What are the regulations on PIT payment by private construction contractors in Vietnam?

What are the regulations on PIT payment by private construction contractors in Vietnam?

According to Clause 2, Article 6 of Circular 40/2021/TT-BTC, the method for calculating tax for individual businesses under separate declarations is stipulated as follows:

Method for calculating tax for individual businesses under separate declarations

1. Individual businesses who have casual business operation and do not have fixed business locations shall pay tax separately. The individual shall determine whether his/her business is “casual” according to its characteristics in each business line. Fixed business location means the place where the individual’s business operation is carried out such as: transaction location, store, factory, warehouse, depot or a similar location.

2. Individual businesses paying tax under separate declarations include:

a) Travelling traders;

b) Individuals that are private construction contractors;

c) Individuals transferring Vietnam’s top-level domains “.vn”;

d) Individuals earning incomes from digital information products and/or services that do not choose to pay tax under periodic declarations.

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Thus, private construction contractors in Vietnam shall pay personal income tax under separate declarations.

What are the regulations on PIT payment by private construction contractors in Vietnam? (Image from the Internet)

Will the overpaid PIT of private construction contractors in Vietnam be refunded?

According to Clause 2, Article 8 of the Personal Income Tax Law 2007, regulations on tax administration and tax refund are as follows:

Tax administration and tax refund

1. Tax registration, declaration, withholding, payment, finalization and refund, handling of violations of the tax law, and tax administration measures comply with legal provisions on tax administration.

2. Individuals are entitled to tax refund in the following cases:

a/ Their paid tax amounts are larger than payable tax amounts;

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

c/ Other cases decided by competent state agencies.

Thus, according to the regulations, if PIT is overpaid, i.e. the amount of tax paid is higher than the payable tax amount, the overpaid amount will be refunded.

What is the maximum fine imposed on private construction contractors delaying the submission of PIT declaration dossiers in Vietnam?

Under Article 13 of Decree 125/2020/ND-CP, the following provisions apply:

Penalties for violations against regulations on time limits for submission of ax tax declaration dossiers

1. Penalties imposed in form of cautions shall be imposed for violations arising from filing ax tax declaration dossiers from 01 to 05 days after expiration of the prescribed time limits under mitigating circumstances.

2. Fines ranging from VND 2,000,000 to VND 5,000,000 shall be imposed for the act of submitting ax tax declaration dossiers from 01 to 30 days after expiration of the prescribed time limits, except the cases specified in clause 1 of this Article.

3. Fines ranging from VND 5,000,000 to VND 8,000,000 shall be imposed for the act of submitting ax tax declaration dossiers from 31 to 60 days after expiration of the prescribed time limits.

4. Fines ranging from VND 8,000,000 to VND 15,000,000 shall be imposed for one of the following violations:

a) Filing ax tax declaration dossiers from 61 to 90 days after expiration of the prescribed time limits;

b) Filing ax tax declaration dossiers at least 91 days after expiration of the prescribed time limits if none of additional taxes is incurred;

c) Failing to submit ax tax declaration dossiers if none of additional taxes is incurred;

d) Failing to submit annexes under regulations regarding tax administration by enterprises having related-party transactions, enclosing CIT finalization dossiers.

5. Fines ranging from VND 15,000,000 to VND 25,000,000 shall be imposed for the act of filing ax tax declaration dossiers more than 90 days after the prescribed deadline if such act results in additional taxes to be paid, and the taxpayer has fully paid taxes, deferred amounts into the state budget before the time of the tax authority’s announcement of the decision on tax inspection and examination, or before the time of the tax authority’s issuance of the report on the deferred submission of ax tax declaration dossiers under the provisions of clause 11 of Article 143 in the Law on Tax Administration.

In case where the fine amount prescribed in this clause is greater than the tax amount additionally incurred in the ax tax declaration dossier, the maximum amount of fine for this act shall be equal to the tax amount payable specified in the ax tax declaration dossier and shall not be less than the average of fine amounts in the range prescribed in clause 4 of this Article.

6. Remedies:

a) Compelling the full payment of deferred tax amounts into the state budget with respect to the commission of the acts prescribed in clause 1, 2, 3, 4 and 5 of this Article if the taxpayer delays filing their ax tax declaration dossier, leading to the late payment of taxes;

b) Compelling the submission of ax tax declaration dossiers, enclosing annexes, in case of committing the acts specified in point c and d of clause 4 of this Article.

Depending on the delay period in submitting tax declaration dossiers, the administrative penalty is determined according to the legal regulations. The fine for private construction contractors can be up to 12.5 million VND.

Additionally, the taxpayer is also required to pay deferred tax amounts into the state budget.