What is personal income tax? Who are PIT payers in Vietnam?

What is personal income tax? Who are PIT payers in Vietnam?

Personal income tax can be understood as a direct tax imposed on certain high-income individuals.

Under Article 2 of the Personal Income Tax Law 2007, the subjects required to pay personal income tax in 2024 are stipulated as follows:

- The subjects subject to personal income tax are resident individuals who have taxable income as specified in Article 3 of the Personal Income Tax Law 2007 arising within and outside the territory of Vietnam, and non-resident individuals who have taxable income as specified in Article 3 of the Personal Income Tax Law 2007 arising within the territory of Vietnam.

- A resident individual is a person who meets one of the following conditions:

+ Present in Vietnam for 183 days or more in a calendar year or continuously for 12 months from the first date of arrival in Vietnam;

+ Have a permanent residence in Vietnam, including having a registered permanent residence or renting a house in Vietnam according to a rental contract with a term.

- A non-resident individual is a person who does not meet the conditions specified in Clause 2, Article 2 of the Personal Income Tax Law 2007.

- The taxpayer must declare personal income tax.

What is personal income tax? Who are PIT payers in Vietnam? (Image from the Internet)

What are the cases of monthly PIT payment in Vietnam?

According to Article 28 of Decree 65/2013/ND-CP, monthly income payers are required to temporarily deduct the payable tax based on their income.

Under Clause 1, Article 55 of the Tax Administration Law 2019:

Tax payment deadlines

1. In case tax is calculated by the taxpayer, the tax payment deadline is the deadline for submission of the tax declaration dossier. In case of submission of supplementary tax documents, the tax payment deadline is the deadline for submission of the erroneous tax declaration dossier.

The deadline for paying corporate income tax, which is paid quarterly, is the 30th of the first month of the next quarter.

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Additionally, according to Clause 2, Article 44 of the Tax Administration Law 2019, the deadline for annual personal income tax finalization is stipulated as follows:

Deadlines for submission of tax declaration dossiers

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2. For taxes declared annually:

a) For annual tax statement dossiers: the last day of the 3rd month from the end of the calendar year or fiscal year. For annual tax declaration dossiers: the last day of the first month from the end of the calendar year or fiscal year

b) For annual personal income tax statements prepared by income earners: the last day of the 4th month from the end of the calendar year;

c) For presumptive tax declarations prepared by household businesses and individual businesses: the 15th of December of the preceding year. For new household businesses and individual businesses: within 10 days from the date of commencement of the business.

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Thus, the deadline for PIT finalization is divided into 2 periods for 2 cases as follows:

- The latest by the last day of the third month from the end of the calendar year or fiscal year for tax finalization returns filed by enterprises on behalf of employees.

- The latest by the last day of the fourth month from the end of the calendar year for individual personal income tax finalization returns directly filed by individuals.

What is the fine for late payment of PIT in Vietnam?

According to Clause 2, Article 59 of the Tax Administration Law 2019, it is stipulated as follows:

Handling of late tax payment

1. Late payment interest shall be charged in the following cases:

a) The taxpayer pays tax behind deadline, the extended deadline, the deadline written in the tax authority’s notice, tax liability imposition decision or handling decision;

b) If the supplementation of the tax declaration dossier leads to an increase in the amount of tax payable, or the tax authority or inspecting authority finds that tax is understated, late payment interest shall be charged on the increase in tax over the period from the day succeeding the initial deadline or the deadline for tax payment of the initial customs declaration;

c) If the supplementation of the tax declaration dossier leads to a decrease in the amount of refundable tax, or the tax authority or inspecting authority finds that refundable tax is smaller than the refunded tax, late payment interest shall be charged on the excessively refunded tax, which has to be paid back to state budget, over the period from the day on which tax is refunded;

d) The cases in which outstanding debt may be paid by installments as prescribed in Clause 5 Article 124 of this Law;

dd) The cases in which administrative penalties are not imposed due to expiration of the time limit for penalty imposition but outstanding tax has to be collected as prescribed in Clause 3 Article 137 of this Law;

e) The cases in which administrative penalties are not imposed specified in Clause 3 and Clause 4 Article 142 of this Law;

g) The organization that is authorized by the tax authority to collect tax but fails to transfer the tax, late payment interest and fines paid by taxpayers to state budget in a timely manner shall pay an interest on such amount.

2. The calculation of late payment interest and the time to calculate late payment interest are stipulated as follows:

a) The late payment interest is 0.03%/day on the overdue tax amount;

b) The time to calculate late payment interest is continuously from the day following the day of overdue tax as stipulated in Clause 1 of this Article until the day before the overdue tax, refunded tax, additional tax, and assessed tax are paid to the state budget.

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Thus, the calculation for late PIT payment is:

Late payment interest = 0.03% x Overdue tax amount.