On November 14th, 2024, the Bac Ninh Provincial Tax Department issued Official Letter No. 4877/CTBNI-TTHT, accordingly:
In case the Company has an agreement to terminate the labor contract with an employee who is an individual residing in Vietnam according to the agreement signed between the two parties. The Company agrees to pay the employee an additional amount of money. In that case:
If the additional payment is severance allowance, unemployment allowance, unemployment benefits, or other allowances according to regulations of the Labor Code and the Social Insurance Law, it is not included in taxable income for PIT.
If the additional payment is not severance allowance, unemployment allowance, unemployment benefits, or other allowances according to regulations of the Labor Code and the Social Insurance Law, it must be included in taxable income for PIT. The Company deducts PIT for the above income as follows:
– If at the time of payment, the employee is still working at the company (the labor contract has not been terminated), the Company deducts PIT according to the progressive partial schedule.
– If at the time of payment, the employee has already terminated the labor contract and left the company, the Company deducts PIT at the rate of 10%.
