One of the most consistently challenging aspects of contracting in Vietnam is complying with the country’s tax system. As well as paying tax in Vietnam, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
If you’re working in Vietnam under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Vietnam for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Vietnam, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Vietnam through PAYE is left with the prospect doing everything themselves.
Do you know much about Vietnamese Tax Law? Does Vietnam have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Vietnam can range from 5 to 35 percent, and you need to be sure you are placed in the correct tax brackets.
If you are a contractor and want a calculation on your tax and net retention in Vietnam, we can supply it to you free of charge.
Contractors in Vietnam are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Vietnamese umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Vietnamese taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Vietnamese tax office or tax department directly including processing your tax refund if you are eligible.
We work with numerous umbrella companies in Vietnam, many of whom are experts in tax and immigration laws. If you have any questions about tax in Vietnam, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Vietnamese work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Vietnam but without the overhead of directly dealing with the Vietnamese tax authorities. Get in touch with us today for some reliable advice on tax in Vietnam!
Your personal income taxes in Vietnam are generally the responsibility of your employer.
Step 1: Obtain a Tax Identification Number
Provide your employer with the following documents:
- A copy of your valid identification card/citizen identification (for individuals of Vietnamese nationality); or
- A copy of your valid passport (for individuals of a foreign nationality).
Your employer will add your details to a consolidated tax registration form (Form No. 05-DK-TH-TCT(link is external)) which is submitted to the local tax office. Within 3 working days of the tax office receiving your tax registration file, you will be granted a personal tax identification number.
Step 2: Keep a Record of Income Tax Withheld
Employment income taxes are withheld by your employer. You may also opt to declare and settle your own taxes.
Your employer must file a monthly or quarterly tax declaration (if tax withheld in the first month is below VND50 million), and annual tax finalisation return on your taxable employment income. This is to be done no later than the 20th of the following month or the end of the first month of the following quarter, and 90 days after the year ended.
Step 3: Complete a Tax Finalisation Declaration Form
If you have more than one source of income, you are required to complete a tax finalisation declaration form (Form No. 2 / QTT-TNCN) if your tax liability at year end is greater or less than the sum of tax paid during the year.
An individual must file a tax return and make a final tax payment by 30 March in the year following the assessment year.
- The tax rates above apply to tax residents. Non-residents are subject to a flat tax rate of 20% on Vietnam-sourced employment income.
You become a tax resident in Vietnam if:
- You are physically present in Vietnam for 183 days or more during a calendar year or 12 consecutive months from the date of arrival in Vietnam; or
- You are a Vietnamese citizen, you have registered a permanent residential place pursuant to the Law on Residence, you live in this place, and earn your living on a regular and stable basis from this place;
- You are a foreigner, and you have registered a permanent residential place (i.e. this place is recorded on your resident or temporary resident card issued by the Ministry of Public Security), or you have leased a house, hotel room, office etc. with a total lease term of 183 days or more in the tax year, and you are not able to provide a certificate of tax residency of a country other than Vietnam.
Residents: Residents are taxed on their worldwide income.
Non-residents: Non-residents are only taxed on their Vietnam-sourced income.