Laws of Vietnam

Pursuant to the Ordinance Amending a Number of Articles of the Ordinance on Income Tax on High-Income Earners, adopted on June 30, 1999 by the National Assembly’s Standing Committee;

Pursuant to the Government’s Decree No. 170/1999/ND-CP of December 6, 1999 amending a number of Articles of Decree No. 05/CP of January 20, 1995, which details the implementation of the Ordinance on Income Tax on High-Income Earners;

The Ministry of Finance hereby guides the supplements and amendments to a number of points of the Finance Ministry’s Circular No. 39 TC/TCT of June 26, 1997 guiding the implementation of the Government’s Decree No. 05/CP of January 20, 1995 and Decree No. 30/CP of April 5, 1997 detailing the implementation of the Ordinance on Income Tax on High-Income Earners as follows:

1. Point 2 of Section I shall be added with the following content at its ending paragraph:

Where it is stipulated in the contracts that if individuals receive incomes without income tax (NET income), the non-tax incomes shall be converted into incomes with tax, which shall serve as a basis for taxable income determination. If individuals receive non-tax incomes, of which incomes from salaries represent 70% or more, the incomes from salaries shall be converted into incomes with tax, then plus (+) the remaining incomes for determination of taxable income.

2. Point 4.1 of Section I shall be amended as follows:

"Job severance allowance provided by the social insurance fund" shall be replaced with the following contents: "Job severance allowance, job-losing allowance for subjects shall comply with the Labor Code".

3. Point 4.2 of Section I shall be amended as follows:

"Incomes earned by the heads of individual business family households, already subject to enterprise income tax (their incomes are not included in expenses when determining taxable incomes".

4. Point 1.2 of Section II shall be amended as follows:

Tax rates for regular incomes shall comply with Clause 3, Article 1 of the Ordinance amending a number of Articles of the Ordinance on Income Tax on High-Income Earners adopted on February 6, 1997 by the National Assembly’s Standing Committee, and Clause 2, Article 1 of the Ordinance amending a number of Articles of the Ordinance on Income Tax on High-Income Earners adopted on June 30, 1999 by the National Assembly Standing Committee.

Tax on regular income shall be calculated by the partially progressive method in the tax levels; the method for partially progressive tax calculation is concretized in the following example: a Vietnamese person has an average monthly income of VND 4,500,000; the payable income tax amount is VND 450,000, which is calculated as follows:

- Level 1: Income of up to VND 2,000,000: not taxed

- Level 2: Income of over VND 2,000,000 up to VND 3,000,000: tax rate of 10%

+ The payable tax amount is:

(VND 3,000,000 - VND 2,000,000) x 10% = VND 100,000

- Level 3: Income of over VND 3,000,000 up to VND 4,000,000: tax rate of 20%

+ The payable tax amount is:

(VND 4,000,000 - VND 3,000,000) x 20% = VND 200,000

- Level 4: Income of over VND 4,000,000: tax rate of 30%

+ The payable tax amount is:

(VND 4,500,000 - VND 4,000,000) x 30% = VND 150,000

Total income tax amount to be paid shall be VND 450,000 = (VND 100,000 + VND 200,000 + VND 150,000)

To simplify the calculation of payable income tax amount under the partially progressive tax index, it may be calculated according to the following guiding index:

a/ Calculating regular-income tax on Vietnamese citizens and other individuals permanently residing in Vietnam

Unit for calculation: Vietnam dong (VND)

Level Average monthly Tax rate Payable tax
income (%) amount

1 Up to 2,000,000 0 0

2 Over 2,000,000 10 TI x 10% -
up to 3,000,000 200,000

3 Over 3,000,000 20 TI x 20% -
up to 4,000,000 500,000

4 Over 4,000,000 30 TI x 30% -
up to 6,000,000 900,000

5 Over 6,000,000 40 TI x 40% -
up to 8,000,000 1,500,000

6 Over 8,000,000 50 TI x 50% -
up to 10,000,000 2,300,000

7 Over 10,000,000 60 TI x 60% -
3,300,000

Of which: TI: Taxable income

(x): Multiply by tax rate

(-): Subtract

Vietnamese citizens at home and other individuals permanently residing in Vietnam, if after paying income tax according to this tax index, the remaining income exceeds VND 8,000,000 a month, they shall have to pay an additional income tax of 30% on the amount in excess of VND 8,000,000.

