Instructions for personal income tax finalization in Vietnam

Personal income tax finalization is always a matter of concern not only for organizations but also for each individual. Not all subjects need to finalize taxes and regulations related to personal income finalization will be shared by Viet An Tax Agent through the article below.

Subjects must make tax finalization

For individuals who directly settle with the Tax authority

• Resident individuals with income from salaries or wages directly declare personal income tax finalization with the tax authority if there is an additional tax amount to be paid or an overpaid tax amount that is requested to be refunded or offset in the next tax declaration period.
• Individuals present in Vietnam for less than 183 days in the first calendar year, but calculated for 12 consecutive months from the first day of presence in Vietnam for 183 days or more, the first settlement year is 12 months. continuously since the first day of presence in Vietnam.
• A foreign individual who finishes a working contract in Vietnam declares tax finalization with the tax authority before leaving the country. In case an individual has not yet completed tax finalization procedures with the tax authority, he or she must authorize an income-paying organization or other organization or individual to finalize tax according to regulations on tax finalization for individuals. In case the income paying organization or another organization or individual receives authorization for finalization, they must be responsible for the additional personal income tax amount payable or be refunded the individual’s overpaid tax amount.
• Resident individuals who have income from salaries and wages and are considered for tax reduction due to natural disasters, fires, accidents, or serious diseases that affect their ability to pay taxes shall not authorize organizations or individuals. Pay tax settlement income instead but must directly declare settlement with tax authorities according to regulations.

For organizations that pay income from salaries and wages

• Organizations and individuals that pay income from salaries and wages are responsible for declaring personal income tax finalization regardless of whether tax deductions arise or not, and finalize personal income tax on behalf of authorized individuals.
• In case an individual authorizes personal income tax finalization for an organization and has an additional tax payable after finalization of VND 50,000 or less and is eligible for tax exemption, the income-paying organization still declares personal information to be paid. Enter it in the organization’s personal income tax finalization declaration dossier and do not summarize the additional tax payable by individuals whose additional tax payable after finalization is 50,000 VND or less. In case the income-paying organization has finalized personal income tax before the effective date of Decree No. 126/2020/ND-CP, it will not be processed retroactively.
• In case an individual is an employee transferred from an old organization to a new organization due to a merger, consolidation, division, separation, or conversion of the type of business by the old organization or the old organization and the new organization in under the same system, the new organization is responsible for finalizing personal income tax according to the individual’s authorization for both the income paid by the old organization and the new income paying organization to collect personal income tax deduction documents issued by the old organization issued to employees (if any).

Subjects are not subject to tax finalization

For individuals who directly settle with the Tax authority

Individuals with income from wages in the following cases are not required to finalize personal income tax:

• Individuals whose personal income tax amount must be paid after each year’s settlement is VND 50,000 or less.
• Individuals whose personal income tax amount must be paid is less than the tax amount temporarily paid without requesting a tax refund or offset in the next tax declaration period;
• Individuals with income from salaries or wages who sign a labor contract of 03 months or more at a unit, and at the same time have current income in other places with an average monthly income of no more than 10 million VND in the year and have been approved deduction personal income tax at the rate of 10%, if not required, tax finalization is not required for this income;
• Individuals whose employers buy life insurance (except voluntary pension insurance), or other optional insurance with accumulated premiums that the employer or insurance company has deducted Personal income tax at the rate of 10% on the insurance premium corresponding to the portion purchased or contributed by the employer to the employee, the employee does not have to finalize personal income tax on this portion of income.

For organizations that pay income from salaries and wages

In case the organization does not pay income, it does not have to declare personal income tax.

The family deduction

• The deduction for taxpayers is 11 million VND/ month (132 million VND/ year);
• The deduction for each dependent is 4.4 million VND/ month.

Note:

• To be eligible for deductions for dependents, taxpayers must register for deductions for dependents according to regulations. In case the taxpayer has not calculated family deductions for dependents in the tax year, the deductions for dependents will be calculated from the month the care obligation arises when the taxpayer performs tax finalization and registration. family deductions for dependents;
• In case the taxpayer is authorized to make a final settlement and has not yet calculated family deductions for dependents in the tax year, the deduction for dependents will also be calculated from the month the care obligation arises when the taxpayer takes action. Finalize authorization and register for family deductions for dependents through the income-paying organization.

Personal income tax finalization procedures

Declare tax finalization

Personal income tax finalization declaration dossier for individuals directly finalizing

• Tax finalization declaration form No. 02/QTT-TNCN.
• Appendix form No. 02-1/BK-QTT-TNCN if registering for family deductions for dependents.
• Photocopies of documents proving the amount of tax deducted, temporarily paid during the year, and the amount of tax paid abroad (if any).

