Do employees with a 6-month contract have the right to authorize salary payers to finalize tax on their behalf in Vietnam?

Do employees with a 6-month contract have the right to authorize salary payers to finalize tax on their behalf in Vietnam?

Based on point d clause 6 Article 8 of Decree 126/2020/ND-CP, the regulations are as follows:

Taxes declared monthly, quarterly, annually, on each occurrence of tax obligations, and tax finalization declarations

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d) Personal income tax for organizations and individuals paying taxable personal income from salaries and wages; individuals having income from salaries and wages authorize tax finalization for organizations or individuals paying income; individuals having income from salaries and wages directly finalize tax with the tax authority. Specific details are as follows:

d.1) Organizations and individuals paying income from salaries and wages are responsible for finalizing tax declarations and finalizing tax on behalf of individuals who authorize them, whether or not tax withholding arises. In case organizations and individuals do not arise from income payment, they are not required to declare personal income tax finalization. If individuals are workers transferred from the old organization to the new organization due to mergers, consolidations, splits, conversions of enterprise types, or the old and new organizations are within the same system, the new organization is responsible for tax finalization on behalf of the individual for income paid by the old organization and reclaiming the personal income tax withholding certificate issued to the worker by the old organization (if any).

d.2) Resident individuals with income from salaries and wages authorize tax finalization to organizations or individuals paying income. Specific details:

Individuals with income from salaries and wages signing labor contracts for 03 months or more at one place and actually working there at the time the organization or individual paying income performs the tax finalization, even if they do not work for the full 12 months of the year. If individuals are workers transferred from the old organization to the new organization under the provisions of point d.1 of this clause, they can authorize the new organization to finalize the tax on their behalf.

Individuals with income from salaries and wages signing labor contracts for 03 months or more at one place and actually working there at the time the organization or individual paying income performs the tax finalization, even if they do not work for the full 12 months of the year; having irregular income from other places averaging not more than 10 million VND per month in the year and having withheld personal income tax at a rate of 10% with no further tax finalization request for this income.

d.3) Resident individuals with income from salaries and wages directly declaring personal income tax finalization with the tax authority in the following cases:

Having additional tax payable or requesting a tax refund or carrying forward to the next tax declaration period, except for the following: individuals with additional tax payable after each year's finalization of 50,000 VND or less; individuals with tax payable less than the prepaid amount without requesting a refund or carrying forward to the next tax declaration period; individuals with income from salaries and wages signing labor contracts for 03 months or more at one unit, concurrently having irregular income from other places averaging not more than 10 million VND per month in the year and having withheld personal income tax at a rate of 10% with no further tax finalization request for this income; individuals whose employers buy life insurance (except voluntary pension insurance), other non-compulsory accumulative insurance policies where employers or insurers have withheld personal income tax at a rate of 10% for the corresponding premium paid or contributed by the employer to the employee, then the employee does not need to finalize personal income tax for this income.

Individuals present in Vietnam for less than 183 days in the first calendar year but have accumulated 183 days or more within 12 consecutive months from the first day of arrival in Vietnam.

Foreign individuals terminating their working contract in Vietnam must declare tax finalization with the tax authority before leaving the country. If the individual has not completed the tax finalization, they must authorize the organization paying income or another organization or individual to finalize the tax according to the regulations on tax finalization for individuals. Should the organization paying income or another organization or individual receive the authorization, it must take responsibility for any additional personal income tax payable or refunded to the individual.

Resident individuals with income from salaries and wages subject to tax reduction due to natural disasters, fires, accidents, or serious illnesses affecting their tax payment ability must directly declare tax finalization with the tax authority and cannot authorize the organization or individual paying income to finalize the tax on their behalf.

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Additionally, according to subsection 3 Section 1 of Official Dispatch 636/TCT-DNNCN in 2021, resident individuals with income from salaries and wages authorize personal income tax finalization to organizations or individuals paying income. Specific details:

Case 1: Individuals with income from salaries and wages signing labor contracts for 03 months or more at one place and actually working there at the time the organization or individual paying income performs the tax finalization, even if they do not work for the full 12 months of the calendar year.

Case 2: If individuals are workers transferred from the old organization to the new organization due to mergers, consolidations, splits, conversions of enterprise types, or the old and new organizations are within the same system, they can authorize the new organization to finalize the tax on their behalf.

Case 3: Individuals with income from salaries and wages signing labor contracts for 03 months or more at one place and actually working there at the time the organization or individual paying income performs the tax finalization, even if they do not work for the full 12 months of the calendar year;

At the same time having irregular income from other places averaging not more than 10 million VND per month in the year and having withheld personal income tax at a rate of 10% with no further tax finalization request for this income.

Case 4: Foreign individuals terminating their working contract in Vietnam who have not completed the tax finalization must authorize the organization paying income or another organization or individual to finalize the tax according to the regulations on tax finalization for individuals.

Case 5: If the organization paying income or another organization or individual receives authorization to finalize, it must take responsibility for any additional personal income tax payable or refunded to the individual.

Thus, based on the above regulations, it can be seen that employees with a 6-month contract are eligible to authorize personal income tax finalization.

What are cases in which employees can authorize salary payers to finalize tax on their behalf in Vietnam? (Image from the Internet)

What are cases in which employees can authorize salary payers to finalize tax on their behalf in Vietnam?

According to point d3 clause 6 Article 8 of Decree 126/2020/ND-CP and subsection 1 Section 2 of Official Dispatch 636/TCT-DNNCN in 2021, individuals with income from salaries and wages in the following cases are not required to finalize personal income tax:

- Individuals with additional personal income tax payable after each year's finalization of 50,000 VND or less.

- Individuals with personal income tax payable less than the prepaid amount without requesting a refund or carry forward to the next tax declaration period.

- Individuals with income from salaries and wages signing labor contracts for 03 months or more at one unit, concurrently having irregular income from other places averaging not more than 10 million VND per month in the year and having withheld personal income tax at a rate of 10% with no additional tax finalization request for this income.

- Individuals whose employers buy life insurance (except voluntary pension insurance) or other non-compulsory accumulative insurance policies where the employer or insurer has withheld personal income tax at a rate of 10% for the corresponding premium paid or contributed by the employer to the benefit of the employee, then the employee does not need to finalize personal income tax for this income.

What is the tax authority's responsibility for receiving and processing personal income tax finalization in Vietnam?

The tax authority's responsibility for receiving and processing personal income tax finalization can be based on Section 6 of Official Dispatch 636/TCT-DNNCN in 2021 with the following regulations:

- The tax authority is responsible for disseminating, instructing, and urging taxpayers to finalize and pay taxes conformably to avoid penalties for violations according to legal regulations.

- The Tax Authority organizes the reception of personal income tax finalization to facilitate location, personnel, and time, ensuring all personal income tax finalization are received within the prescribed period.

- Once the tax authority has accepted the personal income tax finalization dossier, it reviews and processes the declaration dossiers that have not been recorded on the tax sector's IT system; it processes the dossiers as per regulations without returning the finalization dossier unless the individual requests adjustments to the tax authority finalization.

Guidance for the implementation of registering accounts for electronic tax transactions and Official Dispatch No. 535/TCT-DNNCN in 2021 from the General Department of Taxation guides the electronic submission of form 02/QTT-PIT on the General Department of Taxation's electronic portal.