How is the personal income tax of foreign workers calculated?

One of the top concerns of Foreign workers in Vietnam is the desire to have a strong accounting system knowledge to be able to prepare and submit personal income tax administration to serve the management needs of the company in Vietnam as well as the requirements of the tax system abroad. Personal income statements must be made on time, accurately, and in compliance with the accounting regime, with minimum errors (if any). In addition, tax compliance is also a top priority to minimize damage when the tax authority conducts a tax inspection of the Enterprise. To achieve the above desire, foreign-invested enterprises often tend to use outsourced personal income tax services, provided by reputable and professional consulting firms specializing in providing tax services. These consulting companies will advise and support foreign-invested enterprises to feel secure in doing business in Vietnam.

So, how is the personal income tax of foreign workers calculated? Let’s find out with S4B Vietnam through the article below.

1. Types of income subject to Personal Income Tax for foreigners

There are 9 types of income subject to personal income tax administration (PIT) for foreigners. First, taxes apply to personal income earned by foreigners from doing business in that country. Second, personal income tax also applies to income from wages and salaries paid by employers. In addition, there is a personal income tax for foreigners from capital investment and from capital transfer. As for the transfer of real estate, there is also a personal income tax for foreigners. In addition, personal income tax also applies to personal income from copyright, inheritance, and gift receipt.

Personal Income Tax documentation is one of the most challenging processes for foreign workers in Vietnam

2. Personal income tax services for foreigners

It depends on the status of individual resident status in Vietnam that the tax calculation varies. There are two main situations, including for non-resident and resident individuals as following:

2.1 In case a foreigner working in Vietnam is a non-resident individual

Foreigners working in Vietnam identified as non-resident individuals include:

  • An employee being a foreigner in Vietnam means his/her presence in the Vietnamese territory for less than 183 days in a calendar year or for 12 consecutive months from the first day of his/her presence in Vietnam.
  • The employee is a foreigner who does not have a regular place of residence in Vietnam, does not have a registered business of permanent residence in accordance with the law on residence, or does not rent a house in Vietnam.

The tax calculation, in this case, is calculated according to the following formula Payable personal income tax equals the Taxable income from salaries and wages, multiplied with a Tax rate of 20%.

personal income tax administration

Personal income tax consultant

2.2 In case a foreigner working in Vietnam is a resident individual

Foreigners working in Vietnam who are identified as resident individuals include, first of all, need to have a registered place of permanent residence in accordance with the law on residence. Secondly, they are required to have a rented house to live in Vietnam in accordance with the law on housing, with a lease term of 90 days or more in the tax year. Then, personal income tax administration on income from salaries and wages of resident individuals is calculated according to the partially progressive tax rate schedule.

3. How to declare and finalize personal income tax consultant for foreigners?

Taxpayers and individuals earning personal income taxable income for foreigners must declare and finalize tax according to local procedures. Residents who have income from wages must declare tax directly at tax offices. Specifically, resident individuals who have income from wages paid by international organizations, embassies, and consulates in Vietnam Vietnam but not yet deducting tax shall declare personal income tax services directly to tax authorities on a quarterly basis. However, residents earning income from foreign organizations must declare quarterly tax directly at tax offices. It is worth noting that if the employee does not work for the full 12 months or earns income from wages or salaries from other companies, in this case, the employee cannot request the taxpayer to finalize tax on their behalf and must declare taxes directly at the tax authorities.

In summary, the personal income tax administration of foreign workers is calculated based on the income they receive from domestic income sources, including salaries, wages and other incomes from working activities. work in that country. Tax rules and methods are applied to ensure fairness and determine the appropriate tax rate. The calculation of personal income tax for foreign workers may differ from that of domestic workers, due to the influence of international tax regulations and agreements.

If you have any questions regarding personal income tax consulting, please contact for detailed answers:


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