10 frequently asked questions about implementation of the policy for 2017 personal income tax finalization

According to the predetermined schedule, you are required to submit documents on 2017 personal income tax (PIT) finalization by March 31, 2018. Therefore, in order to meet the deadline, you need to make all necessary preparations from now on.

Before carrying out PIT finalization, you should manage to review relevant legislative documents. 
As of the current date (November 11, 2017), the following legislative documents deals with PIT finalization:   
- 2006 Law on Tax Administration; 
- 2012 Law on Tax Administration; 
- 2007 Law on Personal Income Tax;  
- 2012 Amended Law on Personal Income Tax;  
- 2014 Law on Amendments to Laws on Tax; 
- 2017 Consolidated Document No. 14/VBHN-BTC that consolidates the Circular providing guidance on the Law on Tax Administration, the Amended Law on Tax Administration and the Decree No. 83/2013/ND-CP.
- 2016 Consolidated Document No. 05/VBHN-BTC that provides guidance on implementation of the Law on Personal Income Tax, the Amended Law on Personal Income Tax and the Decree No. 65/2013/ND-CP guiding the Law on Personal Income Tax and the Amended Law on Personal Income Tax; 
- 2015 Consolidated Document No. 14/VBHN-BTC that consolidates the Decree providing guidance on the Law on Personal Income Tax and the Amended Law on Personal Income Tax;
- 2016 Consolidated Document No. 16/VBHN-BTC that consolidates the Decree prescribing tax-related administrative penalties and enforcement of tax-related administrative awards.

In the course of implementing 2017 PIT finalization procedures, difficulties are more likely to occur. Below are 10 frequently asked questions related to this matter: 

1. Who is bound to carry out 2017 PIT finalization?

(Ai phải thực hiện quyết toán thuế TNCN 2017)

Any individual resident who earns income from salary, wages or business transactions has the burden of making the tax finalization declaration in the case of having to pay more tax, claiming any tax refund or carrying forward any outstanding amount of tax for offset purpose in the next tax declaration period, unless otherwise prescribed as follows:

- Any individual resident owes the amount of tax payable which is less than the prepaid amount of tax, but does not claim any tax refund or offset in the next declaration period.

- Any individual resident or household business who earns income from business activities has already paid their income tax assessed according to the lump-sum tax method.

- Any individual resident or family household who earns income only from rental of their real property (including land use right) has already made tax payments according to the tax declaration at the tax jurisdiction where their real property is located.

- If any individual resident who earns income from salary or wages by carrying out the employment contract having the term of at least 03 months with a tax unit, and receives additional irregular income at the average monthly maximum of VND 10 million a year from other tax units (VND 120 million/year at most) on which tax has been deducted at source by income payers at the rate of 10%, does not apply for PIT finalization such income shall not be subject to PIT finalization.   

    

- If any individual resident who earns income from salary or wages by carrying out the employment contract having the term of at least 03 months with a tax unit, and receives additional income from rental of real property or land use right that generates the average monthly maximum of VND 20 million a year (VND 240 million/year at most) on which tax has been paid to the tax jurisdiction where such rented real property is located, does not apply for PIT finalization such income shall not be subject to PIT finalization.     

  

- If any person who is an insurance sales agent, lottery sales agent or multi-level marketing agent has his/her personal income on which tax has been paid by the income-paying principal, such income shall not be subject to PIT finalization. 

The aforesaid are provided in Article 12 of the Circular No. 151/2014/TT-BTC. 

 

2. How do employees whose income earned from salaries paid according to the pay scale and salaries paid as incentive for their sales performance carry out the PIT finalization?

(Quyết toán thuế TNCN như thế nào đối với lao động có thu nhập từ tiền lương theo thang bảng lương và tiền lương khuyến khích theo doanh số)

Employer companies are obliged to prepare a general report of these salaries for the purpose of withholding and declaration of taxes on personal income earned from salaries or wages by applying the following specific regulations:

- Before paying salaries or wages to employees who work under an employment contract having the definite term of at least 03 months, employer companies shall carry out PIT withholding according to the percentage method table. 

- Before paying salaries or wages to employees who do not sign any employment contract, or sign an employment contract having the definite term of less than 03 months, with total income payment of at least VND 2,000,000 per each paycheck, employer companies shall withhold 10% of such income for PIT payment purpose. 

When carrying out PIT finalization procedures, these employer companies must name employees who sign an employment contract having the term of at least 03 months in the form No. 05-1/BK-QTT-TNCN and name employees who do not sign any employment contract or sign an employment contract having the term of less than 03 months in the form No. 05-2/BK-QTT-TNCN. 

