What is a tax period? What types of personal income tax periods apply to resident individuals in Vietnam?

What is a tax period?

Pursuant to Clause 6, Article 3 of the Law on Tax Administration 2019 stipulates as follows:

Terminology Explanation

In this Law, the following terms shall be construed as follows:

1. Tax is a compulsory contribution to the state budget made by organizations, households, business households, and individuals as per the law on taxation.

2. Other state budget revenues managed by tax authorities include:

a) Fees and charges as stipulated by the Law on Fees and Charges;

b) Land use fees payable to the state budget;

c) Land and water surface rental fees;

d) Fees for the granting of mining rights;

dd) Fees for the granting of water resource exploitation rights;

e) Revenues from the sale of property on land, transfer of land use rights as specified in the Law on Management and Use of Public Property;

g) Revenues from administrative fines as per the law on handling administrative violations in the field of taxation and customs;

h) Late payment interests and other revenues as per the law.

3. Other state budget revenues not managed by tax authorities include:

a) Revenues from the use of marine areas for dumping as per the law on marine and island resources and environment;

b) Fees for the protection and development of rice cultivation land as per the land law;

c) Revenues from administrative fines as per the law on handling administrative violations, except in the fields of taxation and customs;

d) Revenues payable to the state budget as per the law on the management and use of public property from the management, use, and exploitation of public properties for business, leasing, joint ventures, or associations, after fulfilling tax, fee, and charge obligations;

dd) Aid receipts;

e) Other revenues as per the law.

4. The headquarters of the taxpayer is the location where the taxpayer conducts part or all business activities, including the main office, branches, stores, production sites, warehouses, and properties used for production and business; it also includes the residence or the location where tax obligations arise.

5. A tax identification number is a sequence of 10 or 13 digits and other characters issued by the tax authority to the taxpayer for tax management.

6. A tax period is the time frame for determining the amount of tax payable to the state budget as per the law on taxation.

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A tax period is understood as the time frame for determining the amount of tax payable to the state budget as per the law on taxation.

What is a tax period? What types of personal income tax periods apply to resident individuals in Vietnam? (Image from the Internet)

What types of personal income tax periods apply to resident individuals in Vietnam?

Pursuant to Article 7 of the 2007 Law on Personal Income Tax (amended by Clause 3, Article 1 of the 2012 Amended Law on Personal Income Tax) stipulates as follows:

Tax Period

1. The tax period for resident individuals is stipulated as follows:

a) An annual tax period applies to income from business activities; income from wages and salaries;

b) A tax period per income occurrence applies to income from capital investment; income from capital transfer, except for income from securities transfer; income from real estate transfer; income from winnings; income from royalties; income from franchising; income from inheritance; income from gifts;

c) A tax period per transfer or annually for income from securities transfer.

2. The tax period for non-resident individuals is per income occurrence for all taxable income.

The tax period for personal income tax for resident individuals includes three specific types as follows:

- Annual tax period: applies to income from business activities; income from wages and salaries;

- Tax period per income occurrence: applies to income from capital investment; income from capital transfer, except for income from securities transfer; income from real estate transfer; income from winnings; income from royalties; income from franchising; income from inheritance; income from gifts;

- Tax period per transfer or annually: applies to income from securities transfer.

How to determine a resident individual subject to personal income tax in Vietnam?

Pursuant to Article 1 of Circular 111/2013/TT-BTC (amended by Article 2 of Circular 119/2014/TT-BTC) as follows:

Taxpayers

Taxpayers are resident and non-resident individuals as stipulated in Article 2 of the Law on Personal Income Tax, Article 2 of Decree No. 65/2013/ND-CP dated June 27, 2013, of the Government of Vietnam detailing some articles of the Law on Personal Income Tax and the Law amending, supplementing some articles of the Law on Personal Income Tax (hereinafter referred to as Decree No. 65/2013/ND-CP), with taxable income as stipulated in Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP.

The scope for determining taxable income for taxpayers is as follows:

For resident individuals, taxable income is the income generated both within and outside the territory of Vietnam, irrespective of the place of income payment;

For citizens of countries and territories that have signed agreements with Vietnam to avoid double taxation and prevent tax evasion for income taxes and are resident individuals in Vietnam, personal income tax obligations are calculated from the month of first arrival in Vietnam until the month the labor contract ends and they leave Vietnam (calculated fully by the month). They do not need to carry out consular certification procedures to avoid double taxation under the tax avoidance agreement between the two countries.

For non-resident individuals, taxable income is the income generated within Vietnam, irrespective of the place of income payment and receipt.

...Accordingly, as stipulated above, the subjects liable to pay personal income tax are resident individuals and non-resident individuals. Among them, a resident individual is someone who meets one of the following conditions:

(1) Being present in Vietnam for 183 days or more within one calendar year or within 12 consecutive months from the first day of presence in Vietnam, with each arrival and departure date counting as one day.

(2) Having a permanent residence in Vietnam under one of the following cases:

+ Having a permanent residence as per the residency law;

+ Having a rented house for living in Vietnam according to the housing law, with lease contracts having a term of 183 days or longer within the tax year;

If an individual has a permanent residence in Vietnam as per the above regulation but is actually present in Vietnam for less than 183 days within the tax year and cannot prove residence in any other country, that individual is considered a resident of Vietnam.

The proof of residency in another country is based on a residence certificate. If the individual is from a country or territory that has signed a tax agreement with Vietnam and does not issue a residence certificate, the individual provides a copy of the passport to prove the period of residency.