When changing workplace in Vietnam, may employees request income payers to issue PIT deduction certificates?

When changing workplace in Vietnam, may employees request income payers to issue PIT deduction certificates?

Pursuant to Clause 2, Article 25 of Circular 111/2013/TT-BTC which stipulates the issuance of deduction certificates in specific cases as follows:

Tax Deduction and Certificates of Tax Deduction

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2. Certificate of deduction

a) Organizations and individuals paying income subject to the deductions mentioned in Clause 1 of this Article must issue a tax deduction certificate upon request of the individual having tax deducted. If the individual authorizes a tax finalization, no deduction certificates will be issued.

b.1) For individuals not signing labor contracts or signing labor contracts under three (03) months: the individual has the right to request the organization or person paying income to issue a deduction certificate for each deduction or to issue one certificate reflecting multiple deductions within a taxable period.

Example 15: Mr. Q signs a service contract with Company X for taking care of ornamental plants at the company's premises once a month from September 2013 to April 2014. His income is paid monthly by the company at 3 million VND. In this case, Mr. Q can request the company to issue a certificate each month or a single certificate for the tax deducted from September to December 2013, and another certificate for January to April 2014.

b.2) For individuals signing labor contracts from three (03) months or more: organizations and individuals paying income issue only one deduction certificate per taxable period.

Example 16: Mr. R signs a long-term employment contract (from September 2013 to the end of August 2014) with Company Y. If Mr. R is directly subject to tax finalization with tax authorities and requests the issuance of a deduction certificate, the company will issue one certificate reflecting tax deducted from September to the end of December 2013 and another for January to the end of August 2014.

Additionally, pursuant to Article 31 of Decree 123/2020/ND-CP, which specifies the timing of certificate issuance:

Timing of Certificate Issuance

At the time of individual income tax deduction, at the time of tax, fee, levy collection, organizations making individual income tax deductions, tax collection organizations, must issue certificates and receipts to income earners subject to deductions and taxpayers of taxes, fees, levies.

Therefore, PIT deduction certificates are issued at the point of deduction, thus, when an individual changes workplaces, they may request the old company to reissue the PIT deduction certificates, and the old company is obligated to provide the certificates that have been issued.

Except in the case when still employed at the old company, the taxpayer authorizes tax finalization; they cannot request the issue of a deduction certificate.

When changing workplace in Vietnam, may employees request income payers to issue PIT deduction certificates? (Image from the Internet)

What are regulations on PIT deduction from wages and salaries in Vietnam?

According to point b, Clause 1, Article 25 of Circular 111/2013/TT-BTC, amended by Clause 1, Article 20 of Circular 92/2015/TT-BTC, which regulates the deduction of PIT from wages and salaries as follows:

- For resident individuals signing labor contracts from three (03) months or more, the organization or individual paying income executes tax deduction following the progressive tax rate scale, even for individuals signing contracts of three (03) or more months at multiple places.

- For resident individuals signing labor contracts of three (03) months or more but cease working before the contract ends, the organization, or individual paying income continues to deduct tax following the progressive tax rate scale.

- For foreign individuals working in Vietnam, the organization or individual paying income references the working period in Vietnam mentioned in the contract or assignment letter to tentatively deduct tax following the progressive tax scale (for individuals residing in Vietnam for 183 days within the tax year) or following the flat tax rate (for individuals in Vietnam for less than 183 days within the tax year).

- Insurance enterprises have the responsibility to withhold tax on the accumulation fee portion corresponding to the employer's purchase of life insurance (excluding voluntary pension insurance) or other non-compulsory insurances with fee accumulation for employees with insurers established and operating under Vietnam's law. The deductible tax amount is determined as per guidance in Clause 2, Article 14 of Circular 92/2015/TT-BTC.

Organizations or individuals paying income are responsible for withholding tax on the insurance premium amounts purchased or contributed before paying salaries to employees for life insurance, and other non-compulsory insurances with fee accumulation from insurers not established and operating under Vietnam’s law but authorized to sell insurance in Vietnam that organizations, or individuals paying income, purchase for employees. The deductible tax amount is determined as per guidance in Clause 2, Article 14 of Circular 92/2015/TT-BTC.

- The tax amount to be withheld on income from wages, salaries of resident individuals is determined as per guidelines at Article 7 of Circular 111/2013/TT-BTC; for non-resident individuals is determined under Article 18 of Circular 111/2013/TT-BTC.

What does a PIT deduction certificate include?

Based on Clause 1, Article 32 of Decree 123/2020/ND-CP, the PIT deduction certificate must include:

- Name of the tax deduction certificate, model number of the tax deduction certificate, code of the tax deduction certificate, serial number of the PIT deduction certificate;

- Name, address, tax code of the issuer;

- Name, address, tax code of the PITpayer (if the taxpayer has a tax code);

- Nationality (if the PITpayer is not a Vietnamese national);

- Income amount, time of income payment, total taxable income, tax deducted amount, net income amount received;

- Date, month, year of issuing the PIT deduction certificate;

- Full name, signature of the income payer.

Note: In the case of using electronic tax deduction certificates, the signature on the electronic certificate is a digital signature.