6.4. Lawful casino winnings.
6.5. Winnings in prized games and contests and other forms of lucky draw organized by economic
organizations, administrative or non-business agencies, mass organizations and other organizations or
individuals.
7. Incomes from copyright
Incomes from copyright are those earned from assignment or licensing of objects of intellectual property
rights under the Intellectual Property Law or from technology transfer under the Technology Transfer Law,
specifically:
7.1. Objects of intellectual property rights specified in Article 3 of the Intellectual Property Law and
relevant guiding documents, including:
7.1.1. Objects of copyright, including literary, cultural or scientific works; objects of related rights,
including video or audio recordings of broadcasts, satellite signals bearing encrypted programs.
7.1.2. Objects of industrial property rights, including inventions, industrial designs, layout designs of semi-
conductor integrated circuits, business secrets, marks, trade names and geographical indications.
7.1.3. Objects of rights to plant varieties, which are plant varieties and propagating materials.
7.2. Objects of technology transfer specified in Article 7 of the Technology Transfer Law, including:
7.2.1. Technical know-how.
7.2.2. Technical knowledge about technologies in the form of technological plans or processes, technical
solutions, formulas, technical parameters, drawings, technical diagrams, computer programs or data.
7.2.3. Solutions to production rationalization and technological renewal.
Incomes from assignment or licensing of objects of intellectual property rights or from technology transfer
as specified above include incomes from re-assignment or re-licensing.
8. Incomes from commercial franchising
Commercial franchising is a commercial activity whereby the franchisor permits and requests the
franchisee to conduct by him/her/itself the goods sale and purchase or service provision under conditions
set out by the franchisor.
Incomes from commercial franchising are those earned by individuals from above commercial franchising
contracts, including commercial sub-franchising under the law on commercial franchising.
9. Incomes from inheritance
Incomes from inheritance are those received by individuals under testaments or the law on inheritance
estate, including the following kinds of asset:
9.1. For inheritances being securities, they include share certificates, bonds, bills, fund certificates and
other kinds of securities specified in the Securities Law.
9.2. For inheritances being capital holdings in economic organizations or business establishments, they
include capital contributions to limited liability companies, joint-stock companies, cooperatives,
partnerships, business cooperation contracts; capital in private enterprises, proprietorships, associations or
funds licensed to be established under law or whole business establishments being private enterprises or
proprietorships.
9.3. For inheritances being real estate, they include land use rights, right to use land with assets attached to
land, right to own houses, condominium apartments, right to lease land or water surface.
9.4. For inheritances being other assets subject to compulsory ownership or use right registration
applicable to state management agencies, they include automobiles, motorbikes (motorcycles), ships, boats
and aircraft.
10. Incomes from gifts
Incomes from gifts are those received by individuals from domestic or foreign organizations and
individuals in the form of the following assets:
10.1. For gifts being securities, they include share certificates, bonds, bills, fund certificates and other
kinds of securities specified in the Securities Law.
10.2. Gifts being capital holdings in economic organizations or business establishments, they include
capital contributions to limited liability companies, joint-stock companies, cooperatives, partnerships,
business cooperation contracts; capital in private enterprises, proprietorships, associations or funds
licensed to be established under law or whole business establishments being private enterprises or
proprietorships.
10.3. For gifts being real estate, they include land use rights, right to use land with assets attached to land,
right to own houses, condominium apartments, right to lease land or water surface.
10.4. For gifts being other assets subject to compulsory ownership or use right registration applicable to
state management agencies, they include automobiles, motorbikes (motorcycles), ships, boats and aircraft.
III. Tax-exempt incomes
Under Article 4 of the Law on Personal Income Tax and Article 4 of Decree No. 100/2008/ND-CP, tax-
exempt incomes and dossiers serving as a basis for determination of tax-exempt incomes are as follows:
1. Incomes from transfer of real estate between spouses; parents and their children; adoptive parents and
their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents
and their grandchildren; or among blood siblings.
A tax exemption dossier for each specific case is as follows:
1.1. For real estate transferred between spouses, one of the following papers are required: a copy of the
household registration book or the marriage certificate or the court ruling on divorce or re-marriage (for the
case of house division due to divorce or consolidation of house ownership due to re-marriage).
1.2. For real estate transferred between parents and their children, either of the following papers is
required: a copy of the household registration book (if they share the same household registration book) or
copy of the birth certificate.
