In Vietnam, Personal Income Tax (PIT) is calculated on gross income, which means that it is calculated on the total income earned by an individual before any deductions are made. However, in some cases, an individual may receive income that has already had taxes deducted from it, such as income from overseas sources or income that has been subject to withholding tax. In order to accurately calculate the PIT owed, this net income must be “grossed up”, or increased, to reflect the gross amount before taxes were deducted.
This is necessary because the PIT rate in Vietnam is a progressive tax system, meaning that the percentage of tax owed increases as income levels increase. If an individual were to calculate their PIT based on their net income, they would be paying a lower rate of tax than they should be, as their income would appear to be lower than it actually is. By grossing up the net income to reflect the gross income, the individual is able to accurately calculate the amount of PIT owed based on their true income level.
CONVERSION OF TAX-EXCLUSIVE INCOMES TO ASSESSABLE INCOMES (FROM WAGES)
|
No. |
Converted income/month |
Assessable income |
|
1 |
Up to 4.75 million VND |
Converted income/0.95 |
|
2 |
From over 4.75 million VND to 9.25 million VND |
(converted income – 0.25 million VND)/9 |
|
3 |
From over 9.25 million VND to 16.05 million VND |
(converted income – 0.75 million VND)/0.85 |
|
4 |
From over 16.05 million VND to 27.25 million VND |
(converted income – 1.65 million VND)/0.8 |
|
5 |
From over 27.25 million VND to 42.25 million VND |
(converted income – 3.25 million VND)/0.75 |
|
6 |
From over 42.25 million VND to 61.85 million VND |
(converted income – 5.85 million VND)/0.7 |
|
7 |
From over 61.85 million VND |
(converted income – 9.85 million VND)/0.65 |
