Shall a person be entitled to tax refund when paying tax amounts are larger than payable tax amounts in Vietnam?

Shall a person be entitled to tax refund when paying tax amounts are larger than payable tax amounts in Vietnam?

Based on Clause 2, Article 8 of the Law on Personal Income Tax 2007, which regulates tax management and tax refunds, as follows:

Tax Management and Refund

1. Taxpayer registration, tax declaration, tax deduction, tax payment, tax finalization, tax refund, handling legal violations regarding tax, and other tax management measures shall be implemented in accordance with the regulations of the law on tax management.

2. Individuals are eligible for tax refunds in the following cases:

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

b) Individuals who paid tax but have taxable income not reaching the tax threshold;

c) Other cases as decided by competent state authorities.

Thus, based on the regulations, if an individual has surplus personal income tax, meaning the amount of tax paid is more than the payable tax amount, the surplus will be refunded.

Shall a person be entitled to tax refund when paying tax amounts are larger than payable tax amounts in Vietnam? (Image from the Internet)

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

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

- The General Director of the General Department of Taxation, Directors of Provincial Tax Departments, and Directors of City Tax Departments directly under the central government decide on tax refunds in accordance with tax laws.

- The head of the tax authority where the refund application is submitted decides on refunds for overpaid amounts as per this Law.

- The General Director of the General Department of Customs, Directors of Provincial Customs Departments, and Heads of Customs Sub-Departments where the tax amount to be refunded arises decide on tax refunds in accordance with tax laws.

What are the applications and procedures for handling personal income tax refund in Vietnam?

Firstly, the receipt and response to tax refund dossiers are carried out according to the regulations at Article 72 of the Tax Management Law 2019 as follows:

* Tax management authorities have the duty to receive tax refund dossiers as per the following regulations:

- The tax authority directly managing the taxpayer receives the tax refund dossier for cases eligible for tax refunds in accordance with tax laws.

- The tax authority managing the revenue receives the refund dossier for overpaid amounts; in cases of corporate income tax or personal income tax finalization resulting in overpaid amounts, the tax authority receiving the finalization dossier also receives the refund dossier.

- The customs authority managing the revenue receives the tax refund dossier for cases of tax refunds in accordance with tax laws; for cases where foreigners and overseas Vietnamese exit with goods eligible for tax refunds, the customs authority at the place of exit completes the refund dossier.

* Taxpayers submit tax refund dossiers through the following methods:

- Directly submit the dossier at the tax authority;

- Send the dossier via postal service;

- Send the electronic dossier through the tax authority's electronic transaction portal.

* Processing time:

- Within 03 working days from the date of receiving the tax refund dossier, the tax authority classifies the dossier and notifies the taxpayer of the acceptance and processing time of the tax refund dossier or issues a written notice in cases where the dossier is incomplete.

* Classification of tax refund dossiers (Article 73 Tax Management Law 2019)

- Tax refund dossiers are classified into dossiers subject to pre-refund inspection and dossiers eligible for a refund first.

- Pre-refund inspection dossiers include:

+ Dossiers of taxpayers requesting tax refunds for the first time for each refund case in accordance with tax laws. In cases where the first-time refund request is not approved, subsequent requests are still considered first-time requests;

+ Dossiers of taxpayers requesting tax refunds within 2 years from the date of being penalized for tax evasion;

+ Dossiers of entities undergoing dissolution, bankruptcy, cessation of operation, sale, transfer, and delivery of state-owned enterprises;

+ Tax refund dossiers classified as high-risk in tax management;

+ Tax refund dossiers eligible for a refund first but have exceeded the deadline required by the tax authority's written notice without sufficient explanation or additional documents;

+ Tax refund dossiers for export and import goods not settled through commercial banks or other credit institutions as per the law;

+ Export and import goods tax refund dossiers subject to pre-refund inspection according to the regulations of the Government of Vietnam.

- Refund first dossiers are those not falling within the above categories.

* Regarding the location for tax refund dossier inspection (Article 74 Tax Management Law 2019)

- Refund first dossiers are inspected at the headquarters of the tax authority.

- Pre-refund inspection dossiers are inspected at the taxpayer's headquarters or the headquarters of relevant agencies, organizations, or individuals.

* Regarding the time for resolving tax refund dossiers (Article 75 Tax Management Law 2019)

- For refund first dossiers, the tax authority must decide on the refund no later than 06 working days from the date of notifying the acceptance and processing time of the tax refund dossier, or notify of a pre-refund inspection or non-eligibility for refund if the dossier is inadequate.

- If the information on the tax refund dossier differs from the tax authority's management information, the tax authority must issue a written notice requesting explanation or additional information from the taxpayer.

- The time for explanation or providing additional information is not included in the time for resolving the tax refund dossier.

- For pre-refund inspection dossiers, the tax authority must decide on the refund or non-eligibility for refund no later than 40 days from the date of notifying the acceptance and processing time of the tax refund dossier.

- If the decision on the refund is delayed due to the tax authority's fault beyond the stipulated time at Clauses 1 and 2, Article 75 Tax Management Law 2019, the tax authority not only has to refund the tax but also pay interest at 0.03% per day on the refund amount and the delayed days.

- The interest payment is sourced from the central government budget according to the legal regulations on the state budget.