The objects who have to do PIT finalization

Create at: 04/03/2022 16:10

1. What is PIT? What is PIT finalization?

️⛳Personal income tax (PIT) is an amount that an income earner must deduct from his/her salary, or from other sources of revenue, into the state budget after deductions. Personal income tax is not levied on low-income individuals, so this revenue will be fair to all objects, contributing to reducing the disparity between classes in society.

️⛳ PIT finalization means an individual declares tax in a tax year on issues of additional tax to be paid, refund of overpaid tax, and tax clearing in the next period.

2. The objects who have to do PIT finalization:

✨ Individuals earning income from salaries and wages:

➡️ Resident individuals who earn incomes from salaries and wages paid by international organizations, Embassies, and Consulates in Vietnam but have not yet made tax deductions shall declare tax directly with the tax authorities quarterly.

➡️Resident individuals earning incomes from salaries and wages paid by organizations and individuals from abroad shall declare tax directly with the tax authorities quarterly.

➡️ Individuals and groups of individuals who have income from business and declare tax directly with tax authorities, including:

✔ Individuals and groups of business individuals paying tax according to the declaration method are individuals, groups of business individuals fully comply with the accounting, invoice, and voucher regimes, and individuals, groups of business individuals can only account for revenue, not expenses for the quarterly tax declaration.

✔ Individuals or groups of business individuals paying tax according to the presumptive method are business individuals or groups of business individuals who fail to comply with the provisions of the law on accounting, invoices, and vouchers, cannot identify revenue, expenses and taxable income shall declare tax annually.

✔ Individuals doing mobile business (transportation) declare personal income tax each time it is incurred.

✔ Business individuals use invoices retailed by tax authorities according to individual income tax declaration numbers for each time they are generated for revenue on invoices.

✔ Individuals who do not do business but have activities of selling goods or providing services need an invoice to deliver to the customer for PIT declaration each time it is incurred.

✔ Individuals, groups of individuals with income from house rental, land use rights, water surface, other assets shall declare tax quarterly or each time it is incurred.

➡️ Residents earning incomes from salaries, wages, and business are responsible for making a tax finalization declaration if there is an additional tax payable or an overpaid tax amount, requesting tax refund or tax clearing in the next tax period, except for the following cases:

✔Individuals whose payable tax amount is smaller than the temporarily paid tax amount without request for tax refund or tax clearing in the following period.

✔ Individuals and business households that have income from the business have paid tax according to the presumptive method.

✔ Individuals and households that only earn income from renting houses or leasing land-use rights have paid tax according to the declaration at the place where the house or leased land use right is located.

✔ Individuals earning incomes from wages and salaries, signing labor contracts of three (03) months or more at a unit, but having current income elsewhere in the year, the average monthly income does not exceed 10 million VND has been tax-deductible by the income payer at the source at the rate of 10%, if there is no request, no tax finalization will be made on this income.

✔ Individuals earning incomes from salaries and wages, signing labor contracts of three (03) months or more at a unit and having additional income from renting houses or leasing land use rights with the average monthly income of the year not exceeding 20 million dongs has already paid tax at the place where the house for rent is located and has the right to use the leased land if it is not requested, then no tax finalization shall be made on this income.

✔ Individuals who are insurance agents, lottery agents, multi-level sales agents and have received personal income tax deductions from income payers shall not finalize this income.”

Residents earning incomes from salaries and wages are responsible for making tax finalization if there is an additional tax payable or an overpaid tax amount that is requested to be refunded or cleared in the next tax period, except for the following cases:

✔ Individuals whose payable tax amount is smaller than the temporarily paid tax amount without request for tax refund or tax clearing in the following period.

✔ Individuals whose employer buys life insurance (except voluntary pension insurance), other optional insurance with accumulated premiums that the employer or insurer has deducted deduction of personal income tax at the rate of 10% on the premium amount corresponding to the part purchased or contributed to the employee by the employer.

✨ Organizations paying income from salaries and wages:

▪️ Organizations that pay incomes from salaries and wages, regardless of whether tax deduction is incurred or not, are responsible for making tax finalization and tax finalization on behalf of authorized individuals. In case the organization does not generate income from salaries and wages in 2015, it is not required to declare PIT finalization.

