What is the determination of the PIT period in Vietnam?

What is the definition of PIT period in Vietnam?

According to Clause 6, Article 3 of the Tax Administration Law 2019 stipulated as follows:

Explanation of Terms

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

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4. “premises " of the taxpayer means the location where the taxpayer partially or fully operate their business, including the headquarters, branches, stores, factories, goods storage, asset storage; residences or places where tax is incurred. 

5. “tax identification number” or “TIN” means a series of 10 or 13 digits and other characters assigned by tax authorities to taxpayers to serve tax administration.

6. “tax period” means a period of time used to determine tax liabilities that must be paid towards the state budget in accordance with provisions on taxation.

7. “tax return” means a document stipulated by the Minister of Finance and used by taxpayers to declare information for the purpose of determining tax liabilities.

8. “customs declaration” means a document stipulated by the Minister of Finance and used as a tax return for imported or exported goods.

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The personal income tax period means a period of time used to determine tax liabilities that must be paid towards the state budget in accordance with provisions on taxation.

What is the determination of the PIT period in Vietnam?

Under Article 7 of the Law on Personal Income Tax 2007, as amended by Clause 3 Article 1 of the Law Amending the Law on Personal Income Tax 2012, the personal income tax period is determined as follows:

- For residents, the tax period is specified as follows:

+ Annual tax period, which is applicable to incomes from business, salaries and wages.

+ Tax period upon each time of income generation, which is applicable to incomes from capital investment; incomes from capital transfer, except for incomes from securities transfer; incomes from real estate transfer; incomes from prizes; incomes from copyright; incomes from commercial franchising; incomes from inheritances; and gifts.

+ Tax period upon each transfer or annual tax period, which is applicable to Incomes from transfer of securities

- For non-residents, the tax period counted upon each time of income generation is applicable to all their taxable incomes.

What is the determination of the PIT period in Vietnam? (Image from the Internet)

What is the time for determining taxable income from business in Vietnam?

According to Article 32 of the Personal Income Tax Law 2007, the time for determining taxable income is as follows:

Time of determination of taxable income

1. Time of determination of taxable income with respect to incomes specified in Article 25 of this Law is the time when a non-resident earns an income or a goods sale or service provision invoice is issued.

2. Time of determination of taxable income with respect to incomes specified in Articles 26, 27, 30 and 31 of this Law is the time when an organization or individual in Vietnam pays an income to a non-resident or when a non-resident receives an income from an overseas organization or individual.

3. Time of determination of taxable income with respect to incomes specified in Articles 28 and 29 of this Law is the time when a transfer contract becomes effective.

According to Article 25 of the Personal Income Tax Law 2007:

Tax on incomes from business

1. Tax on incomes from business of a non-resident is determined to be equal to his/her turnover from production or business activities specified in Clause 2 of this Article multiplied by the tax rate specified in Clause 3 of this Article.

2. Turnover is the total sum of money derived from the provision of goods or services, including also expenses paid by the goods or service buyer on behalf of the non-resident but not refunded to the goods or service buyer.

If a contract between the goods or service provider and buyer does not specify personal income tax, the taxable turnover that must be converted is the total sum of money in any form earned by the non-resident from the provision of goods or services in Vietnam, regardless of places where business activities are conducted.

3. Tax rates applicable to incomes from business are specified for different production sectors or business lines as follows:

a/ 1% for goods trading;

b/ 5% for service provision;

c/ 2% for production, construction, transportation and other business activities.

The time for determining taxable income from the business is the time when a non-resident earns an income or a goods sale or service provision invoice is issued.