What are cases in which individuals in Vietnam must independently finalize personal income tax?

What are cases in which individuals in Vietnam must independently finalize personal income tax?

Based on Subsection 1, Section I of Official Dispatch 636/TCT-DNNCN in 2021, the regulations regarding individuals directly settling finalization with the tax authority are as follows:

- Resident individuals with income from salaries or wages must directly declare PIT finalization with the tax authority if there is additional tax payable or if there is overpaid tax requested for a refund or to be used to offset the next tax declaration period.

- Individuals who are present in Vietnam for less than 183 days within the first calendar year, but for 183 days or more within any continuous 12-month period from their first day of presence in Vietnam, will have their first finalization year calculated for the continuous 12-month period from the first day of their presence in Vietnam.

- Foreign individuals who complete their employment contracts in Vietnam must declare tax finalization with the tax authority before leaving the country.

If an individual has not completed the tax finalization procedure with the tax authority, they must authorize the income-paying organization or another individual or organization to perform the tax finalization on their behalf according to the regulations on tax finalization for individuals.

In cases where the income-paying organization or another person or organization receiving the authorization for finalization is responsible for any additional PIT payable or refunded overpaid tax of the individual:

- Resident individuals with income from salaries or wages who are eligible for tax reduction due to natural disasters, fires, accidents, serious illnesses affecting their tax payment capability must not authorize the income-paying organization for tax finalization but must personally declare tax finalization with the tax authority as prescribed.

What are cases in which individuals in Vietnam must independently finalize personal income tax? (Image from the Internet)

What is PIT finalization declaration in Vietnam?

According to the provisions in Clause 10, Article 3 of the Law on Tax Administration 2019, finalization declaration is the determination of the payable tax amount for the tax year or from the beginning of the tax year until the cessation of activities generating tax liabilities or from the emergence to the cessation of activities generating tax liabilities.

Are individuals who do not file PIT finalization declarations in Vietnam subject to a fine of triple the amount of the tax amount?

According to Article 17 of Decree 125/2020/ND-CP on penalties for tax evasion acts:

Penalizing tax evasion acts

1. A fine equal to the amount of tax evaded for taxpayers with mitigating circumstances when perpetrating one of the following violations:

a) Failure to file taxpayer registration; failure to file tax declaration or filing tax declaration more than 90 days after the deadline, unless otherwise stipulated in Point b, c Clause 4, and Clause 5 of Article 13 of this Decree;

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2. A fine of 1.5 times the evaded tax amount for taxpayers perpetrating one of the violations in Clause 1 of this Article without aggravating or mitigating circumstances.

3. A fine of twice the evaded tax amount for taxpayers perpetrating one of the violations in Clause 1 of this Article with one aggravating circumstance.

4. A fine of 2.5 times the evaded tax amount for taxpayers perpetrating one of the violations in Clause 1 of this Article with two aggravating circumstances.

5. A fine of three times the evaded tax amount for taxpayers perpetrating one of the violations in Clause 1 of this Article with three or more aggravating circumstances.

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The aggravating circumstances applied to individuals who fail to file PIT finalization declarations are as follows:

Based on the provisions of Clause 1, Article 6 of Decree 125/2020/ND-CP:

Aggravating, mitigating circumstances in terms of tax, invoices

1. Aggravating and mitigating circumstances according to the laws on administrative violations.

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Referring to the provisions of Article 10 of the Law on Handling Administrative Violations 2012, the aggravating circumstances applied to individuals who fail to file PIT finalization declarations include:

(1) Administrative violations committed by an organized group;

(2) Repeat violations; recurrent violations;

(3) Inciting, pulling, or hiring minors for violations; forcing dependents in terms of material or mental aspects to commit administrative violations;

(4) Utilizing those known to be in a state of mental disorder or other disabling condition to inhibit cognition or behavioral control to commit administrative violations;

(5) Insulting, defaming on-duty public officials; administrative violations with hooliganism;

(6) Abusing a position of power to commit administrative violations;

(7) Exploiting wartime, natural disasters, catastrophes, epidemics, or other severe social conditions to commit administrative violations;

(8) Violations during the execution of punishment by a criminal sentence or during the execution of decisions on administrative handling measures;

(9) Continuing to perpetrate administrative violations despite receiving a request to cease from a competent authority;

(10) Attempts to evade, conceal administrative violations after perpetration;

(11) Administrative violations with a large scale, involving a large number or high value of goods;

(12) Committing administrative violations against multiple people, children, the elderly, people with disabilities, or pregnant women.

*Note: The above circumstances, if already stipulated as administrative violations, shall not be deemed aggravating circumstances.

Thus, an individual failing to file a personal income tax finalization declaration will be fined three times the amount of payable tax if they accumulate three or more aggravating circumstances.