For example: Individual A has an average monthly income of VND 20,000,000, the income tax shall be determined as follows:

- Income tax amount to be paid according to the tax index = VND 20,000,000 x 60% - VND 3,300,000 = VND 8,700,000

- The remaining income after the tax payment according to the partially progressive tax index: VND 11,300,000 = (VND 20,000,000 - VND 8,700,000)

- Additional income tax: VND 990,000 = (VND 11,300,000 - VND 8,000,000) x 30%

Total monthly income tax to be paid shall be VND 9,690,000 = VND 8,700,000 + VND 990,000

b/ To calculate regular income tax on foreigners residing in Vietnam and Vietnamese citizens working abroad

Unit for calculation: Vietnam dong (VND)

Level Monthly average Tax rate Payable tax
income (%) amount

1 Up to 8,000,000 0 0

2 Over 8,000,000 10 TI x 10% -
up to 20,000,000 800,000

3 Over 20,000,000 20 TI x 20% -
up to 50,000,000 2,800,000

4 Over 50,000,000 30 TI x 30% -
up to 80,000,000 7,800,000

5 Over 80,000,000 40 TI x 40% -
up to 120,000,000 15,800,000

6 Over 120,000,000 50 TI x 50% -
27,800,000

Of which: TI: Taxable income

(x): Multiply by tax rate

(-): Subtract

For example: If a foreigner having a monthly regular income of VND 70 million, the income tax shall be calculated as follows:

Monthly regular income of VND 70 million is in level 4, the income tax amount to be paid shall be:

(VND 70 million x 30%) – VND 7.8 million = VND 13.2 million

5. Point 3.1 of Section III shall be supplemented as follows:

For regular incomes besides salaries and wages such as incomes earned through participation in business and services activities, which are not liable to enterprise income tax such as consultancy services under long-term contracts, teaching, vocational training, examination coaching, cultural and art performances; because these incomes are not regular, in order to ensure timely collection and payment, the income-paying agencies shall, when paying the income, substract 10% of total income for tax payment. The tax agencies shall have to provide receipts for the income-paying organizations and/or individuals so that the latter can provide tax receipts for each individual when the tax amount has already been deducted. At the end of the year, individuals shall have to declare their total incomes and make tax final settlement with the tax bodies according to the partially progressive tax index.

For irregular incomes: The income paying organizations and/or individuals shall have to deduct tax before paying incomes.

6. Point 1 of Section VI shall be amended as follows:

All violations of the provisions of the Ordinance on Income Tax on High-Income Earners shall be settled according to the Government’s Decree No. 22/CP of April 17, 1996 on sanctions against administrative violations in the tax domain and Circular No. 128/1998/TT-BTC of September 22, 1998 of the Ministry of Finance.

7. Implementation organization:

This Circular takes effect as from July 1st, 1999.

The phrase "Clause 2, Article 10 of the Ordinance on Income Tax" in Circular 39 TC/TCT of June 26, 1997 shall be replaced with the phrase "Clause 2, Article 1 of the Ordinance amending a number of Articles of the Ordinance on Income Tax on High-Income Earners adopted on June 30, 1999 by the National Assembly Standing Committee".

Other provisions not guided in this Circular shall continue to comply with Circular 39 TC/TCT of June 26, 1997 of the Ministry of Finance.

In the course of the implementation, if any problems arise, organizations and individuals are requested to report them to the Ministry of Finance for study, consideration and settlement.-

For the Minister of Finance
Vice Minister
PHAM VAN TRONG