When shall Vietnamese residents with income from salaries and wages settle personal income tax directly with the tax authorities?

When shall Vietnamese residents with income from salaries and wages settle personal income tax directly with the tax authorities?

According to Point d.3, Clause 6, Article 8 of Decree 126/2020/ND-CP, Vietnamese residents with income from salaries and wages directly declare personal income tax finalization with the tax authorities in the following cases:

- When there is additional tax payable or there is overpaid tax requested for a refund or offset in the next tax declaration period, except in the following cases:

+ Individuals with additional tax payable after finalization for each year of 50,000 VND or less;

+ Individuals whose tax payable is less than the tax prepaid and do not request a tax refund or offset in the next tax declaration period;

+ Individuals with income from salaries and wages under a labor contract of 3 months or more at one unit and simultaneously have incidental income at other places with an average monthly income in the year not exceeding 10 million VND which has already had a personal income tax deduction at a rate of 10% if no request is made, no tax finalization is required for this part of income;

+ Individuals whose life insurance (excluding voluntary retirement insurance) and other non-compulsory insurance with accumulated insurance premiums purchased by the employer, where the employer or insurer has deducted personal income tax at a rate of 10% on the insurance premiums corresponding to the portion purchased or contributed by the employer for the employee, are not required to finalize personal income tax for this income portion.

- Individuals present in Vietnam in the first calendar year for less than 183 days, but present for 183 days or more in 12 consecutive months from the first day in Vietnam.

- Foreign individuals concluding employment contracts in Vietnam must finalize taxes with tax authorities before departure. If individuals have not finalized taxes with the tax authorities, they must authorize an income-paying organization or another organization or individual to finalize taxes according to the tax finalization regulations for individuals. If the employed organization or other organization or individual authorized to finalize the tax bears responsibility for any additional personal income tax liabilities or refunds of overpaid tax for the individual.

- Vietnamese residents with income from salaries and wages also subject to tax reduction due to natural disasters, fires, accidents, or serious diseases affecting the ability to pay taxes must declare tax finalization directly with the tax authorities following regulations, rather than authorizing income-paying organizations or individuals to finalize taxes on their behalf.

When shall Vietnamese residents with income from salaries and wages settle personal income tax directly with the tax authorities? (Image from the Internet)

Who is personal income taxpayer in Vietnam?

Based on Article 2 of the Personal Income Tax Law 2007, individuals subject to personal income tax in 2024 are as follows:

- Individuals liable to personal income tax are Vietnamese residents with taxable income prescribed in Article 3 of the Personal Income Tax Law 2007 arising inside and outside the Vietnamese territory, and non-Vietnamese residents with taxable income prescribed in Article 3 of the Personal Income Tax Law 2007 arising within Vietnamese territory.

- Vietnamese residents are those who meet one of the following conditions:

+ Present in Vietnam for 183 days or more in a calendar year or in 12 consecutive months from the first day present in Vietnam;

+ Have a permanent residence in Vietnam, including having a registered permanent residence or a rented house to live in Vietnam under a term lease contract.

- Non-Vietnamese residents are those who do not meet the conditions specified in Clause 2, Article 2 of the Personal Income Tax Law 2007.

- Taxpayers declare personal income tax.

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

According to Clause 2, Article 59 of the Tax Administration Law 2019, the following regulations apply:

Handling late tax payment

...

2. The rate and duration of late payment calculation are specified as follows:

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

b) The duration of late payment interest is calculated continuously from the day following the day when the late payment arises as prescribed in Clause 1 of this Article until the day immediately preceding the day the tax debt, tax refunds recovered, additional tax liabilities, and assessed tax amounts are paid to the state budget.

...

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

Late payment interest = 0.03% x Amount of late tax payment.