The individual commits to be responsible for the accuracy of the information on that photocopy. In case the income-paying organization does not issue tax deduction documents to the individual because the income-paying organization has ceased operations, the tax authority will base it on the tax department’s database to consider and process the finalization dossier. Tax for individuals without requiring tax deduction documents.

In case, according to the provisions of foreign law, the foreign tax authority does not issue a certificate confirming the amount of tax paid, the taxpayer can submit a photocopy of the Tax Withholding Certificate (clearly stating that tax has been paid according to the declaration). any income tax) issued by the income paying agency or a photocopy of bank documents for the tax amount paid abroad with confirmation from the taxpayer.

• Photocopies of invoices and documents proving contributions to charity funds, humanitarian funds, and study promotion funds (if any).
• In case an individual receives income from international organizations, embassies, or consulates and receives income from abroad, there must be documents proving the amount paid by the unit or organization paying the income abroad.
• In addition, you need to provide a photocopy of your ID card, household registration book, labor contract, etc. (in some cases).

– Documents for individuals authorizing organizations or individuals to pay income to finalize tax on their behalf

• The individual authorizes the organization or individual to pay the income to settle the settlement on his/her behalf according to form No. 02/UQ-QTT-TNCN
• Attached are copies of invoices and documents proving charitable, humanitarian, and study promotion contributions (if any).

– Additional declaration of personal income tax finalization dossier

• In case organizations or individuals make additional declarations that do not change their tax obligations, they only have to submit an Explanation for additional declarations and related documents and do not have to submit additional declarations.
• In case an organization or individual has not submitted an annual tax finalization declaration, the taxpayer shall additionally declare any errors or omissions in the monthly or quarterly tax declaration dossier, and at the same time synthesize the additional declaration data into the finalization dossier. annual tax payment.
• In case an organization or individual has submitted an annual tax finalization declaration, then:
  • For individuals who directly declare taxes or directly finalize taxes, only supplement the annual tax finalization declaration dossier.
  • For organizations and individuals that pay income from salaries and wages, must also declare additional annual tax finalization documents and monthly and quarterly declarations with corresponding errors or omissions.

The place to submit tax finalization documents

For organizations that pay income

Submit personal income tax finalization documents to the tax agency directly managing the organization paying that income.

For individuals who directly settle with the Tax authority

A resident individual who earns salary or wages in one place and is eligible to self-declare tax during the year shall submit a tax finalization declaration dossier to the tax agency where the individual directly declares tax during the year according to the provisions at point a, Clause 8, Article 11 of Decree No. 126/2020/ND-CP.

• In case an individual has a salary or wage income from two or more places, including cases where both incomes are declared directly and income is deducted by the paying organization, the individual submits an application. Declare tax finalization at the tax authority where the source of income is the largest during the year.
• In case the largest source of income in the year cannot be determined, the individual chooses where to submit the finalization dossier at the tax agency directly managing the paying organization or where the individual resides.

– Resident individuals with income from salaries and wages subject to payment deductions at source from two or more places shall submit a tax finalization declaration as follows:

• An individual who has calculated family deductions for himself or herself at an organization or individual paying income must submit a tax finalization declaration dossier to the tax agency directly managing the organization or individual paying that income.
• In case an individual changes his or her workplace and at the organization or individual that pays the final income with family deductions for himself/herself, submit a tax finalization declaration dossier to the tax agency managing the organization or individual paying a final income.
• In case the individual changes workplace and organization, the individual pays the final income without calculating family deductions for himself/herself, then submits the tax finalization declaration dossier to the tax agency where the individual resides.
• In case an individual has not yet calculated family deductions for himself or herself at any income-paying organization or individual, submit a tax finalization declaration dossier to the tax office where the individual resides.
• In case a resident individual does not sign a labor contract, or signs a labor contract of less than 03 months, or signs a contract to provide services with income at one place or many places with 10% deducted, then submit a declaration. Tax finalization at the tax agency where the individual resides.
• Individuals residing during the year have income from salaries or wages in one or many places but at the time of finalization do not work at any organization or individual paying income, the place to submit tax finalization declaration dossiers is tax authority where the individual resides.

Deadline for submitting tax finalization documents

• For income-paying organizations: The deadline for submitting tax declaration and finalization documents is the last day of the 3rd month from the end of the calendar year or fiscal year.
• For individuals directly finalizing taxes: The deadline for submitting tax finalization documents is the last day of the 4th month from the end of the calendar year.

Note: In case the deadline for submitting tax finalization documents coincides with a prescribed holiday, the deadline for submitting tax finalization documents is the next working day. In case an individual has a personal income tax refund but is late in submitting the tax finalization declaration according to regulations, penalties will not be imposed for administrative violations of tax finalization declaration past the deadline.

Above is an article by Viet An Tax Agent on instructions for finalizing personal income tax. Customers who want to use our settlement service, please contact us for the fastest and most effective support!