For out-of-wedlock children, a copy of a competent authority’s decision on recognition of parent and child
is required.
1.3. For real estate transferred between adoptive parents and their adopted children, either of the following
papers is required: a copy of the household registration book (if they share the same household registration
book) or a competent authority’s decision on recognition of child adoption.
1.4. For real estate transferred between paternal grandparents and their grandchildren, the following papers
are required: a copy of the birth certificate of the grandchild and a copy of the birth certificate of his/her
father; or a copy of the household registration book showing the relationship between the paternal
grandparent and the grandchild.
1.5. For real estate transferred between maternal grandparents and their grandchildren, the following
papers are required: a copy of the birth certificate of the grandchild and a copy of the birth certificate of
his/her mother; or a copy of the household registration book showing the relationship between the maternal
grandparent and the grandchild.
1.6. For real estate transferred between blood siblings, the following papers are required: a copy of the
household registration book or copies of the birth certificates of the transferor and the transferee showing
their relationship and the fact that they have the same father and mother or the same father and different
mothers or the same mother and different fathers, or other papers evidencing their blood ties.
1.7. For real estate transferred between fathers-in-law or mothers-in-law and daughters-in-law or sons-in-
law, the following papers are required: a copy of the household registration book showing the relationship
between the father-in-law, the mother-in-law and the daughter-in-law or the son-in-law; or copies of the
marriage certificate and the birth certificate of the husband or the wife to serve as a ground for identifying
the relationship between the transferor being the husband’s father or mother and the daughter-in-law or the
wife’s father or mother and the son-in-law.
In case of transfer of real estate eligible for tax exemption as specified above in which the transferor has no
birth certificate or household registration book, there must be the commune-level People’s Committee’s
certification of the relationship between the transferor and the transferee to serve as a basis for
determination of tax-exempt incomes.
2. Incomes from transfer of residential houses or rights to use residential land and assets attached to
residential land of individuals in case the transferor has only one residential house or the sole right to use
residential land in Vietnam.
2.1. An individual having only one residential house or the sole right to use residential land specified at
this Point is an individual transferor who has the ownership of only one house or the right to use only one
land lot in Vietnam, regardless of whether a house has been built on that land.
2.2. In case of transfer of a residential house under a joint ownership or a residential land plot subject to the
same use right, only individuals who do not have the ownership of residential houses or the right to use
residential land in other localities are entitled to tax exemption. Individuals sharing the ownership of the
same residential house or the right to use the same land lot may own other residential houses or have the
right to use other land lots without enjoying tax exemption.
2.3. In case a husband and a wife are named in the same certificate of residential house ownership or the
right to use the same land lot, which is the only house or land lot under their joint ownership, and they also
separately own or have the right to use other houses or land lots, when the residential house or land lot
under their joint ownership is transferred, only husband or wife who has no own residential house or land
lot is entitled to tax exemption. Husband or wife who already has his/her own residential house or land lot
is not entitled to tax exemption.
2.4. In case an individual owns only one residential house or has the right to use only one residential land
lot or individuals share the ownership of the same residential house or the right to use the same residential
land lot and transfer part of that house or land lot, they are not entitled to tax exemption for the transferred
part.
2.5. Bases for determination of tax-exempt income from transfer of the sole residential house or residential
land lot shall be declared by the transferor himself/herself who shall take responsibility for the truthfulness
of his/her declaration. If the declaration is detected untruthful, personal income tax shall be retrospectively
collected and a fine for the tax fraud shall be imposed under the Law on Tax Administration.
3. Incomes from the value of land use rights of individuals who are allocated land by the State without
having to pay land use levy or with reduced land use levy under law:
3.1. For individuals entitled to land use levy exemption or reduction upon land allocation, when
transferring land areas eligible for land use levy exemption or reduction, cost prices of transferred land
areas shall be determined according to the price set by the provincial-level People’s Committee at the time
of land allocation.
3.2. A tax exemption dossier comprises a copy of a competent authority’s land allocation decision clearly
stating the land use levy exemption or reduction level.
4. Incomes from receipt of inheritances or gifts that are real estate between spouses, parents and their
children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-
law or sons-in-law; grandparents and their grandchildren; or among blood siblings.
Tax exemption dossiers for these cases are similar to those for cases of real estate transfer specified in
Clause 1, Section III, Part A of this Circular.
5. Incomes from conversion of use purposes of agricultural land areas allocated by the State to households
and individuals for production.
