Luật thuế TNCN/ PIT Law

From EXPART HR
Jump to navigation Jump to search
Z26.png
PERSONAL INCOME TAX

Personal Income Tax (PIT) is the amount of money extracted from earners’ salaries or other forms of incomes that The Government levies on individuals. Since Personal Income Tax is not imposed on low-income individuals, this amount ensures equality to all people and bridges the gap between social classes.

The following two subjects must pay for PIT: individuals inhabiting inside and outside of the Vietnamese territory with taxable income. In particular:

  • Resident individuals: Taxable income is the cost arising inside or outside the Vietnamese territory (regardless of where the income is paid).
  • Non-resident individuals: Taxable income is the cost arising inside the Vietnamese territory (regardless of where the income is paid and received).

PIT is a monthly calculated tax, which can be declared on a monthly or quarterly basis, but must be settled annually. There are three different formulae to calculate PIT applicable to three different subjects:

  • Resident individuals with the contract terms of three months or above: The PIT will be calculated according to the partially progressive tariff;
  • Individuals without labor contracts or with the contract terms of less than three months: 10% deduction;
  • Non-resident individuals (mostly foreigners): 20% deduction



CALCULATION METHOD FOR PIT

Calculation method for PIT:

PIT              = Taxable income x Tax rate


Note, Taxable income = Assessable income - Allowable reduction


The reductions include:

  1. Family circumstance deduction for a taxpayer is VND 11 million/month;
  2. Dependant deduction for a taxpayer is VND 4.4 million/month/dependant.
  3. Expenditures for insurance, voluntary retirement fund, charity, study promotion, and humanitarian.


PIT rate according to the progressive tariff

Level Taxable income/ month Tax rate How to calculate payable tax  
Formula 1 Formula 2
1 Maximum of VND 5 million 5% VDN 0 million + 5% of Taxable Income 5% of Taxable Income
2 From VND 5 million to VND 10 million 10% VND 0,25 million + 10% of Taxable Income of over VND 5 million 10% of Taxable Income - VND 0.25 million
3 From VND 10 million to VND 18 million 15% VND 0,75 million + 15% of Taxable Income of over VND 10 million 15% of Taxable Income - VND 0.75 million
4 From VND 18 million to VDN 32 million 20% VND 1.95 million + 20% of Taxable Income of over VND 18 million 20% of Taxable Income - VND 1.65 million
5 From VND 32 million to VND 52 million 25% VND 4.75 million + 25% of Taxable Income of over VND 32 million 25% of Taxable Income - VND 3.25 million
6 From VND 52 million to VND 80 million 30% VND 9.75 million + 30% of Taxable Income of over VND 52 million 30% of Taxable Income - VND 5.85 million
7 Over VND 80 million 35% VND 18.15 million + 35%  of Taxable Income of over VND 80 million 35% of Taxable Income - VND 9.85 million


PERSONAL TAX CODE (PTC)

Personal tax code is the exclusive tax code for each individual, which means under no circumstances there are two individuals having the same tax code. PTC helps the Government control the taxpayers’ PIT more easily. PTC also facilitates individuals’ income declaration process.

Regarding the staff without PTC, they need to fill in the template Template No. 05- ĐK-TCT according to Circular 105” and attach a photo of Identity Card to register a new one.  


Note:

Before preparing the dossier for a new PTC, employees need to check whether they have done this before by visiting the website: http://tracuunnt.gdt.gov.vn/tcnnt/mstcn.jsp and enter the Personal Identity/ Citizen Identity number into the corresponding blank.

Each individual has only one Personal Tax Code (PTC) attached with the Personal Identity/Citizen Identity number. Therefore, individuals possessing two PTCs must go to the tax office (where their PTC is granted) to finish all the paperwork removing either one of those. In case employees using the 9-digit Personal Identity number want to transfer to the 12-digit Citizen Identity one, use “Template No. 08-MST according to Circular 105”.  The Human Resources Department will support the data declaration for synchronization with the tax office.


DEDUCTION BASED ON FAMILY CIRCUMSTANCES


Family circumstance deduction is the amount of money deducted to the Assessable Income of resident taxpayers before calculating taxes on incomes from their businesses, salaries and wages.

