Shall the personal income tax rate increase with salary reform in Vietnam under Resolution 27?

When shall incomes of income earners be taxable in Vietnam?

Pursuant to Article 2 of Circular 111/2013/TT-BTC, it is stipulated as follows:

Taxable Income

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2. Income from wages and salaries

Income from wages and salaries is the income an employee receives from an employer, including:

a) Wages, salaries, and allowances in the form of money or non-monetary forms.

b) Allowances, subsidies, except for the following allowances and subsidies:

b.1) Monthly preferential allowances and lump-sum allowances as prescribed by law regarding preferential treatment for those with meritorious services.

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Additionally, pursuant to Article 1 of Resolution 954/2020/UBTVQH14, it is stipulated as follows:

Personal excemption

Adjust the personal excemption specified in Clause 1 Article 19 of the Personal Income Tax Law No. 04/2007/QH12, amended and supplemented by Law No. 26/2012/QH13, as follows:

1. The deduction level for taxpayers is 11 million VND/month (132 million VND/year);

2. The deduction level for each dependent is 4.4 million VND/month.

According to Decree 73/2024/ND-CP and Decree 74/2024/ND-CP, the statutory pay rate and the region-based minimum wage are increased for officials and public employees and employees. The increase in wages will raise the income, which may directly impact the personal income tax obligations of officials, public employees, and employees.

Thus, for individuals without dependents, they are required to pay personal income tax when their total income from wages and salaries exceeds 11 million VND/month.

Shall the personal income tax rate increase with salary reform in Vietnam under Resolution 27? (Image from the Internet)

Shall the personal income tax rate increase with salary reform in Vietnam under Resolution 27?

Pursuant to Subsection 3.1, Section 3, Chapter 2 of Resolution 27-NQ/TW of 2018, it is stipulated as follows:

Reform Content

3.1. For officials, public employees, and armed forces (public sector)

a) Design a new salary structure including: Basic salary (accounting for approximately 70% of the total salary fund) and allowances (accounting for approximately 30% of the total salary fund). Add bonuses (the bonus fund is approximately 10% of the total annual salary fund, excluding allowances).

b) Develop and issue a new salary table system according to job positions, titles, and leadership positions to replace the current salary table system; transfer the old salary to the new salary, ensuring it is not lower than the current salary, including:

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When implementing the salary reform under Resolution 27-NQ/TW of 2018, the income of officials, public employees, and armed forces may change and affect their personal income tax obligations.

When income increases due to the salary reform, the amount of personal income tax payable will also increase.

When is the deadline for submission of personal income tax in Vietnam?

According to Article 28 of Decree 65/2013/ND-CP, monthly income will be temporarily calculated and tax will be deducted based on income.

Pursuant to Clause 1, Article 55 of the Tax Administration Law 2019 it is stipulated as follows:

Tax Payment Deadlines

1. In cases where the taxpayer calculates the tax, the tax payment deadline is the last day of the tax declaration submission deadline. In cases of supplementary tax declarations, the tax payment deadline is the tax declaration submission deadline of the tax period with errors or omissions.

For corporate income tax, the quarterly provisional tax payment deadline is the 30th day of the first month of the following quarter.

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Additionally, according to Clause 2, Article 44 of the Tax Administration Law 2019 which regulates the deadline for finalizing personal income tax declarations as follows:

Tax Declaration Submission Deadlines

1. The tax declaration submission deadlines for taxes declared monthly or quarterly are as follows:

a) No later than the 20th day of the subsequent month from the month in which the tax obligation arises, for monthly declarations and payments;

b) No later than the last day of the first month of the following quarter from the quarter in which the tax obligation arises, for quarterly declarations and payments.

2. The tax declaration submission deadlines for taxes calculated annually are as follows:

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

b) No later than the last day of the fourth month from the end of the calendar year for the personal income tax finalization dossiers of individuals directly finalizing tax;

c) No later than December 15 of the preceding year for the tax declaration dossiers of business households, individual business households filing under the presumptive tax method; in the case of newly established business households and individuals, it is no later than 10 days from the start of business operations.

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Therefore, the personal income tax payment deadlines are determined as follows:

(1) Tax payment deadlines for monthly or quarterly declarations are as follows:

- No later than the 20th day of the subsequent month from the month in which the tax obligation arises, for monthly declarations and payments;

- No later than the last day of the first month of the following quarter from the quarter in which the tax obligation arises, for quarterly declarations and payments.

(2) Tax payment deadlines for taxes calculated annually

- No later than the last day of the third month from the end of the calendar year or fiscal year for the annual tax finalization dossiers done by enterprises on behalf of employees.

- No later than the last day of the fourth month from the end of the calendar year for the personal income tax finalization dossiers of individuals directly finalizing tax.