5.1. For households and individuals directly engaged in agricultural production and converting use
purposes of their agricultural land areas for agricultural production rationalization, incomes from
agricultural land conversion are tax-exempt.
5.2. A tax exemption dossier comprises a written agreement on land conversion between involved parties
certified by a competent authority.
Copies of papers required for cases of real estate transfer specified in Clauses 1, 2, 3, 4 and 5, Section III
above must be notarized or certified by commune-level People’s Committees. In case these copies are not
notarized or certified by commune-level People’s Committees, transferors shall produce original papers to
tax offices for comparison.
For cases of real estate transfer specified in Clauses 1, 2, 3, 4 and 5, Section III above under Point 2.5,
Clause 2, Section II, Part D of this Circular, real estate transferors shall carry out procedures for tax
exemption.
6. Incomes of households and individuals directly engaged in agricultural or forest production, salt making,
aquaculture, fishing and trading of aquatic resources not yet processed into other products or preliminarily
processed aquatic products.
Households and individuals directly engaged in agricultural or forest production, salt making, aquaculture,
fishing and trading of aquatic resources not yet processed into other products or preliminarily processed
aquatic products and have tax-exempt incomes must satisfy the following conditions:
6.1. They have lawful land or water surface use or lease rights for production, and being directly engaged
in agricultural or forest production, salt making or aquaculture.
For the case of sublease of land or water surface from other organizations or individuals, written land or
water surface lease contracts under law are required.
For fishing activities, certificates of lawful ownership or charter parties of ships or boats for fishing
purposes are required and households and individuals must be directly engaged in fishing activities.
6.2. They actually reside in localities where agricultural or forest production, salt making or aquaculture
activities are conducted.
Localities where agricultural or forest production, salt making or aquaculture activities are conducted
specified at this Point are urban districts, rural districts, towns or provincial cities (collectively referred to
as district-level administrative units) or adjacent districts where production activities are conducted.
Particularly for fishing activities, the condition on places of residence is not required.
6.3. Products of agricultural or forest production, salt making, aquaculture, fishing which are not yet
processed into other products or are preliminarily processed are construed as follows:
6.3.1. Unprocessed or preliminarily processed farm produce include those which are sun-dried, heat-dried,
cleaned or freshly preserved with chemicals, peeled, sorted and packaged.
6.3.2. Unprocessed or preliminarily processed husbandry and aquatic products include those which are
sun-dried, heat-dried, cleaned, frozen, salted, sorted and packaged.
7. Incomes from interests on deposits at banks or credit institutions or interests from life insurance policies.
7.1. Tax-exempt deposit interests under this Point are interests received by individuals from their deposits
at banks or credit institutions. All cases of receipt of deposit interests not from credit institutions
established and operating under the Credit Institutions Law are not exempt from tax.
7.2. Interests from life insurance policies are interests received by individuals under life insurance policies
issued by insurance companies.
7.3. Bases for determination of tax-exempt incomes for above interests are as follows:
7.3.1. Savings books (or savings cards) of individuals, for incomes from deposit interests.
7.3.2. Vouchers of payment of interests from life insurance policies, for incomes from these interests.
8. Incomes from foreign exchange remittances
8.1. Tax-exempt incomes from foreign exchange remittances are sums of money received by individuals in
the country from their relatives who are overseas Vietnamese, guest laborers, persons on working missions
or study courses abroad.
8.2. Bases for determination of tax-exempt incomes from foreign exchange remittances include papers
evidencing sums of money received from abroad and vouchers of payment by organizations which pay
these sums of money on behalf of remitters (if any).
9. Salary or wage amounts paid for night shift or overtime work, which are higher than those paid for day
shifts or prescribed working hours under the Labor Code:
9.1. Salary or wage amounts paid for night shift or overtime work which are higher than those paid for day
shift, are exempt from tax based on actually paid salary or wage amounts for night shift or overtime work
minus those paid for ordinary workdays.
Example: An individual has his/her wage of VND 20,000/hour paid for ordinary workdays under the Labor
Code.
- In case he/she performs overtime work on an ordinary workday and gets an overtime pay of VND
30,000/hour, his/her tax-exempt income will be:
VND 30,000/hour - VND 20,000/hour = VND 10,000/hour
- In case he/she performs overtime work on a weekend or holiday and gets an overtime pay of VND
40,000/hour, his/her tax-exempt income will be:
VND 40,000/hour - VND 20,000/hour = VND 20,000/hour
9.2. Employing units shall make a list showing working time in the night shift or overtime work and wage
amounts for the night shift or overtime work already additionally paid to laborers. This list shall be sent to
the tax office together with dossiers of declaration for tax finalization.
