Ms. Ling's Taxable Income in Vietnam
Uploaded by
Hien Bach Thi Tra QTKD-3KT-18Ms. Ling's Taxable Income in Vietnam
Uploaded by
Hien Bach Thi Tra QTKD-3KT-18Common questions
Powered by AIMs. Ling is considered a non-resident under Vietnam's PIT regulations because she spends less than 183 days in Vietnam over a 12-month period. According to Vietnamese law, an individual is considered a resident if they are present in Vietnam for 183 days or more in a calendar year or consecutive 12 months from the first arrival in Vietnam. Ms. Ling is in Vietnam for a total of 188 days from May 6th to December 31st, 2018, but as she spans two different tax years without exceeding 183 days in one calendar year, she remains a non-resident .
To compute Ms. Ling's PIT payable for 2018, her total income including salary, allowances, and the lump-sum payment is converted into VND using the exchange rate (23,000 VND/$1). Her total income in USD amounts to $8,400 plus a $1,000 lump-sum, totaling $9,400, equivalent to 216,200,000 VND. Since she is a non-resident, a flat PIT rate of 20% applies, resulting in a PIT payable of 43,240,000 VND .
Since Ms. Ling is a non-resident on a short-term contract and is likely not included in the Vietnamese social insurance system, she is not required to contribute to compulsory insurance schemes. These generally apply to individuals with indefinite or long-term contracts who are considered residents .
Under Vietnamese PIT law, employer-provided accommodation is a taxable benefit. The taxable amount is determined by either the actual rental payment or a capped percentage of 15% of the total taxable income, whichever is lower. Therefore, Ms. Ling's house rent must be included in her taxable income calculation as a fringe benefit, subject to these conditions .
Mr. Hai Hoang's combined taxable income includes his salary ($30,000), lunch allowance ($500), high-performance award ($1,000), overtime pay for 30 hours at $30/hour ($900), and income from the Board of management of HPA company ($6,000). Excluding the medical support as a non-taxable income and contributions to charity, his aggregated taxable income totals $38,400 .
An average staff member of C&A Co. has an annual taxable income comprising the monthly salary (VND14 million), annual Tet bonus (VND10 million), and other applicable benefits. Assuming the 12% tax bracket for illustrative purposes, the annual taxable income (168 million VND salary + 10 million VND Tet bonus) equals 178 million VND. Thus, the PIT payable, derived by applying the appropriate tax brackets, would amount to approximately 10.56 million VND .
The Tet holiday occasion payment of VND10 million to each staff at C&A Co. is considered a fringe benefit and should be included in the employee's taxable income for PIT purposes. It is taxable as part of the employee's annual income .
Ms. Ling's taxable income, excluding house rent, includes her salary ($3,000/month), expert allowance ($500/month), lump-sum payment ($1,000), car for business travelling ($200/month), house maid ($150/month), and gym membership fee ($350/month). These add up to a monthly taxable income of $4,200 plus the one-time lump-sum payment, totaling $9,663,000 VND for her contract duration .
Under Vietnamese tax regulations, medical support or expenses paid by an employer on behalf of an employee's family for critical illness treatments are generally not considered taxable income. Therefore, the $2,000 medical support received for Mr. Hai Hoang's father falls outside the taxable income category .
The expense for the company-organized trip to Nha Trang represents a non-cash benefit given to employees. Under Vietnamese tax laws, such expenses are generally not considered taxable income to the employees if they are part of a welfare policy that applies equally to all employees. Therefore, this should not be included in the staff's personal income tax calculations .