The aforesaid are provided in the 2017 Official Dispatch No. 19465/CT-TTHT on PIT finalization issued by the Tax Department of Hanoi.

3. I worked for Company A till March 2017 and then started to work for Company B from April 2017 to end of 2017. I am wondering whether I can authorize Company B to act on my behalf to carry out PIT finalization procedures?  

(Tôi làm việc ở công ty A đến tháng 3/2017, sau đó, đến tháng 4/2017 bắt đầu làm tại công ty B cho đến hết năm 2017 thì có thể ủy quyền cho công ty B quyết toán thuế TNCN không)

Pursuant to Paragraph 3 Article 21 of the Circular No. 92/2015/TT-BTC, if persons who earn income from salaries or wages paid by 2 tax units or over in a tax year are bound by applicable regulations to carry out PIT finalization, they are obliged to directly contact a tax agency for implementation of PIT finalization procedures and are not allowed to entrust the PIT finalization task to any income-paying organization or entity.   

You are required to carry out the following procedures:

Application documents shall include:

- PIT finalization declaration form No. 02/QTT-TNCN (attached file)

- Form No. 02-1/BK-QTT-TNCN which must be filled out in case of application for any dependent exemption for the taxpayer’s qualifying family members. 

- Copies of documents evidencing the amount of tax which has been deduced or paid in advance in a tax year, or the amount of tax which has been paid abroad (if any).  The declarant must ensure accuracy of information shown on these copies.

Where income-paying organizations refuse to issue documents evidencing tax deductions to individual tax payers owing to closure, the tax agency may, after consulting the tax database, process their applications for PIT finalization without requiring these documents.

 

Where in accordance with overseas legislation the foreign tax agency does not issue the written confirmation of the amount of tax which has already been paid, tax payers may submit a copy of the Certificate of tax deduction (clearly verifying the PIT declaration form according to which the amount of tax has been paid) issued by the income-paying entity, or a copy of a bank’s documents evidencing the amount of tax paid abroad with the tax payer’s confirmation.

- A copy of invoices or documents evidencing monetary amounts contributed to charity funds, humanitarian funds or study support funds (if any). 

- If an individual tax payer receives income from a international organization, embassy, consulate and from abroad, documents evidencing the amount of money paid by overseas income-paying entities or organizations shall be required.

Submission address: Tax Subdepartment of your residence (either temporary or permanent residence).

4. Though laws prescribe that any employee working for at least 2 employer entities in a year shall not be entitled to entrust PIT finalization to their income-paying organizations or entities I, as an accountant, found myself carrying out PIT finalization for an employee of this type. So, what can I do now?    

(Theo quy định pháp luật, người lao động làm việc từ 2 nơi trở lên trong năm không được ủy quyền quyết toán thuế TNCN cho tổ chức, đơn vị chi trả thu nhập, nhưng tôi là bên kế toán “đã lỡ” thực hiện quyết toán thuế cho người này thì phải làm sao)

If an individual tax payer has been determined as the one bound to directly contact the tax agency for PIT finalization after authorizing an income-paying organization or person to carry out PIT finalization, and this organization or person has finished carrying out such finalization on his/her behalf, this organization or person is not required to make any change in their PIT finalization, but simply issues a relevant document evidencing the tax deduction which corresponds to the finalization figures, and then enter the statement "Company...has completed PIT finalization for Mr./Mrs.... on behalf of Mr./Mrs….according to the authorization given at the (ordinal number) line of the Form No. 05A/BK-TNCN” at the bottom left corner of that document in order for the individual tax payer to directly contact the tax agency to carry out PIT finalization.

      

The aforesaid are provided in the 2017 Official Dispatch No. 527/CT-TTHT on PIT finalization.

5. How can a foreigner residing in Vietnam who earns income in both overseas countries and Vietnam manage to complete his/her PIT finalization in 2017?

(Quyết toán thuế TNCN 2017 như thế nào đối với người nước ngoài cư trú tại Việt Nam vừa có thu nhập tại nước ngoài, vừa có thu nhập tại Việt Nam)

If an overseas income-paying entity has withheld an amount to pay tax on the income earned abroad, the amount of tax on the income earned abroad shall be subtracted from the PIT amount payable in Vietnam. 

   

Where in accordance with overseas legislation the foreign tax agency does not issue the written confirmation of the amount of tax which has already been paid, the tax payer may submit a copy of the letter of confirmation in which the income-paying entity specifies the withheld PIT amount, and clearly verifies the PIT declaration form according to which the amount of tax has been paid in his/her application documents for PIT finalization.

The aforesaid are provided in the 2017 Official Dispatch No. 62383/CT-TTHT on personal income subject to tax.