10. Incomes from retirement pensions paid by the Social Insurance under the Social Insurance Law.
For laborers who participate in social insurance and retire under retirement regulations, their incomes from
pensions paid by the Social Insurance are tax-exempt.
Individuals residing in Vietnam are eligible for exemption from personal income tax on pensions paid by
foreign countries under the social insurance laws of these countries.
11. Incomes from scholarships, including:
11.1. Scholarships granted from the state budget, including scholarships granted by the Education and
Training Ministry, provincial/municipal Education and Training Services or public schools or other kinds
of scholarship originating from the state budget.
11.2. Scholarships granted by domestic and foreign organizations under their study promotion programs.
11.3. Agencies granting scholarships to individuals shall keep scholarship granting decisions and
scholarship payment vouchers.
Individuals who receive scholarships directly from foreign organizations shall keep documents and
vouchers proving that their received incomes are scholarships granted by these foreign organizations.
12. Incomes from indemnities paid under life insurance policies, non-life insurance policies,
compensations for labor accidents, compensations paid by the State and other compensations as provided
for by law are exempt from personal income tax.
12.1. Incomes from indemnities paid under life insurance policies or non-life insurance policies are sums
of money received by individuals and paid by life or non-life insurance organizations to the insured under
signed insurance policies.
Bases for identifying incomes to be life or non-life insurance indemnities are indemnification documents or
decisions of insurance organizations or courts and indemnity payment vouchers.
12.2. Incomes from compensations for labor accidents are sums of money received by laborers from their
employing agencies or social insurance funds for accidents occurring in their working process.
Bases for determination of incomes from compensations for labor accidents are compensation documents
or decisions of employing agencies or courts and vouchers of payment of compensations for labor
accidents.
12.3. Incomes from compensations paid by the State and other compensations as provided for by law.
12.3.1. Incomes from compensations paid by the State are sums of money received by individuals as
compensations for damage to these individuals’ interests caused by wrongful administrative sanctioning
decisions of competent persons or state agencies; incomes from compensations for persons victimized by
unjust or wrongful decisions of competent authorities conducting criminal procedures against them.
12.3.2 Bases for determination of incomes from compensations paid by the State are competent states
agencies’ decisions compelling agencies or individuals that made wrongful decisions to pay compensations
and compensation payment vouchers.
13. Incomes received from charity funds licensed or recognized by competent state agencies and operating
for charity, humanitarian or non-profit study promotion purposes.
Charity funds specified in this Clause are those established and operating under the Government’s Decree
No. 148/2007/ND-CP of September 25, 2007, on organization and operation of social funds and charity
funds.
Bases for determination of tax-exempt incomes received from charity funds are these charity funds’
decisions on delivery of these incomes and vouchers of payment of sums of money or handover of objects
from charity funds.
14. Incomes received from governmental or non-governmental foreign aid for charity or humanitarian
purposes approved by competent state agencies.
Bases for determination of tax-exempt incomes received from foreign aid are competent state agencies’
documents approving the receipt of aid.
IV. Tax reduction
Under Article 5 of Decree No. 100/2008/ND-CP, taxpayers that face difficulties caused by natural
disasters, fires, accidents or severe diseases and affecting their tax payment ability may be considered for
tax reduction corresponding to the extent of damage they suffer from but not exceeding payable tax
amounts.
1. Determination of tax amounts to be reduced
1.1. Tax reduction shall be considered based on the calendar year. Taxpayers that face difficulties caused
by natural disasters, fires, accidents or severe diseases in a year will be considered for reduction of their tax
amounts payable in that year.
1.2. Payable tax amount of a taxpayer serving as a basis for tax reduction consideration is total personal
income tax amount payable by that taxpayer in a tax year, including:
1.2.1. Personal income tax amounts already paid or withheld for taxable incomes calculated according to
the whole income tariff specified in Article 23 of the Law on Personal Income Tax.
1.2.2. Payable personal income tax amounts for incomes from business activities and incomes from
salaries or wages.
1.3. The basis for determination of the extent of damage eligible for tax reduction is total actual expenses
for remedying damage minus compensations received from insurance organizations (if any), or from
accident-causing organizations or individuals (if any).
