What are the cases of PIT refund in Vietnam?

What are the cases of PIT refund in Vietnam?

According to Clause 2, Article 8 of the Personal Income Tax Law 2007, individuals are entitled to tax refund in the following cases:

- Their paid tax amounts are larger than payable tax amounts;

- They have paid tax but their taxed incomes do not reach a tax-liable level;

- Other cases decided by competent state agencies.

What are the cases of PIT refund in Vietnam? (Image from the Internet)

What are the methods for submitting PIT refund claims by employees in Vietnam?

Under Clause 2, Article 72 of the Law on Tax Administration 2019:

Receipt and processing of tax refund claims

1. Tax authorities shall process tax refund claims as follows:

a) Supervisory tax authorities of taxpayers shall receive tax refund claims in accordance with tax laws. Collecting tax authorities shall receive claims for refund of overpaid amounts. In case of refund of overpaid amounts under an annual/terminal statement of corporate income tax or personal income tax, the tax authority that received the statement shall provide the refund.

b) Collecting customs authorities shall receive tax refund claims in accordance with tax laws. Customs authorities where exit procedures are followed shall receive tax refund claims submitted by foreigners and Vietnamese people residing overseas.

2. Tax refund claims may be submitted:

a) in person at tax authorities;

b) by post;

c) electronically through online portals or tax authorities.

3. Within 03 working days from the day on which the claim is received, the tax authority shall inform the taxpayer in writing of whether the claim is granted or rejected.

4. The Minister of Finance shall elaborate this Article.

Thus, employees submit PIT refund claims through the following methods:

- in person at tax authorities;

- by post;

- electronically through online portals or tax authorities.

Will taxpayers monthly or quarterly declare and pay PIT to serve as the basis for PIT refund in Vietnam?

According to Article 8 of Decree 126/2020/ND-CP, which specifies types of taxes declared monthly, quarterly, it is stated regarding personal income tax as follows:

Taxes declared monthly, quarterly, annually, separately; tax finalization

1. The following taxes AND other amounts collected by tax authorities have to be declared monthly:

a) Value-added tax (VAT), personal income tax. Taxpayers who satisfy the requirements specified in Article 9 of this Decree may declare these taxes quarterly.

...

2. The following taxes and other amounts shall be declared quarterly:

...

c) Personal income tax deducted by income payers that are eligible to declare VAT quarterly and also decide to declare personal income tax quarterly; individuals earning salaries or remunerations (hereinafter referred to as “salary earners”) who decide to declare personal income tax quarterly with tax authorities.

...

In comparison with the provisions in Clause 1, Article 9 of Decree 126/2020/ND-CP:

Conditions for quarterly declaration of VAT and personal income tax

1. Conditions for quarterly declaration

a) The following taxpayers may declare VAT quarterly:

a.1) Any taxpayer that declares VAT monthly as prescribed in Point a Clause 1 Article 8 of this Decree and has a total revenue from sale of goods and services in the previous year of up to 50 billion VND. The total revenue shall be determined according to the VAT returns during the calendar year.

...

a.2) The taxpayer’s business is recently inaugurated. From the calendar year succeeding the first 12 months, the revenue generated in the preceding calendar year (full 12 months) shall be the basis for deciding whether the taxpayer has to declare tax monthly or quarterly.

b) Quarterly declaration of personal income tax:

b.1) A taxpayer who has to declare personal income tax monthly as prescribed in Point a Clause 1 Article 8 of this Decree may declare personal income tax quarterly if all requirements for quarterly declaration are fulfilled.

...

Thus, based on the above provisions, taxpayers are required to declare and pay personal income tax monthly, except for the following cases subject to quarterly declaration:

- PIT declared on behalf of pledgors by credit institutions and third parties authorized by credit institutions to manage the collateral pending settlement.

- PIT deducted by income payers that are eligible to declare VAT quarterly and also decide to declare personal income tax quarterly;

- Individuals earning salaries or remunerations (hereinafter referred to as “salary earners”) who decide to declare personal income tax quarterly with tax authorities.

- Taxpayers have total revenue from sales of goods and services of the preceding year not exceeding 50 billion VND.

The total revenue shall be determined according to the VAT returns during the calendar year.

- if the taxpayer’s business is recently inaugurated, it can choose quarterly personal income tax declaration.