Although the definition of taxable income is broad, there are certain defined benefits that are excluded from taxation (non-taxable allowances). These allowances require supporting vouchers or company’s policies depending on each type of allowance.
Some non-taxable allowances include:
- Payments for telephone charges and stationery costs.
- Payments for business trips.
- Overtime premium (i.e. the additional payment above the normal wage, not the full amount of the overtime/night shift payment).
- One-off allowance for relocation (i) from Vietnam for Vietnamese working overseas, (ii) to Vietnam for expatriates working in Vietnam, and (iii) to Vietnam for Vietnamese residing overseas on a long-term basis and returning to Vietnam to work.
- Daily commute for employees from home to workplace and vice versa.
- Once per year home leave round trip airfare for expatriate employees and Vietnamese working overseas.
- School fees up to high school in Vietnam/overseas for children of expatriates/Vietnamese working overseas.
- Training.
- Mid-shift meals, lunch (subject to a cap if paid in cash).
- Certain benefits in kind provided on a collective basis (e.g. membership fee, entertainment, healthcare).
- Airfares for employees working on a rotation basis in a number of industries (e.g. petroleum, mining).
- Employer’s contributions to certain local and overseas non-mandatory insurance scheme without pay-out of accumulated premiums to the employees (such as medical insurance, accident insurance, etc.).
- Certain allowances/benefits paid by an employer for special occasions, such as wedding and funeral (subject to a cap).
- The taxable value of employer-provided accommodation (including associated utilities and service charges paid as part of the house rental) is limited to 15% of total taxable income (excluding rental) if this is less than the actual housing cost.
Conditions and restrictions are applicable to the above exemptions.
Statutory SI, HI, and UI employer contributions do not constitute a taxable benefit to the employee.