1.4. To-be-reduced tax amounts are determined as follows:
1.4.1. In case the payable tax amount in a tax year is larger than the damage, to-be-reduced tax amount will
be equal to the damage.
1.4.2. In case the payable tax amount in a tax year is smaller than the damage, to-be-reduced tax amount
will be the payable tax amount.
2. Dossiers and procedures for tax reduction consideration
2.1. For taxpayers facing difficulties caused by natural disasters or fires
Taxpayers facing difficulties caused by natural disasters or fires eligible for tax reduction consideration
shall send to tax offices directly managing them tax reduction dossiers, each comprising:
- An application for tax reduction, made according to a set form (not printed herein).
- A written record stating the extent of property damage, made by a competent agency or a written
certification of damage made by the commune-level People’s Committee of the locality where the natural
disaster or fire occurs.
- A voucher of compensation payment by an insurance organization (if any) or an agreement on
compensation by the fire-causing person (if any).
- Vouchers of payment of expenses directly relating to the remedying of the natural disaster or fire.
- A declaration for finalization of personal income tax (if the taxpayer is subject to compulsory tax
finalization).
2.2. For taxpayers facing difficulties caused by accidents
Taxpayers encountering accidents and entitled to tax reduction shall send to tax offices directly managing
them tax reduction dossiers, each comprising:
- An application for tax reduction, made according to a set form (not printed herein).
- A document or a written record certifying the accident, with the police office’s certification or the heath
agency’s certification of degree of injury.
- Papers evidencing the indemnification by the insurance organization or the compensation agreement of
the accident-causing person (if any).
- Vouchers of payment of expenses directly relating to the remedying of the accident.
- A declaration for personal income tax finalization (if the taxpayer is subject to compulsory tax
finalization).
2.3. For taxpayers suffering from severe diseases
2.3.1. Taxpayers suffering from severe diseases and eligible for tax reduction consideration under this
guidance are those who contract diseases which can, unless medical treatment prescribed by health
agencies or doctors is provided, dangerously affect or directly threaten their life.
2.3.2. Persons suffering from severe diseases and eligible for tax reduction consideration shall send to tax
offices directly managing them tax reduction dossiers, each comprising:
- An application for tax reduction, made according to a set form.
- A copy of the medical record or the medical examination book.
- Documents evidencing expenses for medical examination and treatment issued by the health agency; or
invoices of purchase of curative medicines enclosed with doctor’s prescriptions.
- A declaration for personal income tax finalization (if the taxpayer is subject to compulsory tax
finalization).
3. Competence to issue tax reduction decisions
Competent to issue tax reduction decisions are heads of tax offices directly managing taxpayers.
V. Conversion of taxable incomes into Vietnam dong
1. Incomes liable to personal income tax must be calculated in Vietnam dong. Incomes received in a
foreign currency must be converted into Vietnam dong at the average exchange transaction rate on the
inter-bank foreign exchange market at the time of income generation.
Any foreign currency without an announced exchange rate with Vietnam dong must be converted into
Vietnam dong through another foreign currency with an exchange rate with Vietnam dong.
2. A taxable income received in non-cash form (a product or service) must be converted into Vietnam dong
at the market price of that product or service or of products or services of the same or similar type at the
time of income generation.
VI. Tax period
1. For resident individuals
1.1. Annual tax period is applicable to incomes from business activities, salaries or wages.
If in a calendar year, an individual is present in Vietnam for 183 days or more, the tax year is the calendar
year.
For an individual who is present in Vietnam for less than 183 days in a calendar year but his/her period of
presence in Vietnam is 183 days or more if counted in twelve consecutive months from the first day of
his/her presence in Vietnam, the first tax year is twelve consecutive months from the first day of his/her
presence in Vietnam. From the second year on, the tax year will be the calendar year.
Example: Mr. X, a Japanese national, arrives in Vietnam on May 15, 2009. He is present in Vietnam for a
total 140 days in 2009 and more than 43 days in 2010 by May 14, 2010. His first tax year will be counted
from May 15, 2009, to the end of May 14, 2010. His second tax year will be counted from January 1, 2010,
to the end of December 31, 2010.
1.2. Tax period upon each time of income generation is applicable to incomes from capital investment;
incomes from capital transfer; incomes from real estate transfer; incomes from won prizes; incomes from
copyright; incomes from commercial franchising; incomes from inheritances; and incomes from gifts.
