Shall businesses finalize PIT for retired employees in Vietnam?

Shall businesses finalize PIT for retired employees in Vietnam?

Based on subsection d.2, point d, clause 6, Article 8 of Decree 126/2020/ND-CP, resident individuals with income from wages and salaries authorize the personal income tax finalization to the organization or individual paying the income in the following cases:

Types of taxes declared monthly, quarterly, annually, declared upon each tax obligation occurrence, and tax finalization declaration

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6. Types of taxes and fees declared for annual finalization and finalization up to the time of dissolution, bankruptcy, cessation of operation, termination of the contract, or reorganization of the business. In case of conversion of the business type (excluding state-owned enterprises that have become joint-stock companies), where the converted enterprise inherits all tax obligations of the predecessor enterprise, there is no requirement to declare finalization up to the time of the decision on the conversion; the business declares finalization when the year ends. Specifically:

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d) Personal income tax for organizations and individuals paying taxable income from wages and salaries; individuals with income from wages and salaries authorize the tax finalization for the organization or individual paying the income; individuals with income from wages and salaries directly finalize tax with the tax authority. Specifically:

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d.2) Resident individuals with income from wages and salaries authorize tax finalization to the organization or individual paying the income. Specifically:

Individuals with income from wages and salaries entering into labor contracts of 3 months or more at one place and currently working there at the time the organization or individual paying the income performs tax finalization, even if not working for 12 full months in the year. If an individual is an employee transferred from the old organization to a new one as per the regulations at point d.1 of this clause, the individual can authorize the new organization to finalize the tax.

Individuals with income from wages and salaries entering into labor contracts of 3 months or more at one place and currently working there at the time the organization or individual paying the income performs tax finalization, even if not working for 12 full months in the year; simultaneously having casual income at other places averaging no more than 10 million VND per month and already deducted 10% PIT, without requesting tax finalization for this income portion.

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Thus, for the business to finalize PIT on behalf of the employee, the individual must meet the following 2 conditions:

- Enter a labor contract of 3 months or more with the business.

- Currently working at that business.

Therefore, businesses cannot perform PIT finalization on behalf of retired employees.

Shall businesses finalize PIT for retired employees in Vietnam? (Image from the Internet)

Vietnam: What does the direct PIT finalization dossier for retired employees include?

Based on sub-item 1, Section 4 Official Dispatch 883/TCT-DNNCN of 2022 issued by the General Department of Taxation on PIT finalization guidance, the direct PIT finalization dossier for retired employees includes:

- Personal income tax finalization declaration form number 02/QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC.

- Appendix on family deduction declaration for dependents form number 02-1/BK-QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC.

- A photocopy (photo from the original) of documents proving taxes withheld, temporarily paid during the year, or paid overseas (if any). In cases where the income-paying organization ceased operation and did not provide withholding certificates for individuals, the tax authority will consider finalization based on the tax sector's data without requiring withholding certificates. In cases where the income-paying organization or individual uses electronic PIT withholding certificates, the taxpayer utilizes a physical representation of the electronic PIT withholding certificate (paper form printed by the taxpayer from the original electronic PIT withholding certificate sent by the income-paying organization or individual).

- A photocopy of the Tax Withholding Certificate (stating taxes paid per income tax declaration) issued by the income payer or photocopies of bank documents for taxes paid abroad, with the taxpayer's confirmation when foreign laws do not provide tax payment confirmation documents.

- Photocopies of documents evidencing contributions to charity, humanitarian, and study promotion funds (if any).

- Documents proving the amount paid by overseas income-paying units or organizations if the individual receives income from international organizations, embassies, consulates, or income from abroad.

- Dependents registration documents as guided in point a of sub-item 3, Section 3 of Official Dispatch 883/TCT-DNNCN of 2022 (if deducting dependents at the time of tax finalization when dependents have not been registered).

What is the deadline for direct PIT finalization for retired employees in Vietnam?

Based on clause 2, Article 44 of the Tax Administration Law 2019 stipulating the deadline for filing tax declarations for taxes calculated annually as follows:

Deadline for filing tax declarations

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2. The deadline for filing tax declarations for taxes calculated annually is regulated as follows:

a) No later than the last day of the 3rd month following the end of the calendar or fiscal year for annual tax finalization dossiers; no later than the last day of the first month of the calendar or fiscal year for annual tax declarations;

b) No later than the last day of the 4th month following the end of the calendar year for individual personal income tax finalization dossiers;

c) No later than December 15 of the preceding year for presumptive tax declarations of business households and individuals paying tax under the presumptive method; for new business households and individuals, the deadline for filing presumptive tax declarations is no later than 10 days from the start of business activities.

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Thus, the deadline for direct PIT finalization for retired employees is determined as the last day of the 4th month following the end of the calendar year.