As Vietnam continues to attract foreign investment and international professionals, understanding the Vietnamese tax system has become increasingly important for foreigners and investors conducting business or earning income in Vietnam. Vietnamese tax regulations govern various tax obligations, including personal income tax, corporate income tax, value-added tax, and foreign contractor tax, depending on the nature of the activities and the residency status of the taxpayer. Therefore, having a clear understanding of Vietnam’s tax rules is essential for ensuring legal compliance, optimizing tax efficiency, and minimizing potential legal and financial risks.
- When will foreigner become a tax resident of Vietnam
According to Clause 2, Article 2 of the Law on Personal Income Tax 2025, as guided by Article 2 of Decree No. 65/2013/NĐ-CP,
2. A resident individual is a person who meets one of the following conditions:
a) Being present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the first date of arrival in Vietnam;
For the purposes of this provision, “being present in Vietnam” means the physical presence of the individual within the territory of Vietnam.
b) Having a regular place of residence in Vietnam under one of the following circumstances:
– Having a registered permanent residence in accordance with the law on residence; or
– Having a rented house for residence in Vietnam under the housing law, with a lease term of 183 days or more in the tax year.
=> For resident individuals, taxable income includes income arising both within and outside the territory of Vietnam, regardless of where the income is paid.
=> Therefore, if they satisfy either of the conditions regarding the number of days residing in Vietnam or having a regular place of residence in Vietnam, they will be considered a resident individual and will be required to pay personal income tax on income earned both in and outside Vietnam.
- What taxes and contributions, and how much, will the employee have to pay from the following gross monthly salaries: $10,000; $5,000.
Also, please provide the total employment cost (including all social contributions and taxes) for the three gross salary scenarios: $5,000, $10,000
For foreign employees working in Vietnam and participating in mandatory social insurance, the contribution rates are as follows:
| Employer | Employee | ||
| Social Insurance | Health Insurance | Social Insurance | Health Insurance |
| 17.5% | 3% | 8% | 1,5% |
| Total: 30% | |||
=> The total mandatory social insurance contribution rate is 30%, in which the foreign employee contributes 9.5% of their salary, and the employer contributes 20.5% of the employee’s monthly salary fund for social insurance purposes.
However, the maximum mandatory social insurance (SI) contribution is capped at 20 times the base salary. Currently, the base salary is VND 2,340,000 per month, so the maximum salary for SI contribution is: 20 × 2,340,000 VND/month = 46,800,000 VND.
Regarding personal income tax, it will be calculated as follows:
| Taxpayer | RESIDENT |
| Signing labor contracts with the duration of 03 months or more | |
| Formulae | Payable Tax Amount = Assessable income (x) Tax rate |
| Assessable income | Assessable income = Taxable income (–) Deductions |
| Taxable income | Taxable income = Total of wages/salary, remunerations and other incomes considered as wages/salary (–) Tax-free income |
| Tax rate | Under the Progressive tax table (as mentioned below) |
| Deduction | – Personal deductions: for the taxpayer: 15.500.000 VND/month; for each dependent person: 6.200.000 VND/month; – Compulsory insurance; – Donations to charity, humanitarian, study encouragement; – Other cases as specified in the laws from time to time; |
| Tax-free income | Including income for mid-shift meals, lunch; expense for contact (using phone); expense for business trip;… |
PROGRESSIVE TAX TABLE
| Level | Assessable income (“AI”)/month | Tax rate | Formulae for Tax payable | |
| Formulae 1 | Formulae 2 | |||
| 1 | To 10M (million VND) | 5% | 0M + 5% AI | 5% of AI |
| 2 | From over 10M to 30M | 10% | 0,5M (+) 10% of AI over 10M | 10% of AI (-) 0,5M |
| 3 | From over 30M to 60M | 20% | 2.5M (+) 20% of AI over 30M | 20% of AI (-) 3,5M |
| 4 | From over 60M to 100M | 30% | 8,5M (+) 30% of AI over 60M | 30% of AI (-) 9,5M |
| 7 | Over 100M VND | 35% | 20,5M (+) 35% of AI over 100M | 35% of AI (-) 14,5M |
Note: Depending on the individual’s personal deductions and the allowances provided by the Company/Representative Office to the employee, the exact tax rate and taxable income will be determined accordingly.
We will provide detailed advice on this matter once we receive sufficient information to prepare the payroll for our client.
- If a foreigner receives their salary in another country, will they also pay Vietnamese PIT on this income?
Since foreigners are classified as a tax resident in Vietnam, they are required to pay personal income tax on all income earned both within and outside the territory of Vietnam (including income generated from abroad, Vietnam, and any other countries where they have taxable income).
However, when declaring and paying tax in Vietnam, they may submit supporting documents evidencing the tax already paid in Abroad. The Vietnamese tax authorities will review these documents and allow a tax credit for the amount of tax paid abroad. They will then only be required to pay the difference (if any) between the Vietnamese tax liability and the tax already paid in Abroad, in accordance with Vietnam’s tax regulations.
In conclusion, Vietnam’s tax regulations for foreigners and investors establish an important legal framework for managing income-generating activities and investment operations within the country. Compliance with applicable tax obligations not only helps individuals and enterprises avoid administrative penalties and legal disputes but also contributes to maintaining stable and transparent business operations in Vietnam. Accordingly, foreigners and investors should carefully review relevant tax regulations and seek appropriate professional advice to ensure full compliance with Vietnamese tax laws.
📞 CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Chairman of the Members’ Council, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Manager of TLA Law LLC, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
Dinh Phuong Thao