1.3. Tax period upon each transfer or annual tax period is applicable to securities transfer. Individuals who
apply the annual tax period shall register with tax offices at the beginning of the year.
2. For non-resident individuals
Tax period applicable to non-resident individuals shall be counted upon each time of income generation
and applicable to all their taxable incomes.
For non-resident business individuals who have fixed places of business such as shops and goods stalls, the
applicable tax period is that applicable to resident individuals earning incomes from business activities.
Part B
TAX BASES FOR RESIDENT INDIVIDUALS
I. Tax bases for incomes from business activities and incomes from salaries or wages
Tax bases for incomes from business activities and incomes from salaries or wages are taxed income and
tax rate.
Taxed incomes are taxable incomes minus the following amounts:
- Compulsory social insurance premiums under law, including social insurance, health insurance,
professional liability insurance for some professions subject to compulsory insurance and other
compulsory insurance premiums under law.
- Reductions based on family circumstances.
- Contributions to charity funds, humanitarian funds and study promotion funds.
Taxable incomes of individuals who earn taxable incomes from both business activities and salaries or
wages will be the total of taxable incomes from business activities and taxable incomes from salaries or
wages.
1. Taxable incomes from business activities
Taxable incomes from business activities are determined to be turnover minus reasonable expenses directly
related to the generation of taxable incomes in a tax period.
For individuals who earn incomes from both business activities and capital investment or transfer or real
estate transfer (except real estate being fixed assets used for business purposes), incomes from copyrights,
commercial franchising, inheritances or gifts, these incomes will not be calculated as incomes from
business activities but these individuals shall pay personal income tax for each separate income under this
Circular’s guidance.
Taxable income from business activities for each specific case is determined as follows:
1.1. For business individuals who fail to conduct accounting using invoices and documents on tax payment
by the presumptive method, their incomes liable to personal income tax shall be determined according to
the following formula:
Taxable Turnover Ratio
income in = assessed in x of assessed
a tax period a tax period taxable incomes
Assessed turnover shall be determined on the basis of declarations of business individuals, results of
investigation by tax offices and advices of commune or ward tax consultancy councils.
1.2. For business individuals who can account only goods or service sales turnover and cannot account and
determine expenses, their incomes liable to personal income tax shall be determined according to the
following formula:
Taxable Turnover for Ratio
income in = calculation of taxable x of assessed
a tax period income in a tax period taxable incomes
In which, turnover for calculation of taxable income shall be determined according to invoice- and
document-based accounting books and consistent with turnover used for value-added tax calculation.
The General Department of Taxation shall specify the taxable income-turnover ratio for application to
business individuals who cannot account expenses or fail to conduct cost-accounting.
1.3. For business individuals who fully conduct the invoice- and document-based accounting, their taxable
incomes shall be determined according to the following formula:
Turnover Reasonable
Taxable for calculation expenses Other taxable
income in = of taxable - for generation of + incomes in
a tax period income in a tax incomes in a a tax period
period tax period
In which:
- Turnover and expenses shall be determined according to invoice- and document-based accounting books.
For business individuals who are subject to value-added tax, their turnover serving as a basis for
determination of taxable income must be consistent with turnover used for value-added tax calculation.
- Other taxable incomes are those earned in business activities, such as fines for contract breaches or late
payment; bank interests during the period of payment; interests on sale of goods on deferred or installment
payment; proceeds from sale of fixed assets, discarded materials or faulty products.
1.3.1. Turnover for calculation of taxable incomes
Turnover for calculation of taxable incomes from business activities means the total of sales, processing
remuneration, commissions, goods or service provision charges generated in a tax period, including also
price subsidies and surcharges enjoyed by business individuals, regardless of whether such turnover has
been collected or not.
a/ The time of determination of turnover for calculation of taxable incomes is determined as follows:
- For goods, it is the time of transfer of goods ownership or the time of making goods sale invoices.
- For services, it is the time of completion of services or the time of making service provision invoices.
In case invoices are made before the time of transfer of goods ownership (or completion of services), the
time of determination of turnover is the time of making invoices or vice versa.
b/ In some cases, turnover for calculation of taxable incomes is determined as follows:
- For goods sold on installment payment, it is determined based on selling prices of goods sold on lump-
sum payment exclusive of deferred payment interest;
- For goods or services sold on deferred payment, it is selling prices of goods or services sold on lump-sum
payment exclusive of deferred payment interest.
