When shall incomes of income earners be taxable in Vietnam?

When shall incomes of income earners be taxable in Vietnam?

According to Article 2 Circular 111/2013/TT-BTC as follows:

Taxable Income Items

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2. Income from Salary and Wages

Income from salary, wages is the income that employees receive from employers, including:

a) Salary, wages, and other items of similar nature in monetary or non-monetary forms.

b) Allowances and subsidies, except for the following allowances and subsidies:

b.1) Monthly preferential allowances and one-time subsidies in accordance with the law on preferential treatment for people who have made contributions to the country.

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Besides that, according to Article 1 Resolution 954/2020/UBTVQH14 stipulates as follows:

Family Circumstance Deduction Levels

Adjusting the family circumstance deduction levels specified in Clause 1, Article 19 of the Personal Income Tax Law No. 04/2007/QH12 amended and supplemented by Law No. 26/2012/QH13 as follows:

1. The deduction level for the taxpayer is 11 million VND/month (132 million VND/year);

2. The deduction level for each dependent is 4.4 million VND/month.

And according to Decree 73/2024/ND-CP and Decree 74/2024/ND-CP, the increase in statutory pay rates and region-based minimum wages for officials and public employees and laborers, respectively. The salary increase will potentially impact directly the personal income tax payment levels of officials, public employees, and laborers.

Thus, for individuals without dependents, personal income tax must be paid if the total income from salary and wages exceeds 11 million VND/month.

When shall incomes of income earners be taxable in Vietnam? (Image from the Internet)

When is the deadline for personal income tax payment in Vietnam?

According to the regulations in Article 28 of Decree 65/2013/ND-CP, on a monthly basis, the organizing units will pre-deduct the payable tax amount based on income items.

Pursuant to Clause 1, Article 55 of the Tax Management Law 2019 stipulated as follows:

Deadline for Tax Payment

1. For cases where taxpayers calculate tax, the deadline for tax payment is the last day of the tax return submission deadline. In cases of supplementary tax return submission, the tax payment deadline is the tax return submission deadline for the incorrect tax period.

For corporate income tax, the provisional payment is made on a quarterly basis, with the tax payment deadline being the 30th day of the first month of the following quarter.

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Additionally, according to the regulations in Clause 2, Article 44 of the Tax Management Law 2019 concerning the deadline for filing personal income tax returns as follows:

Deadline for Filing Tax Returns

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2. The deadline for filing tax returns for taxes recalculated on an annual basis is stipulated as follows:

a) No later than the last day of the third month following the end of the calendar year or fiscal year for the annual tax settlement return; no later than the last day of the first month of the calendar year or fiscal year for the annual tax return;

b) No later than the last day of the fourth month following the end of the calendar year for personal income tax settlement returns filed directly by individuals;

c) No later than December 15 of the previous year for tax estimation returns of household businesses and individual businesses paying tax under the estimation method; for newly established household businesses and individual businesses, the tax return submission deadline is no later than 10 days from the commencement date of business activities.

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Thus, the deadline for finalizing personal income tax returns is divided into two time points for two cases as follows:

- No later than the last day of the third month following the end of the calendar year or fiscal year for tax settlement returns filed by enterprises on behalf of employees.- No later than the last day of the fourth month following the end of the calendar year for personal income tax settlement returns filed directly by individuals.

What are the penalties for late payment of personal income tax in Vietnam?

According to Article 59 of the Tax Management Law 2019 stipulates as follows:

Handling of Late Tax Payment

1. Cases which require payment of late tax include:

a) Taxpayers who delay tax payment beyond the prescribed deadline, extended deadline, deadline specified in notices from tax authorities, deadline in tax assessment decisions or handling decisions from tax authorities;

b) Taxpayers who supplement their tax returns, leading to an increase in the payable tax amount or when tax authorities, competent state authorities identify underreported payable tax amounts through inspections or audits, must pay the late tax amount from the next day following the original tax payment deadline of the incorrect tax period or the deadline of the initial customs declaration;

c) Taxpayers who supplement their tax returns reducing the tax refund amount initially reported or when tax authorities, competent state authorities identify a smaller refund amount than initially refunded, must pay back the refunded amount subject to recovery from the date of receiving the refund from the state budget;

d) Cases where taxpayers are allowed to pay owed tax in installments as stipulated in Clause 5, Article 124 of this Law;

đ) Cases where administrative penalties for tax management violations are not applicable due to expired penalties, but tax recovery for underreported tax amounts as provided in Clause 3, Article 137 of this Law still applies;

e) Cases where administrative penalties for tax management violations are not applicable for acts stipulated in Clause 3 and Clause 4, Article 142 of this Law;

g) Organizations or entities authorized by tax authorities to collect tax which delay transferring tax, late payment interest, fines of taxpayers into the state budget must pay late payment interest for the delayed amount as provided.

2. The calculation method and duration for late payment interest are stipulated as follows:

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

b) The duration for calculating late payment interest is continuously counted from the day following the date of late payment as stipulated in Clause 1 of this Article to the day before the date the owed tax, recovered refunded tax, increased payable tax, assessed tax, and delayed transfer amount are fully paid into the state budget.

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Thus, the late payment of personal income tax per day is calculated by the formula:

Late Payment Interest Rate = 0.03% x Late Tax Amount.