What are Benefits-in-Kind?
Benefits-in-kind (BIK) are non-cash benefits provided by employers to employees. In Vietnam, most benefits-in-kind are taxable as employment income.
General Rule
All benefits received in connection with employment are taxable, unless specifically exempted.
Types of Taxable Benefits
| Benefit | Tax Treatment |
|---|---|
| Housing/rent | Taxable (with caps) |
| Vehicle + driver | Taxable |
| Education allowance | Taxable |
| Home leave flights | Taxable |
| Relocation allowance | Taxable |
| Cost of living allowance | Taxable |
| Club memberships | Taxable |
Housing Allowance
Tax Treatment
Housing benefits provided by employers are taxable, but with favorable calculation rules.
Calculation Methods
Method 1: Actual Rent Paid (with cap)
If employer pays rent directly:
- Taxable amount: Actual rent × 15% (capped)
- Maximum taxable: 15% of total taxable income before housing deduction
Method 2: Housing Allowance
If employer provides fixed housing allowance:
- Full allowance is taxable as salary
- No 15% calculation applies
Example Calculation
Scenario:
- Monthly salary: 50,000,000 VND
- Monthly rent paid by employer: 20,000,000 VND
Calculation:
- 15% of salary: 50,000,000 × 15% = 7,500,000 VND
- Taxable housing benefit: 7,500,000 VND (not 20,000,000)
Total taxable income: 50,000,000 + 7,500,000 = 57,500,000 VND
Requirements
To claim the 15% calculation:
- Must have actual lease agreement
- Rent must be paid to landlord (not to employee)
- Documentation must be maintained
Company-Provided Housing
If company owns the housing:
- Fair market rental value is taxable
- Apply 15% calculation
Vehicle & Driver Benefits
Tax Treatment
Company car and driver benefits are taxable.
Calculation
Taxable Value = Total Expenses × Percentage for Personal Use
| Type | Calculation |
|---|---|
| Car only | Depreciation + operating costs × personal use % |
| Driver | Driver salary × personal use % |
| Fuel | Actual fuel cost × personal use % |
Safe Harbor Method
Some companies use a fixed percentage:
- 25-50% of vehicle costs deemed personal use
- Must be reasonable and documented
- Acceptable to tax authority if consistent
Example
Scenario:
- Car depreciation: 10,000,000 VND/month
- Operating costs: 5,000,000 VND/month
- Driver salary: 8,000,000 VND/month
- Personal use: 30%
Taxable benefit:
- (10M + 5M + 8M) × 30% = 6,900,000 VND/month
Fuel-Only Benefit
If only fuel is provided:
- Taxable at fair value of fuel for personal use
- Track business vs personal kilometers
Education Allowance
Tax Treatment
Education allowances for employee's children are fully taxable.
No Exemption
Unlike some countries, Vietnam does not exempt education allowances:
- International school fees paid by employer: Fully taxable
- Education allowance paid to employee: Fully taxable
Example
Scenario:
- Monthly salary: 80,000,000 VND
- School fees paid by employer: 25,000,000 VND/month
Taxable income: 80M + 25M = 105,000,000 VND
Planning Consideration
Some employers provide "grossed-up" compensation to offset the tax on education benefits:
- Calculate tax on total compensation
- Employer pays the additional tax
- Employee receives net benefit
Other Common Benefits
Home Leave Flights
| Treatment | Taxable Amount |
|---|---|
| Annual home leave flights | Fair market value |
| Flight class | Economy/Business/First |
| Family member flights | Also taxable |
Example: 2 return flights to home country × ticket value = taxable amount
Relocation Allowance
| Treatment | Taxable Amount |
|---|---|
| Moving expenses | Generally taxable |
| Temporary housing | Taxable |
| Shipping goods | Taxable |
Exception: Some bona fide relocation costs may be non-taxable if properly structured
Cost of Living Allowance (COLA)
| Treatment | Taxable Amount |
|---|---|
| Fixed COLA | Fully taxable as salary |
| Variable COLA | Fully taxable |
Club Memberships
| Type | Tax Treatment |
|---|---|
| Golf club | Fully taxable |
| Gym/Fitness | Fully taxable |
| Social clubs | Fully taxable |
Medical Insurance
| Type | Tax Treatment |
|---|---|
| Mandatory health insurance | Not taxable (part of SI) |
| Private medical insurance | Taxable benefit |
| Medical reimbursement | Taxable |
Telephone & Internet
| Type | Tax Treatment |
|---|---|
| Business phone | May be exempt with documentation |
| Personal phone allowance | Taxable |
| Internet allowance | Taxable |
Tax Reporting
Monthly Withholding
Employers must include benefits-in-kind in monthly PIT withholding:
- Calculate value of benefits
- Add to cash salary
- Apply deductions
- Calculate and withhold tax
Annual Finalization
Verify benefits treatment in annual return:
- Review all benefits received
- Confirm taxable values
- Check calculation methods
- Adjust if necessary
Documentation
Maintain records of:
- Lease agreements
- Vehicle usage logs
- Benefit payment records
- Fair market value determinations
Comparison Table
| Benefit | Taxable? | Calculation |
|---|---|---|
| Housing (rent paid) | Yes | Actual rent × 15% (capped) |
| Housing allowance | Yes | Full amount |
| Company car | Yes | Costs × personal use % |
| Driver | Yes | Salary × personal use % |
| Education allowance | Yes | Full amount |
| Home leave flights | Yes | Ticket value |
| Relocation allowance | Yes | Full amount |
| COLA | Yes | Full amount |
| Club memberships | Yes | Full amount |
| Private health insurance | Yes | Premium amount |
| Meal allowance | Yes | Full amount (unless in-kind meals) |
Need Help?
Our team can:
- Calculate taxable value of your benefits
- Ensure proper reporting on tax returns
- Optimize benefit structures with employer
- Handle benefit-related tax disputes
ZALO: +84703027485
This article is based on Circular 111/2013/TT-BTC. For official regulations, please refer to [vbpl.vn](https://vbpl.vn).