In case the installment or deferred payment under a purchase and sale contract is made through many tax
periods, turnover is the sum of money receivable from the purchaser in a tax period exclusive of
installment or deferred payment interest within the time limit stated in the contract.
The determination of expenses upon determination of taxable incomes for goods sold on installment or
deferred payment must comply with the principle that expenses must correspond with turnover.
- For goods or services made by business individuals for exchange, donation, presentation as gifts,
equipping or giving as bonuses to laborers, turnover is determined based on selling prices of the same or
equivalent goods or services on the market at the time of exchange, donation, presentation as gifts,
equipping or giving as bonuses to laborers.
- For goods or services made by business individuals for use in their production or business activities,
turnover is expenses for making such goods or services.
- For goods processing activities, turnover is total sum of money earned from processing activities,
covering remuneration, costs of fuel, power and auxiliary materials and other expenses for the goods
processing.
- For commissioned sale agents that sell consigned goods at prices fixed by their principals being business
individuals, turnover is commissions enjoyable under agency or goods consignment contracts.
- For lease of assets, turnover is rent periodically paid by the lessee under the lease contract.
In case the lessee pays rent in advance for many years, turnover for calculation of taxable incomes may be
allocated to the number of years of advance rent payment or determined based on lump-sum rent.
In case the lessee pays rent in advance for many years and bears all costs arising in the course of asset use,
turnover for calculation of taxable incomes case be allocated to the number of years of advance rent
payment but the lesser shall promptly calculate the tax amount payable for each year and pay tax for the
whole duration for which the rent is collected in advance.
- For construction and installation activities, turnover is the value of the work or work item or work
volume to be tested for handover. In case the construction and installation contractor is not the material,
machinery and equipment supply contractor, turnover for tax calculation is the sum of money earned from
construction and installation activities exclusive of the value of materials, machinery and equipment.
- For transport activities, turnover is total sum of money earned from the transportation of passengers,
luggage or cargoes.
1.3.2. Deductible reasonable expenses for calculation of taxable incomes
Deductible reasonable expenses are those actually paid and directly related to the generation of turnover
and taxable incomes in a tax period and accompanied with invoices and vouchers under law.
Reasonable expenses are determined as follows:
a/ Salaries, wages, allowances, subsidies, remunerations and other payments to laborers under labor
contracts or collective labor agreements under the Labor Code.
Salaries or wages exclude those of individuals who are heads of business households or members of
business groups named in their business registrations.
Working outfit or attire allowance to be paid to laborers must not exceed VND 1,000,000/year.
b/ Expenses for raw materials, materials, fuels, energy and goods actually used for the production and
trading of goods or provision of services related to the generation of turnover and taxable incomes in a
period, which shall be calculated according to their reasonable consumption rates and actual ex-
warehousing prices determined by business households or individuals themselves, for which they shall take
responsibility before law.
The value of lost supplies, assets, capital or goods is not allowed to be accounted as a reasonable expense,
except losses caused by natural disasters, fires, epidemics, diseases and other force majeure circumstances
ineligible for compensation.
For supplies and goods used for both personal consumption and business activities, only the value of parts
used for business activities may be accounted as expenses.
c/ Expenses for depreciation, regular repair and maintenance of fixed assets used for the production and
trading of goods or provision of services:
- Fixed assets of which depreciation may be accounted as a reasonable expense must satisfy the following
conditions:
+ They are used for production or business.
+ They are accompanied with sufficient invoices, vouchers and other lawful papers evidencing that they
are owned by business individuals.
+ They are managed, monitored and accounted in accounting books of business individuals under current
management and cost-accounting regulations.
- The fixed asset depreciation level is accounted as a reasonable expense under regulations on
management, use and depreciation of fixed assets.
- Fully depreciated fixed assets which are further used for production or business may not be further
depreciated.
For fixed assets used for both business purpose and another purpose, deductible depreciation expenses
shall be based on the extent of their utility for business activities and their common use level.
d/ Paid interests on loans for goods production and trading or service provision activities directly related to
the generation of turnover and taxable incomes.
Loan interest rates are actual interest rates specified in contracts for borrowing loans from banks or credit
institutions. If loans are borrowed from entities other than banks and credit institutions, loan interests shall
be paid based on loan contracts but must not be 1.5 times higher than the prime interest rate announced by
the State Bank of Vietnam at the time of loan provision.
