Notes when refunding personal income tax in Vietnam

Currently, when individuals have income that reaches the tax threshold, they will have to make personal income tax finalization to the tax authority. However, in many cases, taxpayers overpay personal income tax but do not know whether they will receive a refund or not and what to pay attention to regarding personal income tax refund. To answer customers’ questions, Viet An Law Firm presents an overview of notes when refunding personal income tax in Vietnam as follows.

Legal basis

• Personal Income Tax Law 2007, as amended and supplemented in 2014.
• Law on Tax Administration 2019.
• Circular 92/2015/TT-BTC on instructions for implementing value added tax and personal income tax (amended and supplemented from time to time).
• Circular No. 156/2013/TT-BTC on instructions for implementing value added tax and personal income tax.

What is a personal income tax refund?

According to current law, personal income tax is a direct tax, based on the taxpayer’s income after deducting tax-exempt income and family deductions according to current regulations.

Accordingly, a personal income tax refund means that the tax authority will refund the overpaid personal income tax amount when fully meeting the provisions of the law.

Cases of personal income tax refund

Pursuant to Clause 2, Article 8 of the 2007 Personal Income Tax Law, amended and supplemented in 2014, personal income taxpayers will receive tax refunds in the following cases:

• That individual has the amount of tax paid greater than the amount payable.
• Individuals who have paid taxes but have taxable income that is not enough to pay tax.
• Other cases as prescribed by competent authorities.

Thus, if you want to receive a personal income tax refund, the taxpayer will have to fall into one of the above cases.

Conditions for personal income tax refund

According to the provisions of Article 23 of Circular 92/2015/TT-BTC, conditions for personal income tax refund include:

• Only individuals who have a tax code at the time of requesting a tax refund will receive a refund of their personal income tax.
• For individuals who have authorized income-paying organizations or individuals to perform tax finalization , the refund will also be made through the income-paying organization or individual.
• For individuals who are not authorized to finalize taxes, they need to directly declare income to the tax authority or pay compensation in the next period.

How to calculate tax refund amount

According to current law, personal income tax refund will be calculated as follows:

Refundable personal income tax amount = Personal income tax amount paid – Personal income tax amount payable according to tax finalization

If the result of the above calculation is a positive number, it is the amount of tax that has been overpaid, and in case it is negative, it is the amount of tax that has been underpaid.

Procedures for receiving personal income tax refund

To request a personal income tax refund, you can do so through the following ways:

Submit directly to the tax authority

If submitting directly, you will prepare the following documents:

• Request for refund of state budget revenue (According to form No. 01/DNHT issued with Circular No. 156/2013/TT-BTC).
• List 02-1/BK-QTT-TNCN.
• Personal income tax deduction document (a tax deduction document issued by the business.
• Valid citizen identification card or ID card.
• Scanned copy of the labor contract (If tax finalization is done at the tax agency managing the family circumstance deduction enterprise) or household registration book/temporary residence book (If tax finalization is done at the tax agency where the individual resides).
• In case of authorizing an organization or individual to pay income, a tax finalization authorization letter from the person requesting a tax refund must be submitted according to Form 02/UQ-QTT-TNCN).

Submit online application

Log in to the system and submit your application

Please log in to the electronic tax website, or if you do not have an account, register at: https://thuedientu.gdt.gov.vn .

After logging in, you will fill in your personal income tax online declaration information in the Tax Finalization section. Select declaration Form 02/QTT-TNCN.

After completing the declaration, click on the box to complete the declaration and save it to your computer as an XML output. Then on the home page, click submit declaration. If the information is correct and complete, the system will notify you of successful submission.

Note:

• If an individual directly declares tax during the year, the place to submit the tax refund application is the tax agency where the individual submitted the tax declaration during the year.
• Individuals who are eligible for family deductions at an enterprise that pays income must submit a tax refund application to the directly managing tax agency of the enterprise that pays that income.
• In case an individual changes his or her workplace, submit the tax finalization dossier to the tax agency managing the organization that pays the final income.
• Individuals requesting a tax refund can submit their application at any time from the end of the tax year.

Time to receive personal income tax refund

Based on the Law on Tax Administration 2019, the time limit for processing tax refund applications from the time the taxpayer submits all documents and fully implements the process will be as follows:

In case the dossier is subject to advance tax refund, within 06 working days from the date the competent tax authority announces the acceptance of the dossier, that agency will have to issue the following notices:

• Decide on tax refund for taxpayers
• Notice of transfer of documents to pre-tax refund inspection if that person is in the case of documents subject to pre-tax refund inspection.
• Or notify taxpayers of non-refund if the documents are not eligible for tax refund.
• If the information declared on the tax refund dossier is different from the management information of the tax administration agency, the tax administration agency will notify in writing for the taxpayer to supplement the information.

In case the dossier is subject to inspection before tax refund, no later than 40 days from the date the competent tax authority accepts the dossier, that agency will notify as follows:

• Decide on tax refund for taxpayers.
• Decide not to refund tax to taxpayers if the documents do not meet the conditions for tax refund.

In addition, if the tax refund dossier has confirmation of overpayment from the competent authority, the tax refund will be received within 5 days.

Some other notes about personal income tax refund

In addition to the above notes, when refunding personal income tax, you need to pay attention to the following issues

• Tax authorities will not proactively refund taxes. Accordingly, tax refund will only be made when the taxpayer requests a tax refund.
• The time to explain and supplement information in the tax refund dossier is not included in the time limit for processing the tax refund dossier.
• The time limit for processing tax refund documents is calculated in one day. If an individual has a personal income tax refund but is late in submitting the tax finalization declaration according to regulations, no penalty will be imposed for administrative violations of declaring tax finalization after the deadline.
• The tax authority will have to pay interest at the rate of 0.03%/day calculated on the amount to be refunded and the number of days of refund in case of delay in issuing a decision beyond the prescribed time limit for issuing a decision due to errors of the tax authority.

Above are some things to note when refunding personal income tax. Clients who want to learn more notes when refunding personal income tax in Vietnam, please contact Viet An Law Firm for our best support!