Official letter 12044/CCTKV1-QLDL5 about tax policy:
Based on the above provisions, in case the Company pays severance allowance to employees in accordance with the subjects and levels prescribed by the Labor Code and the Law on Social Insurance, this income shall not be included in the taxable income from salaries and wages of employees according to the guidance in Section b.6, Point b, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC. In case the severance allowance to employees is higher than the level prescribed by the Labor Code and the Law on Social Insurance, it must be included in the taxable income. In case the Company advances severance allowance to employees, the Company shall aggregate it with salaries and wages to deduct personal income tax before paying to employees according to the guidance in Article 25 of Circular No. 111/2013/TT-BTC.
