Luật thuế TNCN/ PIT Law
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:
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:
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CALCULATION METHOD FOR PIT
Calculation method for PIT: PIT = Taxable income x Tax rate Note, Taxable income = Assessable income - Allowable reduction
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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.
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.
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DEDUCTION BASED ON FAMILY CIRCUMSTANCES
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:
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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.
Exemptions of PIT finalization
Finalization procedure and dossier
Dossier
Finalization procedure
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.
[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
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