To register for dependent reduction, employees need to fill in the  “Template No. 07-DK-NPT-TNCN according to Circular 80” and attach a dependent registration dossier with it. There will be different types of dossiers for different groups of dependents:

  • Children: A photo of birth certificate (under 18), documents proving that the child is studying at a university, a college or a technical school (above 18). Deduction is not applicable to postgraduates. Otherwise, proof of incapability to work is required; In case of adopted children, proof of relationship is needed, for example, a photo of the adoption confirmation letter.
  • Spouses: A photo of the personal identity/citizen identity card; a photo of household registration or marriage certificate (proof of relationship); In case the spouse is in the working age, a photo of the proof of incapacity to work is required. For example, photos of disability verification and patients’ medical records (AIDS, cancer, chronic kidney failure, etc.)
  • Parents: A photo of the Personal Identity/Citizen Identity Card; A photo of household registration or birth certificate (proof of relationship); In case the parents are in the working age, a photo of  the proof of incapacity to work is required. For examples, photo of disability verification and patients’ medical records (AIDS, cancers, chronic kidney failure, etc.).
  • Supportless people (Grandparents/aunts/uncles, etc.): a photo of Personal Identity/Citizen Identity Card or birth certificate; legitimate documents determining the caring responsibilities as regulated by Law; If the dependent is in the working age, a photo of the proof of incapacity to work is required. For example, photos of disability verification and patients’ medical records (AIDS, cancers, chronic kidney failure, etc.).  


PIT FINALIZATION
The subjects of PIT finalization
Case 1: Failure to pay sufficient PIT (Individuals must complete and submit the PIT finalization declaration form on time. Penalties will be imposed on incorrect or overdue submission cases. The due date for submission is often on April 30th of the following year. In case the submission date falls on weekends, it will be expanded for one day.). Resident individuals earning income from salaries, wages are liable to declare tax finalization if extra payable tax is required. The exception is when the extra payable tax after finalization for each year is no more than VND 50,000.  


Case 2: Individuals fail to pay sufficient PIT and want a refund or add to the following tax declaration. (Taxpayers are not obligated to complete the finalization declaration: If the actual PIT exceeded the required number and taxpayers want a refund or add to the following tax finalization (next year), the tax declaration is required. In case individuals do not want a refund or add to the following tax finalization, tax declaration is not needed).


In other case: Resident individuals who are expats and have their employment contracts in Vietnam terminated/expired have to declare tax finalization at the Tax Department before exiting.

Exemptions of PIT finalization
  • Individuals having extra payable amount after the annual finalization of no more than VND 50,000;
  • CIndividuals who the payable tax amount is less than the temporarily paid one and have no request for a refund or a compensation to the following tax declaration;
  • Individuals earning income from salaries and wages under employment contracts with a term of three months or above at one organization, as well as from current incomes at other organizations with the monthly average income of no more than VND 10 million within a year after the 10% deduction must not complete the tax finalization for this income if not required;
  • In case individuals are provided with life insurance by employers (except for voluntary retirement insurance), other non-obligatory insurance with accumulated insurance cost that employers or enterprises had reduced PIT by 10% of the insurance cost equivalent to the number that employers paid or contributed to employees’ insurance, employees must not complete the PIT finalization for this income.
  • Resident individuals paid sufficient PIT within a year (no more or less).

Finalization procedure and dossier

Dossier

  • PIT deduction certificate and income verification letter
  • Personal identity/ Citizen identity card


Finalization procedure

  • Step 1: Create an online tax account by visiting the local tax department. Alternatively, register online via the web: https://dichvucong.gov.vn/p/home/dvc-trang-chu.html. Since 2022 the online registration requires no physical travels to the tax department to submit dossiers. Select Sign up and fill in necessary information.
  • Step 2: Once individuals are granted with online accounts, sign in the General Department of Taxation’s website to declare tax finalization. For those who have just signed up according to Step 1, sign in the public service gateway to update personal tax code, then search for Online payment, select Declare and pay PIT; select PIT declaration. The system will direct to the website to declare PIT submission.
  • Step 3: Fill in the tax code and CAPTCHA to sign in.
  • Step 4: Select “Tax finalization”, then select “Online declaration”.
  • Step 5: Fill in the online form for tax declaration
  1. Taxpayer’s name: fill in the full name of the person making self-declaration.
  2. Address: Fill in the permanent or temporary address
  3. Mobile phone: Fill in the taxpayer’s mobile phone
  4. Email address: Fill in the taxpayer’s email address
  5. Select declaration form: 02/QTT-TNCN - PIT finalization declaration form (TT92/2015) (finalization from 2020 backwards) or 02/QTT-TNCN - PIT finalization declaration form (TT80/2021) (finalization from 2021 onwards)
  6. Select tax department for finalization:

Select the suitable department depending on taxpayers’ situations

For example, the aforementioned image illustrates an individual earning incomes from two organizations (changed workplace) and receiving tax withholding from paycheck. When the tax code of the department carrying out tax withholding is provided at the point of tax finalization, the system automatically recognizes the tax finalization department.  