▪️ Organizations that pay incomes that are divided, split, consolidated, merged, converted, dissolved, or gone bankrupt in accordance with the Law on Enterprises must make tax finalization on the withheld personal income tax amount by the 45th day at the latest (forty-fifth) from the date of division, separation, consolidation, merger, transformation, dissolution or bankruptcy, and issue tax withholding vouchers to employees as a basis for employees to make personal income tax finalization. In case of conversion of enterprise type in which the receiving party inherits all tax obligations of the enterprise before the conversion (such as converting the type of business from a limited liability company to a joint-stock company or vice versa; converting enterprises with 100% state capital into joint-stock companies and other cases as prescribed by law), the enterprise before conversion is not required to declare tax finalization until the time of decision on enterprise conversion, and do not issue tax deduction vouchers for employees transferred from the old organization to the new organization, the receiving party shall make the annual tax finalization declaration as prescribed.

▪️ In the case of the enterprise reorganization (dividing, splitting, merging, merging, transforming), the employees are transferred from the old organization to the new one (the organization formed after the reorganization of the enterprise). At the end of the year, if the employee has authorization for tax finalization, the new organization must collect the PIT withholding voucher issued to the employee by the old organization to serve as a basis for summarizing the income and withheld tax amounts and tax finalization on behalf of employees.

▪️ Particularly for organizations that pay incomes that that is dissolved or terminated, and have generated income but not withheld PIT, the organizations that pay incomes shall not finalize personal income tax, only provide tax authorities with a list of individuals who have paid income during the year (if any) according to Form No. 05/DS-TNCN issued together with Circular No. 92/2015/TT-BTC dated June 15, 2015, of the Ministry of Finance no later than the 45th day from the date of the decision on dissolution or termination of the operation.

3. Forms of PIT finalization:

✨ Individuals earning incomes from salaries or wages authorize income payers to finalize tax in the following cases:

⏹️ Individuals earning incomes from salaries and wages sign labor contracts of 03 months or more at an income paying organization and are actually working there at the time of authorization for tax finalization (including cases where If the individual does not work for full 12 months in a year), he/she is authorized to finalize tax at such income-paying organization for the portion of income paid by such organization, even if the individual also has income from life insurance (except voluntary retirement insurance), other optional insurance with a cumulative premium for which 10% PIT withheld.

⏹️ In case the income-paying organization carries out the enterprise reorganization (dividing, splitting, merging, merging, transforming) and the employees are transferred from the old organization to the new one (the one formed after the reorganization of the enterprise), if in the year the employee does not have any additional income from salary or wages at another place, he/she may authorize the new organization to finalize tax on behalf of the income paid by the old organization. In case of transferring employees between organizations in the same system such as: Group, Corporation, Parent - Subsidiary Company, Head Office, and branch, the principle of authorization for tax finalization shall also be applied as in the case of enterprise reorganization.

⏹️ Individuals earning incomes from salaries and wages sign labor contracts for 3 months or more at an income paying organization and at the same time, having current income in other places, the average monthly income in the year is not more than 10 million VND, and the income payer has withheld tax at the rate of 10%. If the individual does not require tax finalization on current income, the income payer is authorized to make the tax finalization at an income paying organization that signs a labor contract from 03 months or more. If an individual has a request for tax finalization on current income, the individual shall directly settle the settlement with the tax authorities.

⇒ In case the income paying organization has a large number of employees authorized to finalize the tax, the income paying organization may make a list of authorized individuals which fully reflect the contents in form No. 02/ Issued by UQ-QTT-TNCN, and committed to the accuracy, truthfulness, and responsibility before the law for the data and contents in the list.

✨ Individuals who make tax finalization directly with tax authorities:

⏹️ Individuals who satisfy the conditions to authorize income-paying organizations to finalize tax under the guidance at Point 1 above but have been granted PIT withholding vouchers by income-paying organizations shall not authorize tax finalization to income-paying organizations (except for cases where income-paying organizations have recovered and canceled tax withholding vouchers issued to individuals).

⏹️ Individuals earning incomes from salaries or wages that do not satisfy the conditions are authorized to authorize income payers to finalize tax under the guidance at point 1 above but are subject to PIT finalization as prescribed, they shall directly make tax finalization with tax authorities on all incomes generated in the year, specifically in some cases where PIT finalization is not authorized as follows:

▪️ Individuals who have only current income and have withheld tax at the rate of 10% (even if they have only current income at one place), do not authorize the finalization.

▪️ Individuals earning incomes from wages and salaries, signing labor contracts for 3 months or more at a unit, and having current incomes that have not yet been withheld (including cases where the deduction has not been reached and the deduction has been reached but not deducted), the individual does not authorize the tax finalization.

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