Do foreigners have to pay personal income tax?

The answer is YES. Depending on each specific case, the calculation of personal income tax for foreigners with income from salaries and wages can be calculated progressively in parts or deducted before paying income.

The formula to calculate the PIT for foreigners depends on whether they are resident individuals or non-residents individuals. We have different tax calculations for each case.

1. Foreigners are Resident Individuals

Pursuant to Clause 1, Article 1 of Circular 111/2013/TT-BTC, a resident individual is a person who meets one of the following conditions:

Condition 1: The person has been present in Vietnam for 183 days or longer in a calendar year, or for 12 consecutive months from the day on which that person arrives at Vietnam (the date of arrival and date of departure are considered 01 days);

– The date of arrival and date of departure depends on the certification of the immigration agency on the passport (or laissez-passers) when that person enters and leaves Vietnam;

– If the person enters and leaves Vietnam within one day, it is considered a day of residence.

A person in Vietnam defined in this Point is the presence of that person in Vietnam’s territory.

Condition 2: The person has a regular residence in Vietnam in one of two cases below:

Case 1: The person has a regular residence according to legislation on the residence:

– For Vietnamese citizens: the regular residence is the place where that person regularly, stably, and indefinitely lives and has been registered as a permanent residence as prescribed by legislation on the residence.

– For foreigners: the regular residence is the permanent written in the permanent residence card, or the temporary residence when applying for the temporary residence card issued by competent authorities affiliated to the Ministry of Public Security.

Case 2: The person rents a house in Vietnam according to legislation on housing under a contract that lasts 183 days or longer in the tax year.

If a foreigner is a resident, it will be applied according to the method of progressive each section (calculated tax according to each tax tier, the higher the income, the higher the tax payable) as following:

2.Foreigners are non-residents individuals: the persons that fail to meet the conditions above.

Pursuant to Clause 1 Article 18 of Circular No. 111/2013/TT-BTC, personal income tax is determined according to the following formula:

Personal income tax payable = Taxable income x 20%

Please don’t hesitate to contact us if you require any further information!


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