Shall taxpayer’s salary or income be deducted due to tax enforcement in Vietnam?

Shall taxpayer’s salary or income be deducted due to tax enforcement in Vietnam?

Based on Clause 1, Article 130 of the Law on Tax Administration 2019, regulations on enforcement by deduction of money from the taxpayer’ salary or income are as follows:

- The measure of deducting a portion of wages or income is applied to taxpayers who are forced to execute administrative decisions on tax management and who are working according to payroll or a contract of six months or more, or are receiving retirement or disability allowances.

- The rate of wage deduction, retirement allowance, or disability allowance for individuals is not less than 10% and does not exceed 30% of the individual's total monthly wages or allowances; for other incomes, the deduction rate is based on actual income but does not exceed 50% of total income.

- Agencies or organizations employing and managing the wages or income of those subjected to forced execution of administrative tax management decisions have the following responsibilities:

+ Deduct a portion of the wages or income of those subjected to forced execution of administrative tax management decisions and transfer the deducted amount to the state budget account at the State Treasury according to the content stated in the enforcement decision from the most recent payroll or income payment until the full amount of tax debt is deducted as per the enforcement decision, simultaneously notifying the person issuing the enforcement decision and the subjected individual.

+ In the event that the tax debt as per the enforcement decision is not fully deducted when the employment contract of the subjected individual terminates, the employing agency or organization must inform the person issuing the enforcement decision of this within five working days from the date of contract termination.

+ Should the agency or organization employing and managing the wages or income of those subjected to forced execution deliberately fail to implement the enforcement decision, they will be subject to administrative penalties as stipulated in Chapter XV of this Law.

- the Government of Vietnam stipulates details of this Article.

Therefore, taxpayers forced to execute administrative decisions on tax management will be subject to wage deduction.

Shall taxpayer’s salary or income be deducted due to tax enforcement in Vietnam? (Image from the Internet)

Who is subject to enforcement decisions by deduction of money from the taxpayer’ salary or income in Vietnam?

Based on Clause 1, Article 32 of Decree 126/2020/ND-CP, the subjects subject to enforcement decisions by deduction of money from the taxpayer’ salary or income include:

- Taxpayers who are individuals forced to execute administrative decisions on tax management receiving salaries, wages, or income at an agency or organization under payroll or a labor contract of six months or more or receiving retirement or disability allowances.

- Administrative tax management decisions include:

+ Decisions on administrative penalties for tax management violations;

+ Tax assessment notices, tax assessment decisions;

+ Tax debt notices;

+ Refund recovery decisions;

+ Extension decisions;

+ Installment payment decisions;

+ Decisions terminating the effectiveness of tax debt freeze decisions;

+ Decisions applying remedial measures under the law on administrative penalties in tax management;

+ Compensation decisions;

+ Other administrative tax management decisions as prescribed by law.

What are the responsibilities when deducting money from the taxpayer’ salary or income?

According to regulations in Clause 3, Article 130 of the Law on Tax Administration 2019, agencies or organizations employing and managing the wages or income of those subjected to forced execution of administrative tax management decisions have the following responsibilities:

- Deduct a portion of the wages or income of those subjected to forced execution of administrative tax management decisions and transfer the deducted amount to the state budget account at the State Treasury as stated in the enforcement decision from the most recent payroll or income payment until the full amount of tax debt is deducted as per the enforcement decision.

- Notify the person issuing the enforcement decision and the subjected individual.

- In the event that the tax debt as per the enforcement decision is not fully deducted and the employment contract of the subjected individual terminates, the employing agency or organization must inform the person issuing the enforcement decision of this within five working days from the date of contract termination.

If the agency or organization employing and managing the wages or income of those subjected to forced execution deliberately fails to implement the enforcement decision, they will be subject to administrative penalties.