When shall the certificate of PIT deduction be issued in Vietnam?

When shall the certificate of PIT deduction be issued in Vietnam?

According to point b, clause 2, Article 25 of Circular 111/2013/TT-BTC, deduction certificates are issued in specific cases as follows:

- For individuals not signing a employment contract or signing a employment contract of less than three (03) months: the individual has the right to request the organization or individual providing income to issue a deduction certificate for each tax deduction or to issue one deduction certificate for multiple tax deductions in one tax period.

- For individuals signing a employment contract for three (03) months or more: the organization or individual providing the income only issues one deduction certificate to the individual in one tax period.

When shall the certificate of PIT deduction be issued in Vietnam? (Image from the Internet)

What is the purpose of a certificate of PIT deduction in Vietnam?

Regulations in Article 31 of Decree 123/2020/ND-CP on the timing for preparing certificates are as follows:

Timing for certificate preparation

At the time of deduction of personal income tax, the collection of taxes, fees, charges, the organization deducting personal income tax, or the organization collecting taxes, fees, charges must prepare certificates and receipts for those whose income is subject to tax deduction and for those paying taxes, fees, charges.

Further based on point a, clause 2, Article 25 of Circular 111/2013/TT-BTC regarding tax deductions and deduction certificates as follows:

Tax deductions and deduction certificates

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2. Deduction Certificate

a) Organizations or individuals paying income that has been deducted as guided in clause 1 of this Article must issue deduction certificates as requested by the individual whose tax is deducted. If the individual authorizes tax finalization, no deduction certificate is issued.

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The certificate of PIT deduction is a document issued by the organization or individual providing income to individuals with income tax deducted, recording information about the Personal Income Tax that has been deducted.

The content of the certificate of PIT deduction is prescribed in clause 1, Article 32 of Decree 123/2020/ND-CP, including:

- Name of the deduction certificate, symbol of the deduction certificate form, serial number of the deduction certificate, and the deduction certificate number;

- Name, address, and tax code of the payer;

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

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

- Income amount, time of income payment, total taxable income, deducted tax amount; remaining income to be received;

- Date, month, year of preparing the deduction certificate;

- Full name, signature of the income payer.

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

The certificate of PIT deduction can be used for various purposes, including but not limited to:

(1) Verifying Personal Income Tax payment: The certificate of PIT deduction serves as evidence for the amount of tax the individual has had deducted under tax law, allowing the individual to determine whether they are required to pay Personal Income Tax and verifying the accuracy of the deduction.

(2) As a basis for Personal Income Tax finalization: This is a component in the tax finalization dossier for individuals with income from salaries, wages as prescribed in subsection b, sub-item 9.2, Section 9, Appendix 1 issued with Decree 126/2020/ND-CP.

The certificate of PIT deduction plays an important role in verifying the Personal Income Tax payment of workers.

When is it mandatory to prepare a certificate of PIT deduction in Vietnam?

Based on clause 2, Article 4 of Decree 123/2020/ND-CP, the preparation of a certificate of PIT deduction is stipulated as follows:

Principles for preparation, management, use of invoices, certificates

1. When selling goods, providing services, the seller must prepare an invoice for the buyer (including cases of promotion, advertisement, sample goods; goods, services for donation, gifting, exchange, payment as labor wages, and internal consumption (except for internal rotation of goods for further production); goods exported under forms of lending, borrowing, or returning goods) and must fully record the contents as prescribed in Article 10 of this Decree. For using electronic invoices, it must comply with the standard data format of the tax authority as prescribed in Article 12 of this Decree.

2. When deducting personal income tax, when collecting taxes, fees, charges, the tax deduction organization, fee collection organization, tax collection organization must prepare tax deduction certificates, receipts for tax, fee, charge payment, and issue them to the income recipients whose tax is deducted. All content must be fully recorded as prescribed in Article 32 of this Decree. If using electronic receipts, they must comply with the standard data format of the tax authority. If the individual authorizes tax finalization, no certificate of PIT deduction is issued.

For individuals not signing a employment contract or signing a employment contract of less than 03 months, the organization or individual providing income can choose to issue a deduction certificate for each tax deduction or one deduction certificate for multiple tax deductions in one tax period. For individuals signing a employment contract for 03 months or more, the organization or individual providing income issues only one deduction certificate for the individual in one tax period.

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Thus, according to the above regulations, individuals or organizations deducting tax must prepare and issue deduction certificates to income recipients, ensuring all required contents are fully recorded.

For using electronic receipts, compliance with the standard data format of the tax authority is required. If the individual authorizes tax finalization, no certificate of PIT deduction is issued.

Note: For individuals not signing a employment contract or signing a employment contract of less than 03 months, the organization or individual providing income can choose to issue a deduction certificate for each tax deduction or one deduction certificate for multiple tax deductions in one tax period. For individuals signing a employment contract for 03 months or more, the organization or individual providing income issues only one deduction certificate for the individual in one tax period.