Vietnam: What is the Form 08 on personal income tax commitment used for?

Vietnam: What is the Form 08 on personal income tax commitment used for?

Based on the provisions at point i, clause 1, Article 25 of Circular 111/2013/TT-BTC regarding tax deduction for certain other cases as follows:

- Organizations and individuals paying wages, remunerations, and other payments to resident individuals without labor contracts (as guided at points c, d, clause 2, Article 2 Circular 111/2013/TT-BTC) or with labor contracts of less than three (03) months where the total payment of income of two million (2,000,000) VND per time or more must deduct tax at a rate of 10% on the income before payment to the individual.

- In cases where individuals only have income subject to tax withholding at the aforementioned rate, but the estimated total taxable income after family deductions is below the taxable threshold, the income-earning individual can make a commitment (using the form issued along with guidelines on tax management) sent to the income-paying organization to serve as a temporary basis not to deduct personal income tax.

- Based on the commitment of the income recipient, the paying organization does not deduct tax. At the end of the tax year, the paying organization must still compile a list and income of individuals below the tax deduction threshold (into the form issued with the tax management guidelines) and submit it to the tax authority.

- The individual making the commitment must be responsible for their commitment, and any detected fraud will be handled in accordance with the Tax Management Law.

According to the above regulations, if the individual only has income subject to tax withholding but the estimated total taxable income of the individual after family deductions is below the taxable threshold, the individual can make a commitment according to Form 08/CK-TNCN issued along with Circular 80/2021/TT-BTC.

Thus, the newest 2024 Form 08 personal income tax commitment is used when individuals receive income and estimate total income in the calendar year has not reached the personal income tax payable level.

What is the latest 2024 Form 08 personal income tax commitment used for? (Image from the Internet)

What are guidelines on filling out Form 08 on personal income tax commitment in Vietnam?

For the personal income tax commitment form, you can refer to how to write the 06 items in Form 08/CK-TNCN according to Circular 80/2021/TT-BTC as follows:

(1) To: Fill in the name of the organization or individual paying the income, do not write the name of the tax office (e.g., company, enterprise,...).

(2) Enter your full name.

(3) Enter your tax identification number.

(4) Enter your residential address (permanent, temporary).

(5) Enter your estimated total income in the calendar year below the taxable level (include both numerical and written).

(6) Request: Enter the name of the organization or individual paying the income.

Note: For the tax identification number field: Individuals granted a 10-digit tax identification number should fill in all 10 digits, leaving the remaining 3 boxes blank.

- The part marked with *: The amount declared at this item is determined by the family deduction level calculated in the year.

In the case of individuals without dependents: the declared amount is 11 million VND x 12 months = 132 million VND.

>> The latest 2024 Form 08 personal income tax commitment download

When shall employees pay personal income tax in Vietnam?

In clause 1, Article 21 of the Personal Income Tax Law 2007, amended by clause 5, Article 1 of the Amended Personal Income Tax Law 2012, it is stipulated as follows:

Taxable income

1. Taxable income from business, salary, or wages is the total taxable income as specified in Article 10 and Article 11 of this Law, excluding social insurance contributions, health insurance, unemployment insurance, professional liability insurance for certain sectors that are required to participate in compulsory insurance, voluntary retirement funds, and deductions defined in Article 19 and Article 20 of this Law.

The Government of Vietnam prescribes the maximum deductible amount for voluntary retirement fund contributions as provided in this clause.

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In Article 1 of Resolution 954/2020/UBTVQH14, it is stipulated as follows:

Family deduction level

Adjusted family deduction stipulated in clause 1, Article 19 of the Personal Income Tax Law No. 04/2007/QH12, as amended and supplemented under Law No. 26/2012/QH13, as follows:

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

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

Thus, employees signing labor contracts over 3 months must pay personal income tax when their total income from salary exceeds 11 million VND/month (132 million VND/year) if they do not have dependents, after deducting the required insurance contributions and other contributions such as charity or humanitarian payments and tax-exempt amounts.

For some cases where employees do not sign labor contracts or sign contracts under 03 months and have a total income of 2 million VND or more per time, tax must be deducted at a rate of 10% on income before payment to the individual.

Note: In cases where individuals only have income subject to tax withholding but their estimated total taxable income after family deductions has not reached the taxable threshold, the individual can make a commitment sent to the income-paying organization as a temporary basis not to deduct personal income tax.