Paid loan interests are exclusive of interests paid on loans contributed as capital to setting up
establishments of business individuals.
e/ Management expenses
- Payment of electricity, water and telephone charges; purchase of stationery; hiring of auditors; legal
consultancy and designing service charges; asset insurance premiums; charges for technical services and
other services provided from outside.
- Expenses for acquisition of assets other than fixed assets, covering purchase and use of technical
documents, invention patents, technology transfer licenses and trademarks, which are gradually allocated
to business expenses.
- Rents for fixed assets operating under rent contracts. In case fixed asset rent is paid in lump sum in
advance for many years, such rent shall be gradually allocated to production or business expenses
according to the number of years of fixed asset use.
- Charges for services purchased or hired from outside in direct service of activities of producing and
trading in goods or providing services, which are evidenced by vouchers and invoices under regulations.
- Expenses for sale of goods and services, covering preservation, packaging, transportation, loading and
unloading, warehousing and warranty of products and goods.
f/ Taxes, charges, fees, land rents payable under law for goods production and trading or service provision
activities, including:
- License tax, export tax, import tax, excise tax, royalty tax, agricultural land use tax, house and land tax,
land rent.
- Value-added tax allowed by law to be accounted as expenses.
- Charges and fees actually remitted by business establishments into the state budget under the law on
charges and fees.
g/ Working mission allowances for laborers (excluding travel and accommodation expenses) which must
not exceed twice the prescribed allowance level for state employees and servants as guided by the Ministry
of Finance.
h/ Other expenses directly related to the generation of turnover and taxable incomes accompanied with
vouchers and invoices under regulations.
2. Taxable incomes from salaries or wages
2.1. Taxable incomes from salaries or wages are determined to be total salary, wage or remuneration
amounts and other income amounts of salary or wage nature received by taxpayers in a tax period under
the guidance in Clause 2, Section II, Part A of this Circular.
2.2. Time of determination of taxable incomes
Time of determination of taxable incomes from salaries or wages is the time when employers pay salaries
or wages to their employees.
3. Determination of reductions
3.1. Reduction based on family circumstances
Under Article 19 of the Law on Personal Income Tax and Article 12 of Decree No. 100/2008/ND-CP, the
reduction based on family circumstances shall be effected as follows:
3.1.1. Reduction based on family circumstances is a sum of money deductible from taxable incomes from
business activities, salaries or wages of a taxpayer being a resident individual before tax calculation.
Resident individuals who earn incomes from both business activities and salaries or wages will enjoy the
reduction based on family circumstances made only once from their total taxable incomes from business
activities and salaries or wages.
3.1.2. Levels of reduction based on family circumstances
a/ Reduction for a taxpayer himself/herself is VND 4 million/month or VND 48 million/year. The
reduction level of VND 4 million/month is an average for the whole year, regardless of whether there are
some months in the tax year in which he/she earns no income or earns less than VND 4 million/month.
b/ Reduction for each dependant of a taxpayer, which is VND 1.6 million/month given from the month in
which the taxpayer’s obligation to nurture the dependant arises.
3.1.3. Principles for calculation of family circumstance-based reduction for dependants
- Only taxpayers who have made tax registrations and been granted tax identification numbers may get
family circumstance-based reduction for their dependants. Particularly for the tax year of 2009, taxpayers
without tax declarations may temporarily be entitled to family circumstance-based reduction if they have
registered for family circumstance-based reduction and complete dossiers evidencing their dependants
under the guidance at Point 3.1.7, Clause 3, Section I, Part B of this Circular.
- The family circumstance-based reduction for dependants shall be effected on the principle that each
dependant may be counted only once for tax reduction for a taxpayer in a tax year. Reduction for
dependants shall be given from the month in which taxpayers’ obligation to nurture these dependants
arises.
In case several taxpayers are jointly obliged to nurture a dependant, they shall reach agreement on
registration of this dependant for family circumstance-based reduction for one among them.
- Taxpayers shall declare the number of their dependants for whom reduction is to be given and be held
responsible before law for the truthfulness of their declarations.
3.1.4. Dependants of a taxpayer include:
a/ His/her blood, adopted and out-of-wedlock children, specifically:
- Children under 18 years old (fully calculated in month).
Example: A child of Mr. Nguyen Van A was born in July 1992. In this case, this child is counted as a
dependant until the end of June 2010.
- Disabled children of 18 years or older and incapable of working.
- Children who are studying at universities, colleges, professional secondary schools or job-training
schools and have no income or have incomes not exceeding the level specified at Point 3.1.5 below.
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