Determining Taxable Income for Housing Allowance

The General Department of Taxation received Official Letter No. ROV-1100 dated May 11, 2017, from the representative office of AMNGR Joint Stock Company in Vietnam regarding difficulties in determining taxable income for various allowances. In response to this issue, on June 13, 2017, the General Department of Taxation issued Official Letter 2564/TCT-TNCN with the following reply:

1. For the allowance for employees to rent transportation means:

• According to Point d, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC guiding: “Monetary or non-monetary benefits, aside from salary and wages paid by the employer, which the taxpayer receives in any form.”

• According to Point d.4.3, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC guiding: “For employees working in international organizations or representative offices of foreign organizations: the lump-sum allowance is based on the regulations of the international organization or foreign organization’s representative office.”

Based on the above guidance, if an employee receives a transportation allowance from the parent company in Russia to rent transportation for commuting from their residence to the workplace according to the regulations of the international organization or the foreign representative office, this allowance is not included in the employee’s taxable income.

2. For the housing allowance for employees to rent their own accommodation:

• According to Clause 2, Article 11 of Circular No. 92/2015/TT-BTC amending and supplementing Point d.1, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC guiding:

  “d.1) Housing rent, electricity, water, and accompanying services (if any), excluding: housing benefits, electricity, water, and accompanying services (if any) for housing provided free of charge by the employer to employees working in industrial zones; housing provided by the employer in economic zones, areas with difficult socioeconomic conditions, or areas with particularly difficult socioeconomic conditions for employees working there, which is provided free of charge.”

  In cases where an individual lives at the workplace premises, the taxable income is based on the rent or depreciation, electricity, water, and other services, calculated according to the ratio of the area used by the individual to the total area of the workplace premises.

  The housing rent, electricity, water, and accompanying services (if any) paid by the employer for the employee's accommodation are included in taxable income based on the actual amount paid, but not exceeding 15% of the total taxable income (excluding housing rent, electricity, water, and accompanying services) generated at the unit, regardless of the income payment location.

In the case where the employee receives a housing allowance from the parent company in Russia to rent accommodation, it is included in taxable income based on the actual amount paid, but not exceeding 15% of the total taxable income (excluding housing rent, electricity, water, and accompanying services) generated at the unit, regardless of the income payment location.

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