The most accurate and latest method for personal income tax calculation

How to calculate personal income tax promptly and accurately? The calculation methods for the income tax of individuals can be quite complicated and confusing for some people. Therefore, the following article by Viindoo will provide some guidance on the simplest way to calculate the income tax of individuals.

1. What is personal income tax?

Personal income tax is essential, and this makes a significant contribution to the government budget. This tax is deducted from wages or other sources of income from individuals.

After being deducted, this fee is paid to the Tax office. Personal income tax does not apply to individuals with low and unstable income according to the prescribed tax rate. In general, the higher the person's income, the greater the tax payable.

 Personal income tax is an essential paying tax

Personal income tax is an essential paying tax

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2. How to calculate personal income tax?

There are 2 distinct subjects with different personal income tax rates: Non-resident individuals and resident individuals. For each subject, the method of calculating personal income tax is different. Detailed information is provided below:

2.1 For residents with labor contracts of more than 3 months

The formula for calculating personal income tax amount = Assessable income x Tax rate

In which:

  • Assessable income = Taxable income - Deductions

  • Taxable income = Total income - Non-taxable income 

Specifically:

  • Total income: The amount of money that employees receive through the process of working and investing such as salaries, wages, and other incomes in the form of money or not.

  • Deductions: These include family deductions and insurance deductions.

Depending on the salary, the amount of tax payable by each individual will be different

Depending on the salary, the amount of tax payable by each individual will be different

The progressive tax for a tax rate is as follows:

Level

Assessable income/year (million VND)

Assessable income/month (million VND)

1

Up to 60

Up to 5 

2

Above 60 to 120 

Above 5 to 10 

3

Above 120 to 216

Above 10 to 18

4

Above 216 to 384

Above 18 to 32

5

Above 384 to 624 

Above 32 to 52

6

Above 624 to 960

Above 52 to 80

7

Above 960 

Above 80 

Based on the table above, apply the formula below to calculate personal income tax:

  • Level 1: Tax amount: 0 million VND + 5% of taxable income

  • Level 2: Tax amount: 0.25 million  VND + 10% of taxable income

  • Level 3: Tax amount: 0.75 million VND + 15% of taxable income

  • Level 4: Tax amount: 1.95 million VND + 20% of taxable income

  • Level 5: Tax amount: 4.75 million VND + 25% of taxable income

  • Level 6: Tax amount: 9.75 million VND + 30% of taxable income

  • Level 7: Tax amount: 18.15 million VND + 35% of taxable income

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2.2 For residents without a labor contract

According to clause I, article 25 of Circular 111/2015, the personal income tax payable rate of residents without a labor contract is 10% of the total income. Specifically, individuals or organizations that pay wages or other types of remuneration to individuals who do not sign a labor contract or contract for less than 3 months will take a 10% tax discount on total income.

Residents without a labor contract need to contribute 10% of the total income

Residents without a labor contract need to contribute 10% of the total income

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2.3 For non-resident individuals

Personal income tax for non-resident individuals will be determined by the formula 20% tax rate * salary/wages. This is how to calculate personal income tax according to Article 18 of Circular 111/2013/TT-BTC.

How to calculate non-resident individual tax

How to calculate non-resident individual tax

Clause 2, Article 8 of this Circular also stipulates that the income of non-resident individuals is the same as the income of resident individuals. PIT amount = 20% * assessable income. In which:

Taxable income = Total income - Non-taxable income.

Above is the summary of the personal income tax calculation by Viindoo. The fulfillment of tax obligations helps the country's economy grow stronger. We hope that the information we share here is useful to your business.

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The most accurate and latest method for personal income tax calculation
Viindoo Technology Joint Stock Company, Amber Nguyen December 3, 2022

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