What is the 2023 salary tax threshold? To ensure accuracy and the rights and benefits of employees, it is vital to rely on multiple bases when computing taxes on employees' salary.
Individuals with income from salaries, wages and other sources of income will need to pay personal income tax. However, in 2023, how much salary must be taxed? Details about this issue will be shared by Navigos Search in the article below.
1. How much salary must be paid in personal income tax in 2023?
How much salary must be paid in personal income tax in 2023? First, according to Article 19 of the Personal Income Tax Law (PIT) in 2007, which was adjusted by Article 1 of the Personal Income Tax Law in 2012, the regulations on family deductions are as follows:
Family deduction is the amount of money deducted before tax calculation for business income, salaries and wages of tax resident individuals. Family deductions include the following two parts:
a) The deduction for individual taxpayers is 9 million VND per month (equivalent to 108 million VND per year).
b) The deduction for each dependent is 3.6 million VND per month.
In case the consumer price index (CPI) fluctuates more than 20% compared to the time the Law takes effect or the time of the most recent adjustment to the family allowance, the Government will propose to the National Assembly Standing Committee to adjust Adjust the family deduction level to match price fluctuations to apply to the next tax period.
However, Clause 4 of Article 1 of the 2012 Personal Income Tax Law has been abolished by Article 4 of the 2014 Law Amending Tax Laws.
Instead, Resolution 954/2020/UBTVQH14 has introduced new regulations on specific family deductions as follows:
The family deduction level has been adjusted from Clause 1, Article 19 of the Personal Income Tax Law No. 04/2007/QH12, amended and supplemented by Law No. 26/2012/QH13, as follows:
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The deduction for individual taxpayers is 11 million VND per month (equivalent to 132 million VND per year).
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The deduction for each dependent is 4.4 million VND per month.
So how much salary must be taxed? Currently, if an individual's monthly income exceeds 11 million VND (equivalent to 132 million VND per year), they are subject to personal income tax.
If there is a dependent, the tax rate begins to apply when monthly income exceeds 15.4 million VND.
If there are two dependents, the starting threshold is 19.8 million VND monthly. Simply put, the higher the number of dependents, the higher the tax rate.
Read more: https://navigossearch.com/conditions-for-raising-salary-level
Find out how much salary must be paid in personal income tax?
2. Who must pay personal income tax in 2023?
How much salary must be taxed and who must pay tax? Based on the provisions in Article 2 of the 2007 Personal Income Tax Law, there are three groups of subjects who must pay personal tax, specifically as follows:
Resident individuals: Includes individuals with taxable income as prescribed in Article 3 of the Personal Income Tax Law, regardless of whether this income arises within or outside the territory of Vietnam. At the same time, includes non-resident individuals, but their income arises within the Vietnamese territory according to the provisions of Article 3 of this Law.
A resident individual is a person who meets at least one of the following two conditions:
a) Be present in Vietnam for a period of 183 days or more in a calendar year or 12 consecutive months counted from the first day they are present in Vietnam.
b) Have a permanent residence in Vietnam, including registering permanent residence or renting a house to live in Vietnam under a term lease contract.
Non-resident individuals: Are individuals who do not meet both conditions of resident individuals mentioned above.
Based on Article 3 of the Personal Income Tax Law, amended and supplemented by Law No. 26/2012/QH13, mentioning 10 types of taxable income, specifically as follows:
- Income from business activities.
- Income from salaries and wages.
- Income from capital investment.
- Income from capital transfer transactions.
- Income from real estate transfer transactions.
- Income from winning prizes.
- Income from copyright ownership.
- Income from franchising.
- Income from inheriting securities, capital shares in economic organizations, business establishments, real estate, and other assets that must be registered for ownership or use.
- Income from receiving gifts of securities, capital shares in economic organizations, business establishments, real estate and other assets that must be registered for ownership or use.
Who must pay personal income tax
3. Does the scholarship recipient have to pay personal income tax on the money they receive?
Once we know clearly how much salary must be taxed, we continue to find out whether the money received from the scholarship is subject to personal income tax? Based on Article 4 of the 2007 Personal Income Tax Law, supplemented by Clause 3 of Article 2 of the 2014 Law Amending Tax Laws, the specific regulations on tax-exempt income are as follows:
Tax-exempt income includes the following types:
Income from the transfer of real estate between husband and wife, father and child, adoptive father and adopted child, father-in-law and daughter-in-law, father-in-law and son-in-law, grandfather and grandson, maternal grandfather and grandchild, brother, sisters and brothers together.
Income from the transfer of housing, residential land use rights and assets related to residential land of individuals, in case the individual only owns one house or one plot of land.
Income from the value of individual land use rights allocated by the State.
Income from inheritance and gifts of real estate between husband and wife, father and child, adoptive father and adopted child, father-in-law and daughter-in-law, father-in-law and son-in-law, grandfather and grandchild, maternal grandfather and grandchild , brothers, sisters, siblings together.
Income of households and individuals directly involved in agricultural production, forestry, salt making, aquaculture, and fishing whose products have not been processed or have only undergone normal preliminary processing.
Income from conversion of agricultural land of households and individuals according to land allocation from the State for production.
Income from interest on deposits at credit institutions and interest from life insurance contracts.
Income from receiving remittances.
The portion of wages paid for work done at night or overtime, at a higher rate than for daytime work, according to the provisions of law.
Pensions are paid by Social Insurance.
Income from scholarships, including:
a) Scholarships from the state budget.
b) Scholarships from domestic and foreign organizations according to that organization's study promotion support program.
In all of these cases, income is not subject to personal income tax according to the provisions of law.
Explain: What is the insurance premium rate of the 5-million salary?
4. Eligibility to be counted as a dependent for a taxpayer
How much salary must be taxed and what are the conditions for being counted as a dependent for taxpayers? According to the instructions in section 2.2 of Circular 111/2013/TT-BTC, regarding dependents of taxpayers who are resident individuals, the following conditions must be met:
For people of working age, they must meet the following conditions at the same time:
Must belong to the group of people with disabilities as prescribed by law and be unable to work or suffer from serious diseases such as AIDS, cancer, chronic kidney failure and similar diseases.
Does not generate income or average monthly income during the year does not exceed 1 million VND.
For people outside working age, they must have no income or average income not exceeding 1 million VND per month (within one year).
According to that regulation, taxpayers with dependents who satisfy the above conditions will enjoy the right to direct tax deduction from their total taxable income. This means that even if they have a salary enough to pay personal income tax, after applying family deductions, they may no longer have to pay this tax.
Eligibility to be counted as a dependent for a taxpayer
Navigos Search hopes that this article's content has made clear how much pay is subject to taxes and given readers the most helpful information. To receive timely updates on human resources information, industry and labor market trends, recruitment, interviews, and more, please check back often!
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