Tax is a mandatory revenue into the State budget, clearly regulated by law for economic organizations and members of society. Individuals residing and generating income within the territory of Vietnam at a certain level will have to pay personal income tax. However, not all income is subject to personal income tax. The law of Vietnam stipulates cases of personal income tax exemption to promote economic development and support individuals and businesses with more favorable conditions in using their income. So what are the cases of personal income tax exemption?
1. What is personal income tax?
Personal income tax is a form of tax that individuals must pay based on the income they earn in a financial year. This is a direct tax, calculated on the taxpayer’s income after deducting tax-free income and deductions according to the provisions of law.
Personal income tax applies to income from salary, business, investment and other income sources.
2. Cases of personal income tax exemption
Cases of personal income tax exemption include:
a. Income from real estate transfer (including houses and construction works formed in the future according to the provisions of law on real estate business) between:
– Wife with husband;
– Biological father, biological mother and biological children;
– Adoptive father, adoptive mother and adopted child;
– Father-in-law, mother-in-law and daughter-in-law;
– Father-in-law, mother-in-law and son-in-law;
– Grandfather, grandmother with grandchildren;
– Grandfather, grandmother and grandchildren;
– Brothers and sisters together.
b. Income from transfer of housing, residential land use rights and assets attached to residential land of individuals in case the transferor only has one house or residential land use rights in Vietnam.
c. The transferring individual has only one house and residential land use rights in Vietnam that meets the following conditions:
– At the time of transfer, the individual only has the right to own and use one house or one plot of land (including cases where there is a house or construction attached to that plot of land);
– The time an individual has the right to own and use housing or residential land up to the time of transfer is at least 183 days;
– Housing and residential land use rights are fully transferred;
– Determination of ownership and right to use housing and residential land is based on the certificate of ownership and right to use housing and land. Individuals who have houses or residential land transferred are responsible for declaring and are responsible before the law for the accuracy of the declaration. In case the competent authority detects false declaration, tax exemption will not be granted and will be handled according to the provisions of law.
c. Income from the value of land use rights of individuals allocated land by the State is free of charge or has land use fees reduced according to the provisions of law.
d. Income from inheritance or gifts of real estate (including housing and construction works formed in the future according to the provisions of law on real estate business) between:
– Wife with husband;
– Biological father, biological mother and biological children;
– Adoptive father, adoptive mother and adopted child;
– Father-in-law, mother-in-law and daughter-in-law;
– Father-in-law, mother-in-law and son-in-law;
– Grandfather, grandmother with grandchildren;
– Grandfather, grandmother and grandchildren;
– Brothers and sisters together.
e. Income of households and individuals directly engaged in agricultural production, forestry, salt making, farming, and fishing of aquatic products that have not been processed into other products or have only undergone normal preliminary processing.
f. Households and individuals directly involved in production activities must satisfy the following conditions:
– Have legal rights to use land and water surface for production and directly participate in agricultural production, forestry, salt making, and aquaculture.
– For fishing, you must have the right to own or use ships, boats, fishing means and directly participate in fishing;
– Actual residence in the locality where agricultural production, forestry, salt making, and aquaculture activities take place according to the provisions of law on residence.
g. Income from conversion of agricultural land of households and individuals assigned by the State for production.
h. Income from interest on deposits at credit institutions, interest from life insurance contracts.
i. Income from remittances.
k. The salary for night work and overtime work is paid higher than the salary for daytime work and overtime work as prescribed by law.
l. Pensions are paid by the Social Insurance Fund; Pensions are paid monthly by the voluntary pension fund.
m. Income from scholarships, including:
– Scholarships received from the state budget;
– Scholarships are received from domestic and foreign organizations (including living expenses) according to that organization’s study promotion support program.
>> PROCEDURES FOR REGISTRATION OF DEPENDENT FOR PERSONAL DEDUCTION https://linconlaw.vn/procedures-for-registration-of-dependent-for-personal-deduction/
>> OBLIGATIONS OF ADJOINING IMMOVABLE PROPERTY OWNER https://linconlaw.vn/obligations-of-adjoining-immovable-property-owner/

n. Income from compensation for life and non-life insurance contracts, compensation for labor accidents, state compensation and other compensation as prescribed by law.
o. Income received from a charity fund permitted to be established or recognized by a competent state agency, operating for charitable and humanitarian purposes, not for profit purposes.
p. Income received from foreign aid for charitable and humanitarian purposes in the form of government and non-government approved by competent state agencies.
q. Income from salaries and wages of Vietnamese seafarers working for foreign shipping companies or Vietnamese shipping companies that transport internationally.
r. Income of individuals who are ship owners, individuals who have the right to use the ship, and individuals working on board the ship from providing goods and services directly serving offshore exploitation and fishing activities.
Legal basis:
- Personal Income Tax Law 2007;
- Law amending the Tax Laws 2014;
- Decree 91/2014/ND-CP amending and supplementing a number of articles in decrees regulating taxes;
- Decree 12/2015/ND-CP detailing the implementation of the law amending and supplementing a number of articles of tax laws and amending and supplementing a number of articles of tax decrees;
- Decree 65/2013/ND – CP details a number of articles of the personal income tax law and the law amending and supplementing a number of articles of the personal income tax law.
𝐋𝐈𝐍𝐂𝐎𝐍 𝐋𝐀𝐖 𝐅𝐈𝐑𝐌 – 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 𝐜𝐨𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧
- In Hanoi: 4F Sudico Tower, Me Tri street, My Dinh 1 ward, Nam Tu Liem district, Hanoi city.
- In HCMC: 272 Do Phap Thuan, An Phu ward, Thu Duc city, Ho Chi Minh city.
- Website: http://linconlaw.vn/
- Email: Lawyer@linconlaw.vn
- Facebook: https://www.facebook.com/Linconlawfirmm
- Linkedln: linkedin.com/in/lincon-law-firm-100b96201
- Hotline: +84.987.733.358