How to calculate personal income tax refund from wages and salaries in Vietnam in 2024?

What are cases of personal income tax refund in Vietnam?

According to Article 8 of the Law on Personal Income Tax 2007, regulations on tax management and tax refunds are as follows:

Tax Management and Tax Refunds

1. Taxpayer registration, tax declaration, tax deduction, tax payment, tax finalization, tax refund, handling of violations of tax laws, and tax management measures are implemented in accordance with the provisions of the tax management law.

2. Individuals are entitled to tax refunds in the following cases:

a) The amount of tax paid is greater than the amount of tax payable;

b) The individual has paid tax but their taxable income does not reach the level subject to tax payment;

c) Other cases as decided by the competent state authority.

Therefore, according to the above regulations, individuals are entitled to tax refunds in the following cases:

- The amount of tax paid is greater than the amount of tax payable;

- The individual has paid tax but their taxable income does not reach the level subject to tax payment;

- Other cases as decided by the competent state authority.

How to calculate personal income tax refund from wages and salaries in Vietnam in 2024? (Image from the Internet)

How to calculate personal income tax refund from wages and salaries in Vietnam in 2024?

According to Form 02/QTT-TNCN Download issued together with Circular 80/2021/TT-BTC, the formula for calculating the refundable personal income tax for resident individuals with income from wages and salaries is as follows:

Overpaid Personal Income Tax = Personal Income Tax Paid - Personal Income Tax Payable according to Tax Finalization

In this, the personal income tax paid is determined based on the transaction amount deposited into the State budget or the personal income tax deduction certificate.

Personal Income Tax Payable = [(Total taxable income - Total deductions) : 12 months] x Tax rate x 12 months.

This is the amount of tax that individuals must pay according to tax finalization. This tax amount is calculated based on legal regulations related to taxable income, deductions, and tax rates.

To calculate the amount of refundable personal income tax, it is necessary to know exactly how much tax has been provisionally paid and how much tax is due.

Vietnam: What does the application for refund of overpayments from wages and salaries include?

Based on Article 42 of Circular 80/2021/TT-BTC stipulating the application for refund of overpayments from wages and salaries as follows:

Dossier for Overpaid Tax

1. Dossier for personal income tax refund for income from wages and salaries

a) In the case where organizations and individuals paying income from wages and salaries finalize tax for individuals who have authorized them

The dossier includes:

a.1) A written request for handling of overpaid tax, late payment fines, according to Form No. 01/DNXLNT issued together with Appendix I of this Circular;

a.2) A power of attorney in compliance with the law in cases where the taxpayer does not directly carry out the tax refund procedure, excluding tax agents submitting the tax refund dossier under the contract signed with the taxpayer;

a.3) A detailed list of tax payment documents according to Form No. 02-1/HT issued together with Appendix I of this Circular (applicable to organizations and individuals paying income).

b) In cases where individuals with income from wages, salaries directly finalize tax with tax authorities, have overpaid tax, and request a refund on the individual income tax finalization declaration, they do not have to submit a tax refund dossier.

The tax authority resolves the refund based on the personal income tax finalization dossier to process the overpaid amount for the taxpayer according to the regulations.

2. Dossier for overpaid taxes and other payments includes:

a) A written request for handling of overpaid tax, late payment fines, according to Form No. 01/DNXLNT issued together with Appendix I of this Circular;

b) A power of attorney in cases where the taxpayer does not directly carry out the tax refund procedure, excluding tax agents submitting the tax refund dossier under the contract signed with the taxpayer;

c) Accompanying documents (if any).

3. In case of overpayment when converting ownership, converting business, merger, consolidation, division, separation, dissolution, bankruptcy, termination of activities which require tax authorities to conduct inspections at the taxpayer's premises in accordance with point g, clause 1, Article 110 of the Tax Administration Law and Chapter VIII of this Circular, if in the Conclusion or Resolution and other inspection documents there is an overpaid tax amount, the taxpayer is not required to submit a tax refund dossier as stipulated in this clause. The tax authority will base on the Conclusion or Resolution and other inspection documents to carry out the overpaid amount refund procedure for the taxpayer according to the regulations.

From the above regulations, it can be seen that the dossier for personal income tax refund concerning income from wages and salaries is as follows:

(1) In the case where organizations, individuals paying income from wages and salaries finalize tax for individuals who have authorized them

The application for refund of overpayments includes:

- A written request for handling of overpaid tax, late payment fines, according to Form No. 01/DNXLNT issued together with Appendix I of this Circular;

- A power of attorney in compliance with the law in cases where the taxpayer does not directly carry out the tax refund procedure, excluding tax agents submitting the tax refund dossier under the contract signed with the taxpayer;

- A detailed list of tax payment documents according to Form No. 02-1/HT issued together with Appendix I of this Circular (applicable to organizations and individuals paying income).

(2) In cases where individuals with income from wages and salaries directly finalize tax with tax authorities, have overpaid tax, and request a refund on the individual income tax finalization declaration, they do not have to submit a tax refund dossier.

The tax authority resolves the refund based on the personal income tax finalization dossier to process the overpaid amount for the taxpayer according to the regulations.