6. Is a branch required to carry out PIT finalization?

(Chi nhánh có được quyết toán thuế TNCN không)

If a branch possessing a stamp, bank account and directly rendering its services provides its employees or other persons with income by paying them salaries or wages, it must withhold and declare the personal income tax in accordance with subparagraph a.3 and c paragraph 1 Article 16 of the Circular No. 156/2013/TT-BTC of the Ministry of Finance dated November 6, 2013. 

The aforesaid are provided in the 2017 Official Dispatch No. 39243/CT-TTHT on PIT declaration and payment of subordinate establishments.

7. Is a representative office required to carry out PIT finalization?

(Văn phòng đại diện có được quyết toán thuế TNCN không)

If a representative office is charged with providing income for employees, it shall be obliged to carry out PIT declaration and finalization.

The aforesaid are provided in the 2017 Official Dispatch No. 5675/CT-TTHT on license fee and PIT payment.

8. In case of transfer of employees from a parent company to a representative or branch office, how do the 2017 PIT finalization procedures apply?

(Quyết toán thuế TNCN 2017 như thế nào trong trường hợp luân chuyển lao động từ Công ty sang Văn phòng đại diện hoặc Chi nhánh)

Intracompany transferees shall be entitled to authorize a representative office/branch (their new host organization) to carry out PIT finalization on their behalf if their income is received directly from this representative office/Branch.

The parent company shall not be obligated to carry out PIT finalization for employees in this context.

The aforesaid are prescribed by paragraph 1, 2 Article 21 of the Circular No. 92/2015/TT-BTC.  

9. In which case is the authorization to carry out PIT finalization permitted?

(Trường hợp nào được ủy quyền quyết toán thuế TNCN)

- Any person earning income from salaries or wages has entered into an employment contract having the term of at least 03 months with an income-paying organization or person and is actually working there on the date of authorization even if his/her employment period is less than 12 months.   

  

- Any person earning income from salaries or wages has entered into an employment contract having the term of at least 03 months with an income-paying organization or person, and is actually working there on the date of authorization even if his/her employment period is less than 12 months, and concurrently receives the monthly maximum irregular income of VND 10 million on average from income payers other than his current employer establishment 10% of which has been withheld by these income payers without requiring that it is subject to PIT finalization.  

     

- Any employee is transferred to a new employer establishment if his/her previous employer establishment undergoes division, splitting, consolidation, merger or transformation process.  At the end of a tax year, if that employee authorizes PIT finalization, his/her new employer establishment must collect documents evidencing PIT deductions (if any) from his/her previous one which is used as the basis for preparing a report on his/her income and withheld tax amount, and must carry out PIT finalization on his/her behalf.  

- Income-paying organization or person shall be allowed to carry out PIT finalization on behalf of their employees only if such income is derived from salaries or wages that these employees directly received from them. Where an income-paying organization which is formed after the division, splitting, consolidation, merger or transformation process is authorized by employees transferred from the original organization to carry out PIT finalization, this new employer organization shall be responsible for carrying out finalization of tax on the income paid by the original organization. 

10. In which case is the authorization to carry out PIT finalization prohibited?

(Trường hợp nào không được ủy quyền quyết toán thuế)

- If a person who fulfills eligibility requirements to authorize his/her income-paying organization or individual to carry out PIT finalization on his/her behalf in accordance with regulations in force has been issued with documents evidencing PIT deductions by this organization or individual, his/her authorization shall not be legally accepted (except if that income-paying organization or individual has managed to get back and eliminate these documents evidencing PIT deductions).

- If a person earning income from salaries or wages fails to meet eligibility requirements to authorize his/her income-paying organization or individual to carry out PIT finalization on his/her behalf in accordance with regulations in force, but is legally bound to implement PIT finalization procedures, (s)he shall directly contact with a relevant tax agency to carry out finalization of tax on all of his/her income earned in the tax year. The followings are those who are allowed to authorize PIT finalization:

+ If any person earns irregular income 10% of which has been withheld for tax payment (even if irregular income is provided by only one income payer), (s)he shall not be entitled to authorize PIT finalization.

+ If any person earning income from salaries or wages enters into an employment contract having the minimum term of 03 months at an income-paying establishment, and has the irregular income on which tax has not been withheld yet (even if such income has not reached the level at which it must be withheld, or such income already reaching the level at which it must be withheld is not withheld), (s)he shall not be entitled to authorize PIT finalization.

The aforesaid are subject to paragraph 3 Article 21 of the Circular No. 92/2015/TT-BTC.  

Reading in Vietnamese 10 câu hỏi thường gặp khi thực hiện quyết toán thuế thu nhập cá nhân 2017