Are charitable contributions a basis for tax calculation on income from wages and salaries in Vietnam?
Are charitable contributions a basis for tax calculation on income from wages and salaries in Vietnam?
Based on Article 7 of Circular 111/2013/TT-BTC, the contents related to personal income tax for business individuals in this Article have been abolished by Clause 6, Article 25 of Circular 92/2015/TT-BTC, which stipulates as follows:
Basis for tax calculation on taxable income from business, wages, and salaries
The basis for tax calculation on income from business and income from wages and salaries is taxable income and the tax rate. Specifically:
1. Taxable income is determined by taxable income as guided in Article 8 of this Circular minus (-) the following deductions:
a) Family circumstance deductions as guided in Clause 1, Article 9 of this Circular.
b) Insurance premiums and voluntary pension fund contributions as guided in Clause 2, Article 9 of this Circular.
c) Charitable contributions, humanitarian aid, and educational support as guided in Clause 3, Article 9 of this Circular.
- Tax rate
The personal income tax rate for income from business, wages, and salaries is applied according to the partially progressive tax schedule stipulated in Article 22 of the Personal Income Tax Law. Specifically:
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Charitable contributions as guided in Clause 3, Article 9 of Circular 111/2013/TT-BTC will not be taxable income used as a basis for personal income tax calculations. Specifically:
(1) Charitable contributions, humanitarian aid, and educational support are deducted from taxable income concerning income from business, wages, and salaries before calculating tax for resident taxpayers, including:
- Contributions to organizations and facilities caring for and raising children in especially difficult circumstances, disabled persons, and the elderly without shelters.
The organizations and facilities caring for and raising children in difficult circumstances, disabled persons, must be established and operate according to the regulations of the Government of Vietnam.
The documentation for proving contributions to organizations and facilities caring for and raising children in especially difficult circumstances, disabled persons, and the elderly without shelters is the legal receipt of these organizations and facilities.
- Contributions to charity funds, humanitarian funds, and educational support funds established and operating under the regulations of the Government of Vietnam and other related documents on the management and use of financial support sources.
The documentation for proving charitable, humanitarian, and educational support contributions is the legal receipt issued by the central or provincial organizations or funds.
(2) The charitable contributions, humanitarian aid, and educational support arising in any year are deducted from taxable income for the tax year in which they arise. If they cannot be fully deducted, they will not be deducted from taxable income for the following tax year.
The maximum deduction does not exceed the taxable income from wages and salaries and business income for the tax year in which the contributions are made.
Are charitable contributions a basis for tax calculation on income from wages and salaries in Vietnam? (Image from the Internet)
When is the deadline for submitting personal income tax finalization documents?
According to Clause 2, Article 44 of the 2019 Tax Administration Law, it is stipulated:
Deadline for submitting tax declaration documents
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2. The deadline for submitting tax declaration documents for taxes calculated on an annual basis is stipulated as follows:
a) No later than the last day of the third month from the end of the calendar year or fiscal year for annual tax finalization documents; no later than the last day of the first month of the calendar year or fiscal year for annual tax declaration documents;
b) No later than the last day of the fourth month from the end of the calendar year for personal income tax finalization documents for individuals directly conducting tax finalization;
c) No later than December 15 of the preceding year for tax declaration documents for presumptive tax of business households, individuals paying tax under the presumptive method; for new business households and individuals, the deadline is no later than 10 days from the commencement of business activities.
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Thus, the deadline for personal income tax finalization for the year 2024 is stipulated as follows:
- No later than March 31, 2024, for annual tax finalization documents.
- No later than May 4, 2024, for personal income tax finalization documents of individuals directly conducting tax finalization.
When are persons with income from wages and salaries not required to finalize personal income tax in Vietnam?
According to point d.3 clause 6, Article 8 of Decree 126/2020/ND-CP, persons with income from wages and salaries are not required to finalize personal income tax in the following cases:
- Individuals have an additional tax liability of 50,000 VND or less after finalization for each year.
- Individuals have a tax liability smaller than the tax already temporarily paid and do not request tax refunds or carryovers to the next tax period.
- Individuals have income from wages and salaries under labor contracts of three months or more at one unit and have additional freelance income averaging less than 10 million VND per month for the year and have already had 10% personal income tax withheld. If they do not request finalization, they do not have to finalize the tax on this portion of income.
- Individuals whose employers purchased life insurance (excluding voluntary pension insurance), other non-compulsory insurance with cumulative insurance premiums, and the employer or the insurer has withheld 10% personal income tax on the corresponding insurance premiums paid or contributed by the employer, the employees are not required to finalize the personal income tax on this portion of income.
