THE DEADLINE FOR PERSONAL INCOME TAX FINALIZATION IS COMING: EMPLOYEES NEED TO UNDERSTAND THESE FOLLOWING ISSUES

Employees’ incomes from salaries and wages are obliged to pay personal income tax and declare personal income tax finalization according as prescribed by law. These following information are important that employees need to know and understand about personal income tax finalization for the tax year 2020.

1️⃣ Regarding the deadline of annual personal income tax finalization:

According to Article 44 of the Tax Management Law 2019, the specific deadline for submitting personal income tax declaration documents is as follows:

+ The deadline for submitting personal income tax finalization documents is the last day of April 2021 for individuals who declare tax finalization with tax authorities directly.

+ Particularly in case employees have incurred a personal income tax refund but turned in late in submitting the tax finalization declaration as prescribed, no fine will be applied for administrative violations in filing tax finalization overtime (according to Clause 4, Article 28 of Circular No. 111/2013/TT-BTC).

❗ Special case: Postpone the personal income tax finalization deadline of the tax period 2020 to May 4, 2021 because the last day of the 4th month coincides with a public holiday.

+ For income-paying organizations, the deadline for submitting PIT finalization documents is the last day of March 2021 or the last day of the third month from the end of the fiscal year.

2️⃣ In case of having to declare the finalization:

According to Point d.3 Clause 6 Article 8 of Decree 126/2020/ND-CP, employees who have additional tax payable or have overpaid tax amounts that are requested for refund or compensate in the next tax period must declare personal income tax finalization, except the following cases:

- Employees whose additional tax payable after the final settlement of each year is 50,000 VND or less;

- Employees whose payable tax amount is smaller than the temporarily paid tax amount without request for tax refund or compensate in the next tax period;

- Employees’ incomes from salaries and wages, has a labor contract of 3 months or more at a unit, and at the same time has an average monthly current income of not more than VND 10 million in other places and has personal income tax deduction at the rate of 10%. If there is no request for refund, then no tax finalization is required for this income;

- The employee is purchased life insurance by the employer (except the voluntary retirement insurance), and other optional insurance with accumulated insurance premiums. If the employer or the insurance company has personal income tax deduction at the rate of 10% on the insurance premium amount corresponding to the part that the employer buys or contributes to the employee, the employee does not have to pay personal income tax on this part of income.

3️⃣ In case of authorization for personal income tax finalization:

According to point d.2 clause 6 Article 8 of Decree 126/2020/ND-CP, resident workers’ incomes from salaries and wages authorize tax finalization to organizations and employees paying income, specifically can be as follows:

- Employees’ incomes from salaries and wages, has a labor contract of 3 months or more at a place and are actually working there at the time the organization or employee pays incomes to perform the tax finalization, even if you do not work for full 12 months in a year.

In case the employee is an employee who is transferred from the old organization to the new organization according to the provisions of Point d.1 Clause 6 Article 8 of Decree 126/2020/ND-CP, the employee is authorized to make the tax finalization for the new organization.

- Employees’ incomes from salaries and wages, has a labor contract of 3 months or more at a place and are actually working there at the time the organization, the employee pays for tax finalization, even if you do not work for full 12 months in a year. At the same time has an average monthly current income of not more than VND 10 million in other places and has personal income tax deduction at the rate of 10%. If there is no request for refund, then no tax finalization is required for this income.

4️⃣ In case the employee eligible for the paid personal income tax refund:

According to the provisions of Article 8 of the Law on Personal Income Tax in 2007, an employee is eligible for the personal income tax refund in the following cases:

(1) The paid tax amount is greater than the payable tax amount;

(2) The employee has paid tax amount but has a taxable income that is not yet taxable;

(3) Other cases as decided by competent state authorities.

The personal income tax refund in the above cases applies to employees who have registered and have a tax identification number at the time of submission the tax finalization documents.

5️⃣ In case the enterprise is required to issue tax deduction vouchers:

According to the provisions of Clause 2, Article 25 of Circular 111/2013/TT-BTC, in case the employee has been paid tax deduction income by an organization or individual but do not authorize income-paying organizations or individuals for tax finalization, they have the right to request income-paying organizations and individuals to issue tax deduction vouchers as prescribed by law. Specifically:

- For employees who do not sign a labor contract or sign a labor contract of less than three (03) months: the employee has the right to request the income paying organization or individual to issue a deduction voucher for each tax deduction or issue a deduction voucher for multiple deductions in a tax period.

- For employees who sign labor contracts of three (03) months or more: income-paying organizations and individuals only provide employees with a deduction voucher in a tax period.

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