What are the taxable incomes in Vietnam required to be finalized annually? In case the tax is not deducted, is it necessary to declare tax?
What are the taxable incomes required to be finalized annually in Vietnam?
Pursuant to Point d, Clause 6, Article 8 of Decree 126/2020/ND-CP stipulates as follows:
Taxes declared monthly, quarterly, annually, separately; tax finalization
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6. The following taxes and amounts shall be declared annually and finalized when an enterprise is dissolved, shuts down, terminates a contract or undergoes rearrangement. In case of conversion (except equitized state-owned enterprises) where the enterprise after conversion inherits all tax obligations of the enterprise before conversion, tax shall be finalized at the end of the year instead of the issuance date of the decision on conversion. Tax shall be finalized at the end of the year):
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d) Personal income tax for salary payers; salary earners that authorize salary payers to finalize tax on their behalf; salary earners that finalize tax themselves. To be specific:
d.1) Salary payers shall finalize tax on behalf of authorizing individuals, whether tax is deducted or not. Tax finalization is not required if an individual does not earn any income. In case an employee is re-assigned to a new organization after the old organization is acquired, consolidated, divided or converted, or to a new organization that is in the same system as the old organization, the new organization shall finalize tax as authorized by such employee, including the income paid by the old organization, and collect documents about deduction of personal income tax issued by the old organization to the employee (if any).
d.2) A resident salary earner may authorize the salary payer to finalize tax if:
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d.3) A resident salary earner shall directly submit the personal income tax finalization dossier to the tax authority in the following cases:
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Thus, in incomes subject to PIT, the annual PIT finalization only applies to incomes from salaries and wages.
What are the taxable incomes in Vietnam required to be finalized annually? In case the tax is not deducted, is it necessary to declare tax?
Vietnam: In case the tax is not deducted, is it necessary to declare tax?
Pursuant to Section 2 of Official Dispatch 2393/TCT-DNNCN 2021 of the General Department of Taxation, the following instructions are provided:
Regarding the personal income tax declaration of organizations and individuals that do not generate income
- In Clause 6, Article 1 of the Law amending and supplementing a number of articles of the Law on Personal Income Tax dated November 22, 2012 stipulates:
“Article 24 is amended and supplemented as follows:
“Article 24. Responsibilities of income-paying organizations and individuals and responsibilities of resident taxpayers
1. Responsibility to make tax declaration, withholding, payment and finalization is specified as follows:
a) Income-paying organizations and individuals shall make tax declaration, withhold and remit tax into the state budget, and make tax finalization for all kinds of taxable income they pay to taxpayers;
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- At Point 9.9, Clause 9 of Appendix I - The list of tax declaration dossiers issued together with the Government's Decree No. 126/2020/ND-CP dated October 19, 2020 stipulates:
“9.9. Tax declaration dossiers of organizations and individuals paying tax withheld income for salaries and wages
a) Monthly and quarterly tax declaration dossiers
Personal income tax return (applicable to organizations and individuals paying incomes from salaries and wages) form No. 05/KK-TNCN.”
Pursuant to the above provisions, only organizations and individuals that pay personal income taxable income are required to declare personal income tax. Therefore, in case organizations and individuals do not generate and pay personal income taxable income, they are not subject to the provisions of the Law on Personal Income Tax. Accordingly, organizations and individuals that do not pay personal income tax in any month/quarter are not required to declare personal income tax for that month/quarter.
Accordingly, the case that organizations and individuals do not generate and pay personal income taxable income are not subject to the provisions of the Law on Personal Income Tax 2007. Accordingly, organizations and individuals that do not pay personal income tax in any month/quarter are not required to declare personal income tax for that month/quarter.
What are the penalties for violations against regulations on time limits for the submission of tax returns in Vietnam?
Pursuant to Article 13 of Decree 125/2020/ND-CP stipulates as follows:
Penalties for violations against regulations on time limits for submission of tax returns
1. Penalties imposed in form of cautions shall be imposed for violations arising from filing tax returns from 01 to 05 days after expiration of the prescribed time limits under mitigating circumstances.
2. Fines ranging from VND 2,000,000 to VND 5,000,000 shall be imposed for the act of submitting tax returns from 01 to 30 days after expiration of the prescribed time limits, except the cases specified in clause 1 of this Article.
3. Fines ranging from VND 5,000,000 to VND 8,000,000 shall be imposed for the act of submitting tax returns from 31 to 60 days after expiration of the prescribed time limits.
4. Fines ranging from VND 8,000,000 to VND 15,000,000 shall be imposed for one of the following violations:
a) Filing tax returns from 61 to 90 days after expiration of the prescribed time limits;
b) Filing tax returns at least 91 days after expiration of the prescribed time limits if none of additional taxes is incurred;
c) Failing to submit tax returns if none of additional taxes is incurred;
d) Failing to submit annexes under regulations regarding tax administration by enterprises having related-party transactions, enclosing CIT finalization dossiers.
5. Fines ranging from VND 15,000,000 to VND 25,000,000 shall be imposed for the act of filing tax returns more than 90 days after the prescribed deadline if such act results in additional taxes to be paid, and the taxpayer has fully paid taxes, deferred amounts into the state budget before the time of the tax authority’s announcement of the decision on tax inspection and examination, or before the time of the tax authority’s issuance of the report on the deferred submission of tax returns under the provisions of clause 11 of Article 143 in the Law on Tax Administration.
In case where the fine amount prescribed in this clause is greater than the tax amount additionally incurred in the tax return, the maximum amount of fine for this act shall be equal to the tax amount payable specified in the tax return and shall not be less than the average of fine amounts in the range prescribed in clause 4 of this Article.
6. Remedies:
a) Compelling the full payment of deferred tax amounts into the state budget with respect to the commission of the acts prescribed in clause 1, 2, 3, 4 and 5 of this Article if the taxpayer delays filing their tax return, leading to the late payment of taxes;
b) Compelling the submission of tax returns, enclosing annexes, in case of committing the acts specified in point c and d of clause 4 of this Article.
According to the above regulations, the level of administrative sanction will be based on the overdue time for filing personal income tax returns to determine
In addition, violating organizations and individuals will also be forced to take remedial measures in addition to being administratively sanctioned.
Note, the level of administrative sanction as prescribed above only applies to the violating organization. In case of individual violations, the administrative sanction level is half of that of the violating organization.
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