DO FOREIGN WORKERS WORKING IN VIETNAM HAVE TO PAY PERSONAL INCOME TAX?

Legal base

  • Labor Code
  • Circular 32/2013/TT-NHNN
  • Decree 65/2013/ND-CP
  • Law on Personal Income Tax

When working in Vietnam, foreign workers will get the same basic salary as Vietnamese people. According to occupation, job position and worker’s experience, the salary paid will change.

Regulations related to paying salaries to foreigners

According to Clause 2, Article 95 of the Labor Code, Vietnamese employers can pay salaries to foreign workers in Vietnamese Dong or foreign currency. Depending on the agreement between the two parties in the contract, the payment method can be made by bank transfer or cash.

According to Clause 14, Article 4 of Circular 32/2013/TT-NHNN, residents and non-resident are paid salaries, bonuses, and allowances in labor contracts in foreign currency by transfer or cash. According to Clause 2, Article 95 of the Labor Code, wages paid to foreign workers can be recorded in foreign currency in the labor contract.

Therefore, businesses in Vietnam can pay salaries to foreign employees in foreign currency, via bank transfer or in cash. Depending on the agreement between two parties in the labor contract, the company can pay salaries to foreign workers in both Vietnamese currency or foreign currency.

Do foreign workers working in Vietnam have to pay personal income tax? 

According to Article 2 of Decree 65/2013/ND-CP, personal income taxpayers include resident individuals, non-resident individuals with taxable income:

– For resident individuals, taxable income is income arising within and outside the territory of Vietnam, regardless of where the income is paid; 

– For non-resident individuals, taxable income is income arising in Vietnam, regardless of where the income is paid.

Therefore, foreign workers working in Vietnam, whether they reside or not, must pay personal income tax. According to Article 6 of the Law on Personal Income Tax, taxable income obtained by foreign workers in foreign currency shall be converted into Vietnamese dong at the average exchange rate in the interbank foreign exchange market, the income generated will be announced by the National Bank of Vietnam.