Is personal income tax required for payments for participation in machinery investment projects in Vietnam?

Is personal income tax required for payments for participation in machinery investment projects in Vietnam?

Based on the provisions stated at Point c, Clause 2, Article 2 of Circular 111/2013/TT-BTC, taxable income from salaries and wages can be identified as follows:

Taxable Income

According to Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

1. Income from business

Income from business is the income obtained from production and business activities in the following sectors:

a) Income from the production, business of goods, services in all fields and sectors of business as prescribed by law, such as: production, business of goods; construction; transportation; catering business; service business, including rental services of houses, land use rights, water surfaces, other properties.

b) Income from independent professional practice of individuals in fields, sectors with licensed or certified professional practice as prescribed by law.

c) Income from production activities, business of agriculture, forestry, salt production, aquaculture, fishing that do not meet the tax exemption conditions guided at Point e, Clause 1, Article 3 of this Circular.

2. Income from salaries, wages

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c) Remuneration received in forms such as: agent commission for selling goods, brokerage commission; participation in scientific and technical research projects; participation in programs and projects; royalties under the law on royalties; participation in teaching activities; participation in cultural, artistic, physical training, sports performances; advertising services; other services, other remuneration.

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Thus, according to the above regulation, personal income tax must be paid for payments for participation in machinery investment projects.

Is personal income tax required for payments for participation in machinery investment projects in Vietnam? (Image from Internet)

Who has the authority to decide on personal income tax refund in Vietnam?

According to Article 76 of the Law on Tax Administration 2019, the authority to decide on tax refunds is as follows:

- The Director General of the General Department of Taxation, the Director of the Tax Department of provinces and cities directly under the central government decide on tax refunds in cases of refunds as stipulated by tax law.

- The head of the tax authority receiving the excess tax refund application decides on the refund of overpaid tax according to the provisions of this Law.

- The Director General of the General Department of Customs, the Director of the Customs Department, the Chief of the Customs Sub-department where the refundable tax amount arises decides on tax refunds in cases stipulated by tax law.

What are regulations on receipt and processing of tax refund claims in Vietnam?

The receipt and processing of tax refund claims are initially implemented according to the provisions of Article 72 of the Law on Tax Administration 2019 as follows:

* The tax administration agency is assigned the task of receiving the tax refund claims as prescribed below:

- The tax authority directly managing the taxpayer receives the tax refund claims in cases of tax refund as stipulated by tax law.

- The tax authority managing the revenue receives the application for the refund of overpaid tax; in the case of refund for overpaid tax according to the corporate income tax settlement, personal income tax settlement, the tax authority receives the dossier of the corporate income tax settlement, personal income tax settlement from the taxpayer to receive the overpaid tax refund claims;

- The customs authority managing the revenue receives the tax refund claims in cases of tax refund as prescribed by tax law; in the case of foreigners, Vietnamese residing abroad exiting with goods eligible for tax refund, the customs authority processing the exit procedures receives the tax refund claims.

* Taxpayers submit the tax refund claims through the following methods:

- Submit directly at the tax administration agency;

- Send by post;

- Send electronically via the electronic transaction portal of the tax administration agency.

* Processing time:

- Within 03 working days from the date of receiving the tax refund claims, the tax administration agency classifies the dossier and informs the taxpayer about the acceptance of the dossier and the timeline for processing the tax refund claims, or notifies in writing to the taxpayer in case the dossier is incomplete.

* Classification of tax refund claimss (Article 73 of the Law on Tax Administration 2019)

- tax refund claimss are classified into dossiers subject to prior verification before the refund and dossiers eligible for immediate refund.

- Dossiers subject to prior verification before a refund include:

+ Dossiers of taxpayers applying for a refund for the first time for each type of refund as stipulated by tax law. If the taxpayer's tax refund claims is sent to the tax administration agency for the first time but does not qualify for a refund according to regulations, the next refund request is still considered as the first refund request;

+ Dossiers of taxpayers applying for a refund within 02 years from the time they were sanctioned for tax evasion;

+ Dossiers of organizations in liquidation, bankruptcy, operation termination, sale, transfer, and handover of state-owned enterprises;

+ tax refund claimss classified as high tax risk according to tax risk management classifications;

+ tax refund claimss subject to immediate refund but not resolved within the deadline as notified in writing by the tax administration agency, where the taxpayer does not explain, supplement the tax refund claims, or the explanation, supplementation does not substantiate the declared tax amount as correct;

+ tax refund claimss for exported, imported goods not settled through commercial banks, other financial institutions as regulated by law;

+ tax refund claimss for exported, imported goods subject to prior inspection before a refund as stipulated by the Government of Vietnam.

- Dossiers eligible for immediate refund are those of taxpayers not mentioned above.

* On the location for verifying tax refund claimss (Article 74 of the Law on Tax Administration 2019)

- Dossiers eligible for immediate refund undergo verification at the premises of the tax administration agency.

- Dossiers subject to prior verification before a refund are verified at the premises of the taxpayer or the premises of related agencies, organizations, individuals.

* On the deadline for processing tax refund claimss (Article 75 of the Law on Tax Administration 2019)

- For dossiers eligible for immediate refund, no later than 06 working days from the date the tax administration agency announces acceptance of the dossier and processing timeframe, the tax administration agency must decide on the refund for the taxpayer or notify the transfer of the taxpayer's dossier to verification before the refund if falling under the provisions of Clause 2, Article 73 of the Law on Tax Administration 2019 or notify no refund if the dossier does not qualify.

- If information declared in the tax refund claims differs from management information held by the tax administration agency, the tax administration agency shall notify in writing for the taxpayer to explain, supplement information.

- The time for explanation, additional information is not included in the processing time for the tax refund claims.

- For dossiers subject to verification before a refund, no later than 40 days from the date the tax administration agency provides a written notification on acceptance, the tax administration agency must decide on the refund for the taxpayer or not refund if the dossier does not meet eligibility.

- Exceeding the time limits stated in Clauses 1 and 2, Article 75 of the Law on Tax Administration 2019, if the delay in issuing the refund decision is the tax administration agency's fault, in addition to the refundable tax amount, the tax administration agency must also pay interest at the rate of 0.03%/day on the refundable amount and delay days.

- The interest payment source is from the central budget as stipulated by the law on the state budget.