What is a personal income tax statement? What are key points about PIT statement in Vietnam?

What is a personal income tax statement?

According to Clause 10, Article 3 of the Law on Tax Administration 2019, the definition of tax statement declaration is as follows:

Interpretation of Terms

In this Law, the following terms are understood as follows:

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tax statement declaration is the process of determining the amount of tax to be paid for the tax calculation year or the period from the beginning of the tax year until the termination of activities generating tax obligations, or the period from the generation to the termination of activities generating tax obligations in accordance with the law.

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Thus, according to the above regulations, personal income tax (PIT) finalization refers to the process wherein the taxpayer (individual or organization) compiles, calculates, and declares all taxable income, deductions, taxes withheld, or temporarily paid in a fiscal year (typically a calendar year) to determine the final PIT amount to be paid or refunded according to the law.

Vietnam: What is a personal income tax statement? (Image from the Internet)

What are key points about PIT statement in Vietnam?

(1) Purpose

- To ensure the PIT amount payable by an individual aligns with their actual income after deducting exempt and reduced amounts.

- To determine whether the individual needs to pay additional tax (if short) or is eligible for a tax refund (if overpaid).

(2) Subjects Required to Finalize PIT

Based on point d, clause 6, Article 8 of Decree 126/2020/ND-CP and guidance in Section 1 of Official Dispatch 154/CTSTR-KK in 2025 by the Tax Department of Soc Trang Province Download, the subjects not required to finalize PIT include the following:

*For individuals directly finalizing tax with the Tax Authority

- Resident individuals with income from salaries or wages from two or more places that do not meet the conditions for authorizing finalization according to the regulations must directly declare PIT statement with the tax authority if there is additional tax payable or overpaid tax requested for refund or offset in the next tax declaration period.

- Resident individuals who are foreigners concluding their work contracts in Vietnam must declare PIT statement with the tax authority before leaving the country.

- Resident individuals with income from salaries or wages paid from abroad and resident individuals with income from salaries or wages paid by International organizations, embassies, or consulates who have not had tax withheld during the year must directly finalize with the tax authority.

- Resident individuals with income from salaries or wages who are subject to tax reduction due to natural disasters, fires, accidents, or severe illnesses affecting their tax payment ability must not authorize organizations or individuals to pay income in place of PIT statement but must directly declare the finalization with the tax authority as stipulated.

Note: Individuals present in Vietnam for the first calendar year under 183 days, but within 12 consecutive months from the first day of presence in Vietnam for 183 days or more, the first finalization year is the 12 consecutive months from the first day of presence in Vietnam.

*Organizations and individuals paying income from salaries or wages

- Organizations and individuals paying income from salaries or wages are responsible for declaring PIT statement regardless of whether tax withholding has occurred and finalizing PIT on behalf of individuals who have authorized it. If an individual authorizes PIT statement to an organization and additional tax payable after finalization is 50,000 VND or less, which is eligible for tax exemption, the organization or individual paying income still declares the information of the income-receiving individual in the organization's PIT statement declaration and does not aggregate additional tax payable of individuals with additional tax payable after finalization of 50,000 VND or less.

- For individuals who are employees transferred from an old organization to a new organization due to the merger, consolidation, division, separation, change of enterprise type of the old organization, and the old and new organization are within the same system, the new organization is responsible for PIT statement on behalf of the individual for both parts of the income paid by the old organization and the new income-paying organization retrieves the PIT withholding documents issued to the employees by the old income-paying organization (if any).

- If an organization or individual paying income is dissolved, bankrupt, terminated, has its activities ceased, or reorganizes, it must declare PIT statement up to the time of dissolution, bankruptcy, activity termination, contract termination, or enterprise reorganization. In the event of changing the enterprise type (excluding state enterprises undergoing equitization) where the transforming enterprise fully inherits the tax obligations of the enterprise being transformed, there is no need to declare PIT statement up to the point of decision on enterprise transformation. The enterprise declares finalization at the end of the year.

