Which allowances and benefits are not subject to PIT in Vietnam?

Which allowances and benefits are not subject to PIT in Vietnam?

Under point b, Clause 2 Article 3 Decree 65/2013/ND-CP as amended by Clause 3 Article 2 Decree 12/2015/ND-CP, the following allowances and benefits are not subject to PIT in Vietnam:

- Monthly and lump sum allowances, benefits for meritorious contributors prescribed by law;

- Monthly benefits and lump sum benefits for participants in protection of the country, people performing international tasks, young volunteers who have fulfilled their duties;

- National defense and security allowances; benefits for the servicemen;

- Allowances for toxic, dangerous jobs or workplaces with toxic, dangerous factors;

- Attraction allowances, region-based allowances;

- Benefits for unexpected difficulties, benefits for occupational accidents, occupational diseases, lump sum benefits upon delivery or adoption, benefits for decline in working capacity; lump sum pension, monthly death benefits, redundancy pay, severance pay, unemployment benefits, and other benefits prescribed by the Labor Code and the Law on Social insurance.

- Benefits for beneficiaries of social protection defined by law;

- Seniority allowances for senior officers;

- Lump sum benefits for individuals sent by their employers to extremely disadvantaged areas; lump sum benefits for officials whose tasks involve sovereignty over territorial sea and islands. Lump sum benefits for foreigners who move to reside in Vietnam, Vietnamese citizens working overseas, Vietnamese citizens who resided overseas and go back to work in Vietnam ;

- Allowances for health workers of villages;

- Vocational allowances.

Allowances and benefits that are not included in taxable income must be specified by competent authorities.

Which allowances and benefits are not subject to PIT in Vietnam? (Image from the Internet)

Who is required to pay personal income tax in Vietnam?

Under the provisions of Article 2 of the Personal Income Tax Law 2007, the provisions are as follows:

Taxpayers

1. Personal income taxpayers include residents who earn taxable incomes specified in Article 3 of this Law inside and outside the Vietnamese territory and non-residents who earn taxable incomes specified in Article 3 of this Law inside the Vietnamese territory.

2. Resident means a person who satisfies one of the following conditions:

a/ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

b/ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.

3. Non-resident means a person who does not satisfy any of the conditions specified in Clause 2 of this Article.

Thus, based on the above provisions, individuals subject to personal income tax include:

- Personal income taxpayers include residents who earn taxable incomes specified in Article 3 of the Personal Income Tax Law 2007 inside and outside the Vietnamese territory and non-residents who earn taxable incomes specified in Article 3 of the Personal Income Tax Law 2007 inside the Vietnamese territory.

- Resident means a person who satisfies one of the following conditions:

+ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

+ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.

- Non-resident individuals are those who do not meet the following conditions:

+ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

+ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.

When is the deadline for paying PIT in Vietnam?

According to Article 28 of Decree 65/2013/ND-CP, employees will be organized to declare provisional payments based on their income from salaries and wages.

Under Clause 1, Article 55 of the Tax Administration Law 2019, it is stipulated as follows:

Tax payment deadlines

1. In case tax is calculated by the taxpayer, the tax payment deadline is the deadline for submission of the tax declaration dossier. In case of submission of supplementary tax documents, the tax payment deadline is the deadline for submission of the erroneous tax declaration dossier.

The deadline for paying corporate income tax, which is paid quarterly, is the 30th of the first month of the next quarter.

The deadline for paying resource royalty and corporate income tax on crude oil is 35 days from the date of selling domestically or the date of customs clearance in case of export.

Resource royalty and corporate income tax on natural gas shall be paid monthly.

...

Furthermore, according to Clause 2, Article 44 of the Tax Administration Law 2019, the deadline for PIT finalization filing is stipulated as follows:

Deadlines for submission of tax declaration dossiers

...

2. For taxes declared annually:

a) For annual tax statement dossiers: the last day of the 3rd month from the end of the calendar year or fiscal year. For annual tax declaration dossiers: the last day of the first month from the end of the calendar year or fiscal year

b) For annual personal income tax statements prepared by income earners: the last day of the 4th month from the end of the calendar year;

c) For presumptive tax declarations prepared by household businesses and individual businesses: the 15th of December of the preceding year. For new household businesses and individual businesses: within 10 days from the date of commencement of the business.

...

Thus, the deadline for PIT finalization is divided into two timing points for two cases as follows:

- No later than the last day of the third month from the end of the calendar year or fiscal year for tax finalization declarations made by enterprises on behalf of employees.

- No later than the last day of the fourth month from the end of the calendar year for personal finalization tax declarations of individuals directly finalizing tax.