The Vietnamese Government formally released Resolution 954/2020/UBTVQH14 on 2 June 2020 to implement reductions in Personal Income Tax for Vietnamese taxpayers for the 2020 tax year, as part of the effort to stimulate the economy.
Personal Income Tax Reductions for 2020 in Vietnam
Following the Resolution, individual taxpayers in Vietnam receive an increase in their monthly personal deduction (the amount which is excluded from Personal Income Tax) from 9m VND to 11m VND.
Personal deductions for each family dependent also increase from 3.6m VND to 4.4m VND per month.
These new rates are to be applied by employers for payrolls processed after 1 July 2020 - however the reductions apply for the entire 2020 year, meaning that employees will be expecting refunds on taxes already paid in the first half of 2020 when they finalise taxes at the end of 2020.
We also encourage employers who utilise “Net” employment contracts (as opposed to “Gross” employment contracts) to reconsider their structuring or revise their contracts as employees will be expecting an increase in take-home salary from this, which the “Net” contracts may not afford.
For further information contact:
Matthew Lourey, Managing Partner
Tran Huyen, Head of Payroll and HR Consulting