(3) Deadline for PIT statement

According to Clause 2, Article 44 of the Law on Tax Administration 2019 stipulating the deadline for PIT statement for the year 2025 for the tax period of 2024 as follows:

- No later than the last day of the third month from the end of the calendar year or fiscal year for the annual tax statement dossier, that is, March 31, 2025.

- No later than the last day of the fourth month from the end of the calendar year for the individual income tax statement dossier of individuals directly finalizing tax, that is, April 30, 2025. However, April 30, 2024, and May 1, 2025, are public holidays according to Notice 6150/TB-BLDTBXH in 2024 (holiday schedule from April 30 to May 1, 2025, for officials and public employees is from April 30, 2025, to May 4, 2025, spanning from Wednesday to Sunday, totaling 05 consecutive days). Therefore, the PIT statement deadline for individuals directly finalizing tax is May 5, 2025.

(4) Documents Required for PIT statement Declaration

According to Article 43 of the Law on Tax Administration 2019 and Circular 80/2021/TT-BTC, the documents required for PIT statement declaration are stipulated. Additionally, Article 1, Section 4 of Official Dispatch 13762/CTHN-HKDCN in 2023 by the Tax Department of Hanoi city also provides guidance on PIT statement as follows:

* For individuals directly declaring PIT statement with the tax authority, the PIT statement dossier includes:

+ Personal income tax statement declaration form No. 02/QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.

+ Appendix of the schedule of dependent deduction for family circumstances form No. 02-1/BK-QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.

+ A photocopy (photo from the original) of documents proving the tax already withheld, temporarily paid during the year, taxes paid abroad (if any). If the income-paying organization does not issue a tax withholding certificate to the individual due to the cessation of the organization's activities, the tax authority will base on the tax sector's data to review and process the tax statement dossier for the individual without necessarily having the tax withholding certificate.

In cases where organizations or individuals paying income use electronic PIT withholding documents, taxpayers should use the paper representation of the electronic PIT withholding document (paper copy printed by the taxpayer converted from the original electronic PIT withholding document sent by the income-paying organization or individual to the taxpayer).

+ A photocopy of the Tax Deduction Certificate (clearly stating the tax paid under which income tax declaration) issued by the income-paying organization or bank receipt for the tax amount paid abroad certified by the taxpayer in cases where, according to foreign law, the foreign tax authority does not issue a tax credit note.

+ Photocopy of invoices or documents proving contributions to charity funds, humanitarian funds, scholarship funds (if any).

+ Documentation proving the amount paid by the foreign income-paying unit or organization when individuals receive income from international organizations, embassies, consulates, and receive income from abroad.

+ Register documentation for dependents according to point g, clause 1, Article 9 of Circular 111/2013/TT-BTC amended by Article 1 of Circular 79/2022/TT-BTC (if deductions for dependents at the time of tax statement for dependents who have not yet registered).

* For organizations and individuals paying income, the PIT statement declaration includes:

+ Personal income tax statement declaration form No. 05/QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.

+ Appendix of detailed schedule of individuals under progressive tax calculation model No. 05-1/BK-QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.

+ Appendix of detailed schedule of individuals under a flat-rate tax calculation model No. 05-2/BK-QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.

+ Appendix of detailed schedule of dependents with family deduction model No. 05-3/BK-QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.

* In cases where individuals authorize the income-paying organizations to finalize on their behalf, the individual must prepare an Authorization Letter for Personal Income tax statement for the tax calculation year 2024 using form No. 08/UQ-QTT-TNCN issued with Appendix 2 of Circular 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.(5) Simple Example:

Mr. A has an income from salary of 200 million VND/year, with a deduction of 10 million VND for personal income tax. After deductions for himself (132 million VND) and one dependent (52.8 million VND), the taxable income remaining is 15.2 million VND. The tax to be paid is 760,000 VND (5% of 15.2 million). Since 10 million has already been deducted, Mr. A is refunded 9.24 million VND.

