiration of the contract term.

Organize direct tax collection from individual cases not through delegated collection.

Carry out reporting systems as prescribed by the General Department of Taxation.

Tax officers directly managing income tax of units have the responsibility to manage, inspect, and urge the timely submission of income tax at those establishments.

IV- VIOLATION HANDLING

Violations of the Income Tax Ordinance for high-income individuals such as: acts of false declaration, tax evasion, delayed or protracted tax payment, failure to comply with regulations on declaration, record-keeping, and documentation related to tax... shall be handled according to Article 21 of the Income Tax Ordinance.

V. IMPLEMENTATION

This Circular takes effect from April 1, 1991.

Tax authorities at all levels are responsible for disseminating and guiding organizations and individuals subject to income tax, who are authorized to collect income tax, to strictly adhere to the provisions of the Ordinance, Decree, and Circulars guiding income tax.

During implementation, if there are any issues or difficulties, business entities, organizations authorized to collect taxes, and tax agencies should promptly report them to the Ministry of Finance (General Department of Taxation) for research and resolution.

GUIDANCE TABLE

METHOD OF CALCULATING PROGRESSIVE PARTIAL INCOME TAX FOR HIGH-INCOME INDIVIDUALS ACCORDING TO THE INCOME TAX ORDINANCE

Income tax is calculated using the progressive partial method within each tax bracket. The specific method of calculating progressive partial tax is as follows:

Example: The income tax payable by each Vietnamese citizen with a regular monthly income of 1,400,000 VND is 130,000 VND, calculated as follows:

Income tax payable =

= (1,000,000 - 500,000) x 10% + (1,400,000 - 1,000,000) x 20%

To simplify the tax calculation process, it is calculated according to the specific guidance tables below:

1. Regular income for Vietnamese citizens and other individuals residing in Vietnam.

Unit: 1,000 VND

Note: TNCT refers to taxable income.

2. Regular income for foreigners earning income in Vietnam.

Unit: 1,000 VND

During implementation, if there are any issues or difficulties, business entities, organizations authorized to collect taxes, and tax agencies should promptly report them to the Ministry of Finance (General Department of Taxation) for research and resolution.

3. Non-regular income per occurrence or period

Unit: 1,000 VND

For non-regular income from technology transfer services exceeding 1,500,000 VND per occurrence, the income tax is calculated based on the total taxable income multiplied by a unified tax rate of 5%. Income from lottery winnings over 10,000,000 VND per occurrence is taxed at a rate of 10% on the total winnings.

Example: Lottery winnings of 20,000,000 VND per occurrence, income tax payable: 20,000,000 VND x 10% = 2,000,000 VND.

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

Application for registration of groundwater extraction works (for cases of extracting water for purposes with a scale not exceeding 10 m

PAYMENT OF INCOME TAX
ON REGULAR INCOME YEAR 19...

Full Name

Nationality

ID number or passport issued by

(Major Technical Specifications and Other Information)

Place of permanent residence

Place of Work

(Major Technical Specifications and Other Information)

Head of Authorized Unit

(Signature, stamp)

Declaration Maker

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

SUMMARY TABLE

DECLARATION OF PAYMENT OF INCOME TAX FOR AUTHORIZED ORGANIZATIONS (FOR TNTK)

Month Year

Exchange Rate

Name of Authorized Organization

Location

Place Where Account is Opened

Account number

Tax Due (in Money)

Commission Rate Enjoyed

Amount of Commission Enjoyed

Tax Due to Budget

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

SUMMARY TABLE

DECLARATION OF PAYMENT OF INCOME TAX FOR AUTHORISED ORGANISATIONS
(Irregular Income)

Month... Year 19...

Total Taxable Income

Name of Authorized Organization

Location

Bank account opening place Account number

Commission Rate Enjoyed (%)

Amount of Income Tax Due

Amount of Commission Enjoyed

(in words)

PAYMENT OF INCOME TAX NUMBER...

(in words)

 

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

Application for registration of groundwater extraction works (for cases of extracting water for purposes with a scale not exceeding 10 m

Regarding Irregular Income

Workplace

Full Name

Nationality

ID number or passport issued by

(Major Technical Specifications and Other Information)

Place of permanent residence

Income-Paying Organization

Contract Number:

Various Income Amounts