  1. Declaration form: Official declaration form
  2. Year of finalization
  • Step 6: Select “Continue”
  • Step 7: Declare tax finalization

[01] to [06]: The system automatically fills in the information

[07] to [08]: Select province/city at section 08 first, then select district at section 07 (Permanent address)

[09]: Fill in taxpayer’s mobile phone (Obligatory)

[10]: Fax (Optional)

[11]: Fill in taxpayer’s email (Obligatory)

[12]: Bank account (if any) (Optional)

[12a]: Open at: Fill in the number of the receiving bank account.

[13] to [21]: Information about tax agent (if any)

[22]: Total taxable income within a tax period:

[23]: Total taxable income arising in Vietnam is the total amount of taxable incomes from salaries, wages and other taxable incomes which are related to the salaries and wages arising in Vietnam; including taxable incomes from salaries, wages when working in economic sector and exempt taxable income in accordance with the Agreement on Double Taxation Avoidance (if any).

Income-paying organizations will grant the license for individuals. The individuals then will fill in the declaration form with income details from the license.

For example, in 2020, Mr. A works for Company X from January to April with the total taxable income based on the license of above VND 100 million, Company Y from May to December with the total taxable income based on the license of above VND 150 million, according to Target [23], Mr. A will earn VND 250 million.

[24]: Tax reduction based on total taxable income is the total taxable income from salaries, wages and other taxable incomes which are related to the salaries and wages that individuals earn from jobs in economic sector, exclusive of the exempt incomes in accordance with Agreement on Double Taxation Avoidance (if any) (Skip this section if irrelevant).

[25]: The total deducted taxable income according to the Agreement is the total taxable income from salaries, wages and other taxable incomes, which are related to the salaries and wages that can be exempted from tax in accordance with Agreement on Double Taxation Avoidance (if any) (Skip this section if irrelevant).

[26]: The total taxable income arising outside Vietnam: is the total amount of taxable incomes from salaries, wages and other taxable incomes, which are related to the salaries and wages arising outside of Vietnam (if any) (Skip this section if irrelevant)

[27]: Number of dependents will be automatically calculated once being declared.

If taxpayers have dependents, scroll down to the end and select “02-1/BK-QTT-TNCN” to declare dependents’ information:

After selecting “02-1/BK-QTT-TNCN”, you will be redirected to the screen for dependent declaration. After finishing the declaration, elect “Declaration form” to reduce to one declaration interface and continue.

[28]: Tax deductions: will be automatically calculated by the system

[29]: Deduction for taxpayer himself/ herself: will be automatically calculated by the system

[30]: Tax deduction for dependents: The system automatically calculates

[31]: Charity, humanitarian, study promotion: refer to the expenditures for nurturing and caring organizations and agencies for children in especially difficult circumstances; disabled, homeless elderly; expenditures for charity funds; humanitarian funds; study promotion funds founded and run in accordance with the State regulations (if any) (Skip this section if irrelevant)

[32]: Deducted insurance costs include costs for social insurance, health insurance; unemployment insurance; obligatory professional liability insurance for some specific occupations.

[33]: Deducted costs for voluntary retirement funds are the total costs for a voluntary retirement fund arising in reality with the maximum of VND 3 million/ month (Skip this section if irrelevant).

[34]: The total taxable income: will be automatically calculated by the system.

[35]: The total PIT occurring in the tax period: will be automatically calculated by the system


  • Step 8: Select XML extract.
  • Step 9: Select “Submit form”
  • Step 10: Attach the dossier (including photos of income verification letter, PIT deduction documents, citizen identity card/ passport/ personal identity card). Then, press “Continue”
  • Step 11: Enter the test code to verify the form submission and select “Continue”
  • Step 12: Enter the OTP code and continue (the OTP code will be sent to computer)


After selecting “Continue”, you will be informed of the successful submission and get an automatic message confirming that your declaration has been submitted


Retrieved from "https://wiki.vinschool.edu.vn/DAOTAO-en-wiki/index.php?title=Luật_thuế_TNCN/_PIT_Law&oldid=1189"