Vietnam: Is tax statement required if income does not reach the personal income tax threshold?

Based on the provision at point d, clause 6, Article 8 of Decree 126/2020/ND-CP as follows:

Types of taxes declared monthly, quarterly, annually, each time a tax obligation arises, and tax statement declaration

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6. Types of taxes and fees declared for annual tax statement and finalization upon dissolution, bankruptcy, termination of operations, contract termination, or reorganization of the enterprise. In case of changing the type of enterprise (excluding state-owned enterprises transforming into a joint-stock company) where the transforming enterprise inherits all tax obligations of the converted enterprise, tax statement declaration is not required until the decision on enterprise transformation is made, the enterprise declares finalization at the end of the year. To be specific:

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d) Personal income tax for organizations, individuals paying taxable personal income tax from wages, salaries; individuals with income from wages, salaries authorizing tax statement to the organization, individual paying the income; individuals with income from wages, salaries directly settling tax statement with the tax authorities. To be specific:

d.1) Organizations, individuals paying income from wages, salaries are responsible for tax statement declaration and finalization on behalf of individuals who have authorized the organizations, individuals paying income, regardless of whether tax withholding arises or not. In cases where the organization, individual does not arise income to be paid, tax statement declaration for personal income tax is not required. In case an individual who is an employee transferred from the old organization to the new organization due to the old organization merging, consolidating, splitting, separating, or changing the type of business or both the old and new organizations belong to the same system, the new organization is responsible for tax statement on behalf of the individual for both the income paid by the old organization and retrieving the personal income tax withholding vouchers issued by the old organization for the employee (if any).

d.2) Resident individuals with income from wages, salaries authorizing tax statement to the organization, individual paying the income. To be specific:

Individuals with income from wages, salaries signing labor contracts for 03 months or more at one place and are actually working there at the time the organization, individual paying the income carried out the tax statement, including cases where they do not work for the entire 12 months of the year. If the individual is an employee transferred from the old organization to the new organization as stipulated in point d.1 of this clause, the individual may authorize the new organization to finalize tax.

Individuals with income from wages, salaries signing labor contracts for 03 months or more at one place and actually working there at the time the organization, individual paying the income finalizes tax, including cases where they do not work the full 12 months of the year; and having occasional income at other places with an average monthly not exceeding 10 million VND, and has been deducted personal income tax at a rate of 10% if there is no request for tax statement for this income.

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Therefore, even though the income doesn't reach the personal income tax threshold, individuals must still finalize taxes for 2025 (depending on the case, the individual may authorize the organization, individual paying the income to finalize or directly declare the personal income tax statement with the tax authorities).

Furthermore, according to guidance in Official Dispatch 2783/CTTPHCM-TTHT of 2024, subjects not required for tax statement include:

- Individuals with additional personal income tax payable after finalization of each year from 50,000 VND or less. These individuals are exempted from tax in this case; they themselves determine the amount of tax exempted, are not required to submit personal income tax statement dossiers and do not have to submit tax exemption dossiers. In cases where the finalization period is from the year 2019 and prior years that have been finalized before the effective date of Decree 126/2020/ND-CP, no retrospective action is taken;

- Individuals with the amount of personal income tax payable less than the tax temporarily paid and do not request a tax refund or offset against the next tax period;

- Individuals with income from wages, salaries signing labor contracts of 03 months or more at one unit, simultaneously having occasional income at other places averaging per month in the year not exceeding 10 million VND, and have been deducted personal income tax at the rate of 10% if there is no request, then they are not required to finalize tax for this income;

- Individuals whose employers purchase life insurance (excluding voluntary pension insurance), other non-compulsory insurance with accumulated insurance premiums, where the employer or insurer has deducted personal income tax at a rate of 10% on the corresponding insurance premium amount that the employer purchases or contributes to the employee, then the employee is not required to finalize personal income tax on this income.