Which entities are exempt from finalizing personal income tax in Vietnam for 2025?

Which entities are exempt from finalizing personal income tax in Vietnam for 2025?

Pursuant to Point d Clause 6 Article 8 of Decree 126/2020/ND-CP and as guided in Section II of Official Dispatch 154/CTSTR-KK year 2025 by the Tax Department of Soc Trang Province Download, individuals who do not have to finalize Personal Income Tax (PIT) include the following:

(1) For individuals who directly finalize with the Tax Authority

Individuals with income from salaries and wages in the following cases are not required to finalize PIT:

- Individuals with additional personal income tax payable after annual settlement of 50,000 VND or less. Individuals in this case are exempt from tax and self-determine the exempt amount, not required to submit PIT finalization documents nor tax exemption documents;

- Individuals whose PIT payable is less than the tax temporarily paid and do not request a tax refund or offset in the next tax declaration period;

- Individuals with income from salaries and wages under labor contracts of 3 months or more at one unit, and concurrently have casual income at other places averaging monthly in the year not exceeding 10 million VND, and have been subject to a 10% PIT deduction without any requests do not need to finalize PIT for this income;

- Individuals for whom the employer purchases life insurance (excluding voluntary pension insurance), or other non-mandatory insurance with insurance fee accumulation and from which the employer or the insurer has deducted PIT at a rate of 10% on the premium corresponding to the part the employer purchases or contributes for the employee, then the employee does not need to finalize PIT for this income part.

(2) For organizations and individuals paying income from salaries and wages

Organizations and individuals paying income from salaries and wages are not required to finalize PIT, including those who do not generate income payments throughout the year; and those who suspend business operations for the entire calendar year.

Which entities are exempt from finalizing personal income tax in Vietnam for 2025? (Image from Internet)

When shall individuals authorize personal income tax finalization in Vietnam for 2025?

Pursuant to Point d.2 Clause 6 Article 8 of Decree 126/2020/ND-CP and Subsection 1 Section 3 of Official Dispatch 154/CTSTR-KK year 2025 by the Tax Department of Soc Trang Province Download, residents with income from salaries and wages can authorize personal income tax finalization to the organizations or individuals that pay their income in the following cases:

- Case 1: Individuals with income from salaries and wages under labor contracts of 3 months or more at one place and are actually working there at the time the organization or individual pays the income implementation of PIT finalization, even if they have not worked for a full 12 months in the calendar year. In the case that an individual is an employee transferred from the old organization to the new organization due to merger, consolidation, division, separation, or conversion of enterprise type within the same system, the individual can authorize PIT finalization to the new organization.

- Case 2: Individuals with income from salaries and wages under labor contracts of 3 months or more at one place and are actually working there at the time the organization or individual paying the income executes the PIT finalization, even if they do not work for a full 12 months in the calendar year, while also having casual income elsewhere averaging no more than 10 million VND per month throughout the year and has been subject to a 10% PIT deduction or if there is no request for PIT finalization for this income.

Note: In the case of individuals having income from salaries and wages under labor contracts of 3 months or more at one unit, and concurrently having casual income that has not been deducted or insufficiently deducted PIT (including cases not yet reaching the deduction threshold or reaching it but not deducted), they cannot authorize income-paying organizations or individuals to finalize PIT on their behalf.

- Case 3: Foreign individuals concluding work contracts in Vietnam without performing tax finalization procedures with the tax authority should authorize the organization paying the income or other organizations/individuals to finalize PIT in accordance with regulations on PIT finalization for individuals. In cases where the organization paying income or other organizations/individuals are authorized to finalize, they must take responsibility for the additional PIT payable or be reimbursed for any excess tax paid by the individual.

Vietnam: What does the Personal Income Tax finalization for 2025 include?

Based on Point b Clause 9 Appendix I issued with Decree 126/2020/ND-CP, the personal income tax finalization includes:

(1) For individuals who directly finalize their PIT with the tax authority, the PIT finalization includes:

+ PIT finalization declaration form No. 02/QTT-TNCN promulgated together with Appendix 2 Circular 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance.

+ Appendix listing family deduction for dependents form No. 02-1/BK-QTT-TNCN issued together with Appendix 2 Circular 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance.

+ A copy (photo from the original) of documents proving the amount of tax already deducted, temporarily paid in the year, tax paid abroad (if any). If the organization paying income does not issue withholding tax documents to the individual because the organization paying income has ceased operations, the tax authority bases on the tax industry data to consider processing the tax finalization for individuals without the need for tax withholding documents.

In cases where organizations or individuals paying income use electronic PIT withholding vouchers, the taxpayer uses the printed version of the electronic PIT withholding voucher (paper form self-printed by the taxpayer from the original electronic PIT withholding voucher issued by the organization or individual paying income).

+ A copy of the Tax Deduction Certificate (clearly stating the tax already paid according to which income tax declarations) issued by the income-paying organization or a copy of the bank document for taxes paid abroad confirmed by the taxpayer in case foreign tax authorities do not issue a certificate of taxes paid.

+ A copy of receipts proving contributions to charity funds, humanitarian funds, and study promotion funds (if any).

+ Documentation proving the amount paid by foreign institutions or organizations when individuals receive income from international organizations, embassies, consulates, and receiving income from abroad.

+ Dependent registration dossier as prescribed in Point g Clause 1 Article 9 Circular 111/2013/TT-BTC as amended by Article 1 Circular 79/2022/TT-BTC (if considering deductions for dependents at the time of tax finalization for those who have not registered dependents).

(2) For organizations or individuals paying income, the PIT finalization is as follows:

+ PIT finalization declaration form No. 05/QTT-TNCN issued together with Appendix 2 Circular 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance.

+ Appendix listing detailed persons subject to tax calculation according to the progressive tariff scale form No. 05-1/BK-QTT-TNCN issued together with Appendix 2 Circular 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance.

+ Appendix listing detailed persons subject to tax calculation according to full tax rate form No. 05-2/BK-QTT-TNCN issued together with Appendix 2 Circular 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance.

+ Appendix listing detailed dependents family deductions form No. 05-3/BK-QTT-TNCN issued together with Appendix 2 Circular 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance.

(3) In cases where individuals authorize the organization paying income to finalize taxes on their behalf, the individual prepares a Power of Attorney for PIT finalization for the 2024 tax period according to form No. 08/UQ-QTT-TNCN issued together with Appendix 2 Circular 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance.