PERSONAL INCOME TAX FINALIZATION FOR 2022 MUST BE DONE NO LATER THAN MAY 4, 2023

According to the Decree 125/2020/ND-CP on 19 November 2020, the violation of the deadline for submission of the dossier for tax declaration may be liable to a fine of up to VND 25,000,000. Therefore, it is crucial to understand and implement the relevant regulations. For income-paying organizations, the declaration and finalization of tax (in general) and personal income tax (“PIT”) (in particular) are usually carried out by professional teams who understand the relevant procedures and knowledge. However, individuals who do not belong to the situation of authorisation for income-paying organizations could be quietly embarrassed in the process.

In this newsletter, ATA Legal Services focuses on guidelines for PIT finalization that they belong to the situation of direct finalization with the tax authorities. This newsletter is based on Dispatch no 883/TCT-DNNCN (“Dispatch 883”) on 24 March 2022 by the General Department of Taxation.

1. The cases that individuals do not finalize PIT

1. Individuals whose additional payable PIT after finalization of each year is less than VND 50,000;
2. Individuals whose additional payable PIT is less than the amount of tax temporarily paid without requesting a refund or set-off in the next declaration;
3. Individuals who get income from wages under the 03 months or more labour contract in a company, and at the same time, they get other monthly average current income per year not exceeding 10 million and have deducted PIT at the rate of 10%: if they do not request, they are not required to finalize this income;
4. Individuals whose employer purchased life insurance (except for voluntary pension insurance) to their, other optional insurance with the accumulated insurance fee, that the employer or insurer has deducted PIT at the rate of 10% per the premium amount corresponding to the portion of purchase or contribution of the employer, the employee is not required to finalise PIT on this income portion.

2. The cases that individuals direct finalize PIT

Individuals who belong to tax finalization and one of the following cases must directly finalize PIT at the department of taxation:

1. For resident individuals whose income from wages from 02 companies or more and do not satisfy the conditions for authorised finalisation[1], they must directly finalize PIT if they request a refund or off-set at the next declaration term concerning their additional or overpaid payment tax.
2. If Individuals present in Vietnam in the first calendar year are less than 183 days, but counting for 12 consecutive months from the first day of presence in Vietnam are more than 183 days, the first finalisation year is 12 consecutive months from the first day of presence in Vietnam.
3. Foreigners who conclude labour contracts in Vietnam, declare tax finalization before leaving Vietnam.
4. Resident individuals whose income from wages paid from abroad and International Organisations, Embassies, and Consulates have been not deducted and there is an additional payment tax or an overpaid tax to request a refund or off-set in the next declaration.
5. Resident individuals whose income from wages, is eligible for deduction due to natural disasters, fires, accidents, or critical disease affecting their payment ability.

3. The Dossier of finalisation is applied to individuals who directly declare with the department of taxation, includes:

1. Form of PIT finalization declaration;
2. Appendix of family deduction statement for dependents;
3. Copies (copies from originals) of documents proving the deduction of tax, temporarily paid during the year, and the amount of tax paid abroad (if any);
4. A copy of the Tax Deduction Certificate (stating the amount paid under which a form of declaration) issued by the Income-Paying Organization;
5. Copies of invoices and documents proving the contribution to charity, humanitarian funds, and study promotion funds (if any);
6. Documents proving the amount paid by the organization paying income abroad in case the individual receives income from international organizations, embassies, consulates and receives income from abroad.
7. Dependent registration dossier (if the deduction is calculated for dependents who have not yet registered dependents).

4. The tax authority to which the tax finalization dossier is submitted

a. For resident individuals whose income from wages and subject to self-declaration

• If income arises in one company:

+ In case of income paid by organizations or individuals in Vietnam but not yet deducted tax: individuals submit tax finalization dossiers at the department of taxation which directly managies organizations or individuals paying income.

+ In case of income paid from abroad: the individual submits a dossier of tax declaration to the department of taxation to which the individual's work arises in Vietnam. In case the place where the individual's work arises is not in Vietnam, the individual shall submit a dossier of tax declaration to the department of taxation to which the individual resides.

• If income arises at two or more companies: the individual submits the dossier of tax finalization to the department of taxation to which the largest source of income in the year is located.

b. For resident individuals whose income from wages is subject to organizations that pay deductions at source from two or more companies

• Determine by where the family deduction is ultimately calculated:

+ Individuals who have calculated the family situation deduction for themselves at any income-paying organization or individual shall submit the dossier of tax finalization declaration to the department of taxation directly managing the organization or individual paying such income.

+ In case an individual changes his/her place of work and at an organization or individual that pays the final income with family deduction for himself/herself, he/she shall submit the dossier of tax finalization declaration to the department of taxation managing the organization or individual paying the final income.

+ Other cases (at the time of finalization, the individual does not calculate the family deduction, does not work at any income-paying organization): submit the dossier of tax finalization declaration to the department of taxation to which the individual resides.

• Resident individuals who apply dossier of tax reduction due to natural disasters, fires, accidents or critical diseases: submit the dossier of tax finalization declaration to the department of taxation to which the individual submits the tax reduction application.

5. Form of submission of tax finalization dossiers

1. Submitting directly at the department of taxation;
2. Submitting the electronical dossier via the eTax Mobile V1.0 applicaiton: recommended.

6. Deadline for submitting PIT finalization dossier

Deadline: the last day of the 4th month from the end of the calendar year. In case this day coincides with a holiday, the expiry date is the working day following that holiday.

Thus, for 2022, the deadline to submit PIT finalization dossier for individuals is no later than May 4, 2023 (the first working day after the holiday).

[1] Decree 126/2020/ND-CP approves individuals with income from wages from 02 companies or more to authorise income-paying organization to make tax finalisation when:

+ Have a labor contract of 03 months or more and actually work there at the time the organization pays tax finalization income;

+ At the same time, they have current income in other places on average monthly in the year not exceeding VND 10 million and have been deducted PIT at the rate of 10%;

+ There is no a tax finalization requirement for current income.