Taxes in Vietnam: comprehensive guide for US expats
Vietnam offers US expats an attractive combination of low cost of living, rich culture, and favorable tax opportunities.
This article will guide you through the Vietnamese tax system – essential knowledge for Americans living or working in this fast-growing Southeast Asian nation.
This article is brought to you by Taxes for Expats (TFX) – a top-rated tax firm serving US citizens, residents, and anyone with US tax obligations, both at home and abroad. Planning to move to Vietnam and need help with your US return or tax planning? Learn more about our tax services or contact us. Learn more about our tax services or contact us.
Tax residency in Vietnam
Vietnam determines tax residency through specific criteria that foreigners must understand. You become a tax resident if you meet any of these conditions:
- You reside in Vietnam for 183 days or more within a calendar year or any consecutive 12-month period from your first arrival date.
- You maintain a permanent residence in Vietnam (including registered residence recorded on permanent/temporary residence card).
- You have a rented house in Vietnam with a lease term of 183 days or more in a Vietnam tax year (for foreigners) and unable to prove tax residence in another country.
Tax residents face worldwide taxation under the Vietnamese tax system. They must pay personal income tax on both Vietnamese-sourced and foreign-sourced income.
Non-tax residents are individuals who don't meet any of the criteria described above but may still have Vietnamese tax obligations. Non-tax residents only pay taxes on Vietnam-sourced income.
Personal income tax rates in Vietnam
Vietnam personal income tax rates for tax residents follow a progressive structure ranging from 5% to 35% on employment income:
| Annual taxable income (VND million) | Monthly taxable income (VND million) | Tax rate |
|---|---|---|
| 0 to 60 | 0 to 5 | 5% |
| 60 to 120 | 5 to 10 | 10% |
| 120 to 216 | 10 to 18 | 15% |
| 216 to 384 | 18 to 32 | 20% |
| 384 to 624 | 32 to 52 | 25% |
| 624 to 960 | 52 to 80 | 30% |
| More than 960 | More than 80 | 35% |
Example calculation: An expat earning VND 20,000,000 monthly would pay: VND 250,000 (first 5M at 5%) + VND 500,000 (next 5M at 10%) + VND 300,000 (next 8M at 15%) + VND 40,000 (remaining 2M at 20%) = VND 1,090,000 total monthly personal income tax (PIT).
Non-residents pay a flat 20% rate on Vietnamese employment income. For business income, rates range from 1% to 5% depending on the activity type.
Which income is taxable in Vietnam?
Vietnam recognizes different categories of taxable income for residents and non-residents:
For tax residents:
- employment income (wages, salaries, bonuses)
- business income (0.5% to 5% based on business type)
- interest and dividends (5%, excluding bank interest)
- sale of shares (0.1% of sales proceeds)
- capital assignment (20% on net gain)
- sale of real estate (2% of sales proceeds)
- royalties and franchising income (5%)
- inheritances, gifts, and prizes (10%, excluding casino prizes)
For non-residents:
- employment income (20% flat rate)
- business income (1% to 5% based on type)
- various investment income at specific rates
How to file and pay taxes in Vietnam
Tax returns must be filed with the tax department at your place of residence or through your employer. The Vietnam tax year follows the calendar year (January 1 to December 31).
Key deadlines:
- annual tax finalization: March 31 of the following year
- monthly withholding: by the 20th of each month
- individual self-filing: April 30 for those with tax due, May 2 for overpayments
You can file taxes through online submission on government portals, with tax agents or professional services, or directly in local tax offices.
Penalties: Late payment incurs a 0.05% penalty per day, while underreporting results in a 10% penalty on the unreported amount. More severe penalties apply for tax evasion.
Americans abroad must file their US tax return with the Internal Revenue Service (IRS) in addition to their taxes in Vietnam, if applicable.
Other taxes on individuals in Vietnam
- Stamp duty: Rates of 0.5% to 15% apply on property transfers, depending on the transaction value and property type.
- Real property tax: Municipal authorities impose taxes on real estate ownership and occupation.
- Inheritance/estate tax: Inheritances and gifts are subject to personal income tax at special rates, typically 10% on securities, capital contributions, and real estate.
