Are employees in Vietnam eligible for PIT deduction for insurance premiums?

Are employees in Vietnam eligible for PIT deduction for insurance premiums?

The deductions are stipulated in Article 9 of Circular 111/2013/TT-BTC, amended by Article 1 of Resolution 954/2020/UBTVQH14:

Deductions

The deductions guided in this Article are the amounts deducted from the taxable income of the person before calculating taxable income from wages, remunerations, and business. In particular:

1. Personal deductions

According to Article 19 of the Law on Personal income tax, Clause 4 Article 1 of the Law on the amendments to the Law on Personal income tax, and Article 12 of the Decree No. 65/2013/ND-CP:

a) Personal deduction is the amount of money deducted from the taxable income before calculating tax on incomes from business, or wages earned by the resident taxpayer.

If the resident earns income from both business and wages, one deduction from the total income from business and wages shall be made.

b) Levels of personal deductions

b.1) Deduction for the taxpayer: 9 million VND/month, 108 million VND/year.

b.2) Deduction for each dependant: 3.6 million VND/month.

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2. Deductions for insurance premiums and contributions to the voluntary pension fund

a) Insurance premiums include premiums for social insurance, health insurance, unemployment insurance and professional liability insurance, which is compulsory for some professions.

b) Contributions to the voluntary pension fund

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Employees are eligible for PIT deductions for insurance premiums, including premiums for social insurance, health insurance, unemployment insurance and professional liability insurance, which is compulsory for some professions.

Are employees in Vietnam eligible for PIT deduction for insurance premiums? (Image from the Internet)

What is the determination of the PIT period for employees in Vietnam?

According to Article 7 of the Law on PIT 2007, amended by Clause 3, Article 1 of the Law on Amendments to Law on Personal Income Tax Law 2012 2012, the PIT period is determined as follows:

- For residents, tax period is specified as follows:

+ Annual tax period, which is applicable to incomes from business, salaries and wages.

+ Tax period upon each time of income generation, which is applicable to incomes from capital investment; incomes from capital transfer, except for incomes from securities transfer; incomes from real estate transfer; incomes from prizes; incomes from copyright; incomes from commercial franchising; incomes from inheritances; and gifts.

+ Tax period upon each transfer or annual tax period, which is applicable to Incomes from transfer of securities.

- For non-residents, the tax period counted upon each time of income generation is applicable to all their taxable incomes.

What are the responsibilities of non-residents paying PIT in Vietnam?

According to Article 17 of the Law on Tax Administration 2019, the responsibilities of non-residents paying PIT are as follows:

- Apply for taxpayer registration and use TINs as prescribed by law.

- Declare tax accurately, honestly and adequately and submitting tax dossiers on time; take legal responsibility for the accuracy, honesty and adequacy of tax dossiers.

- Pay tax, late payment interest and/or penalties fully, on schedule and at the right location.

- Conform to regulations on accounting, statistics and management, use of invoices and records as prescribed by law.

- Truthfully and fully record the taxable activities and transactions.

- Issue and deliver invoices and records to buyers with the correct quantity, type and actual payment amount when selling goods and/or providing services as prescribed by law.

- Provide information and/or materials related to the determination of tax liabilities accurately, fully and promptly, including information on investment value; transaction IDs and contents of accounts opened at commercial banks and/or other credit institutions; explain declared tax and/or tax payment as requested by tax authorities.

- Comply with decisions, notifications and requests of tax authorities, tax officials as prescribed by law.

- Take responsibility for the fulfillment of tax liabilities as prescribed by law in case the taxpayer’s legal representative or authorized representative fails to follow tax procedures.

- Taxpayers operating businesses in areas with available information technology infrastructure must declare and pay tax and carry out transactions with tax authorities electronically as prescribed by law.

- Based on the availability of information technology equipment, the Government shall specify the documents that regulatory authorities already have and thus can be excluded from tax declarations, applications for tax refund and other tax dossiers.

- Develop, manage and operate systems of technical infrastructure so as to ensure e-transactions with tax authorities; sharing information related to the fulfillment of tax liabilities with tax authorities

- Taxpayers who have entered into related-party transactions have the responsibility to create, retain, declare and provide documents on taxpayers and their related parties, including information on related parties residing in foreign countries or territories according to the Government's regulations.