Do you sometimes look at your monthly payslip and get totally puzzled as to how your employer arrived to that amount of tax deduction?
Well, this blog is for you!
Another major headache of being an adult is paying taxes, especially when you have no idea how to compute them!
I want to thank my good friend, Rodney Balagtas, for helping me understand how to calculate my taxes when I started! Salamat kaayo!
There are 2 kinds of Personal Income Tax calculations in Vietnam for expats.
First, better know which category you fall under:
A. Resident Tax Payer
You’ve been present in Vietnam for at least 183 days in a calendar year or for 12 consecutive months from the first day of your arrival in Vietnam.
Otherwise, you will be considered a..
B. Non-Resident Tax Payer
Of course, both have to be legally employed!
Important: All expats working in Vietnam are subjected to Social Insurance Contribution (Health Insurance)
(1) 1.5% of your basic salary, NOT gross salary – check your work contract;
(2) 1.5% of 4,750,000₫ up to 29,800,000₫ of your Gross Income (for contracts dated from April 1st, 2021)
Now, here’s how to calculate your income tax. Let’s start with the easy one:
Flat Rate 20% (Non-Resident Taxpayer)
Net Income = Gross Income – 20% of Gross Income – Health Insurance
Let’s say your gross income is 40,000,000₫:
Health Insurance = 447,000₫ (NOTE: 1.5% of 29,800,000₫)
Net Income = 40,000,000₫ – (40,000,000₫ x 20%) – 447,000₫
Net Income = 31,553,000₫
Progressive Rate (Resident Taxpayer)
Complicated AF, but there are some perks though.
Net Income = Gross Income – Taxable Income – Health Insurance
First, calculate your taxable income:
Taxable Income = Gross Income – (Personal Deduction + Dependent Deduction + Health Insurance)
Personal Deduction = 11,000,000₫
Dependent Deduction = 4,400,000₫ per dependent
Let’s say you are single, without any dependent and you earn 40,000,000₫ as well:
Health Insurance = 447,000₫ (NOTE: 1.5% of 29,800,000₫)
Taxable income = 40,000,000₫ – (11,000,000₫ + 447,000₫)
Taxable Income = 28,553,000₫
If you look at the whole table at once, it may look too overwhelming but start looking from left to right.
*Taxable Income Bracket (TIB) shows you the tax rate you will pay on each portion of your income.
*Green is how the taxation office calculates it, and pink is the actual tax computation of the example.
Net Income = Gross Income – Taxable Income – Health Insurance
Net Income = 40,000,000₫ – 4,060,600₫ – 447,000₫
Net Income = 35,492,400₫
DOWNLOAD FREE TAX CALCULATOR EXCEL SHEET AND VIETNAM TAX REGULATION DOCUMENT BELOW
See the difference between the taxes of a Non-Resident and a Resident taxpayer?
Gross Income = 40,000,000₫
Non-Resident Net Income = 31,553,000₫
Resident Net Income = 35,492,400₫
Do you want to teach English in Vietnam or anywhere in the world?
CLICK HERE TO DOWNLOAD FREE TAX CALCULATOR EXCEL SHEET
Related: Work Permit Requirements for Foreign English Teachers in Vietnam (2021)
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