- Social security contributions: Vietnamese employees contribute 8% for social insurance, 1.5% for health insurance, and 1% for unemployment insurance. Foreign employees under Vietnam labor contracts with terms of one year or more are subject to social insurance contributions at 8% and health insurance at 1.5%. Expatriates are not subject to unemployment insurance contributions.
Capital acquisitions tax, capital duty, and wealth tax are not levied in Vietnam.
Vietnam corporate taxation
The general corporate income tax rate is 20%. Companies in oil, gas, and precious natural resources sectors face rates of 32% to 50%. Mining enterprises dealing with gold, silver, and gemstones are subject to 40% or 50% rates depending on location.
Residence: Corporations incorporated in Vietnam are considered tax residents.
Tax base: Residents pay tax on worldwide income; non-residents only on Vietnamese-source income.
Capital gains: No separate capital gains tax exists; gains are taxed at the standard 20% corporate rate.
Incentives: Preferential rates of 10% (for 15 years) and 17% (for 10 years) are available for encouraged investment projects.
Withholding tax
Dividends paid to corporations are not subject to withholding tax in Vietnam, while a 5% withholding tax applies to dividends paid to individual recipients.
Interest payments to non-residents are subject to a 10% withholding tax, which may be reduced under applicable tax treaties. Similarly, royalties paid to non-residents are also subject to a 10% withholding tax, with potential reductions based on treaty provisions.
There is no branch remittance tax applicable in Vietnam.
Other taxes on corporations
Municipal authorities levy real property tax based on the occupation of real estate. Stamp duty ranges from 0.5% to 15% on property transfers.
A special sales tax is applied to luxury goods and services at various rates, covering items such as alcohol, cigarettes, entertainment services, and gambling. The business license tax is an annual charge based on registered capital, ranging from VND 1,000,000 to VND 3,000,000. Export-import tax is levied on goods that cross Vietnamese borders.
A natural resources tax is imposed on organizations and individuals involved in the exploitation of natural resources.
Vietnam's VAT rates include a standard rate of 10%, a reduced rate of 5% for certain goods and services, and a temporary 2% reduction on some items subject to the standard rate, effective until June 2025.
Anti-avoidance rules
- Transfer pricing: Rules introduced in 2005 are implemented, with documentation requirements for related-party transactions. Advanced Pricing Agreements (APAs) are not available.
- Thin capitalization: Not applicable in Vietnam.
- Controlled foreign companies: No specific CFC rules exist.
- Disclosure requirements: No general disclosure requirements beyond standard filing obligations.
- Tax rulings: Taxpayers can seek clarification from local or national tax authorities on specific tax matters.
US tax obligations for Americans in Vietnam
If you are a US citizen or green card holder, you must file US tax returns even while living in Vietnam.
The filing threshold depends on your income level and filing status. For example, if you are single, you must file a return if your gross income exceeds $14,600 for the 2024 tax year.
The standard US tax filing deadline is April 15. If you live outside the United States, you automatically receive a two-month extension. If you need additional time, you can request a further extension until October 15.
US expats in Vietnam may need to file the following tax forms:
- Form 1040 – The standard income tax return required for all US citizens, regardless of location.
- Form 8938 (FATCA report)– Required if foreign assets exceed $200,000 on the last day of the tax year or $300,000 at any point ($400,000 and $600,000 for married taxpayers filing jointly).
- Form 2555 (Foreign Earned Income Exclusion FEIE) – Allows expats to exclude up to $126,500 (2024 limit, adjusted annually) of foreign income from US taxes.
- FBAR (FinCEN Form 114) – Required if the combined value of foreign bank accounts exceeds $10,000 on any day during the tax year. It must be filed separately from your tax return.
Need help with US taxes in Vietnam? Get professional help
Whether you're starting a business, working, or enjoying retirement in Vietnam, staying compliant with both US and Vietnamese tax obligations is essential for your peace of mind.
At Taxes for Expats, we bring over 20 years of experience helping Americans in Vietnam navigate complex tax situations. We provide personalized guidance tailored to your specific circumstances, ensuring you avoid costly mistakes while maximizing your tax benefits.
