Vietnam: In order not to deduct 10% of personal income tax, how should taxpayers fill out the personal income tax commitment form?
If the income is enough to pay tax, what should the individual do to avoid withholding tax?
Pursuant to the provisions of Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC on personal income tax withholding in Vietnam as follows:
Tax withholding and certificate of tax withheld at source in Vietnam
1. Tax withholding in Vietnam
…
i) Withholding tax in other cases
The organization or person that pays a total income from 2 million VND to a resident that does not sign a labor contract (as guided in Point c and Point d Clause 2 Article 2 of this Circular) or that signs a labor contract for less than 03 months shall withhold 10% tax on the income before it is paid to the person.
For the person that earns only a taxable income as stated above but the total taxable income estimated after personal deductions are made does not reach the taxable level, the person shall make and send a commitment (the form is provided in the guiding documents on tax administration) to the income payer as the basis for temporarily exempting the income from personal income tax.
Based on the commitment made by the income earner, the income payer shall not withhold tax. At the end of the tax year, the income payer shall make a list of persons that earn incomes below that taxable level (the form is provided in the guiding documents on tax administration) and send it to the tax authority. The persons are responsible for the commitments they made. Any deceit discovered shall be penalized in accordance with the Law on Tax administration.
The persons that make commitments as guided in this Point shall obtain tax registration and have tax codes when the commitments are made.
Thus, in case an individual has only income subject to tax deduction but the estimate of the individual's total taxable income after deduction of family circumstances is not enough to pay tax, the individual earning income from commit (under the form promulgated together with the guiding document on tax administration) to send the income payer to the income payer as a temporary basis for not deducting personal income tax.
Thus, based on the commitment of the income recipient, the income paying organization does not deduct tax.
Vietnam: In order not to deduct 10% of personal income tax, how should taxpayers fill out the personal income tax commitment form?
What is the form of temporary commitment not withholding personal income tax in Vietnam?
Individuals who are subject to temporary commitments not withholding personal income tax in Vietnam according to Form 08/CK-TNCN issued together with Circular 80/2021/TT-BTC are as follows:
Download the form of temporary commitment not withholding personal income tax in Vietnam: here
Note: The amount declared in this section is determined by the family deduction calculated in the year:
VD:
- In case the pledger has no dependents: the declared amount is 11 million VND x 12 months = 132 million VND.
- In case the committer has 01 dependent actually to take care of in a year of 10 months:
Amount declared = 132 million VND + 4.4 million VND x 10 months = 176 million VND.
In what cases is the certificate of tax withheld at source issued?
According to the provisions of Clause 2, Article 25 of Circular 111/2013/TT-BTC on certificate of personal income tax withheld at source as follows:
Tax withholding and certificate of tax withheld at source in Vietnam
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2. Certificate of tax withheld at source
a) After withholding tax as guided in Clause 1 of this Article, the income payer shall issue certificates of tax withheld at source at the request of the persons that have tax withheld from their incomes. The certificate of tax withheld at source shall not be issued if the person delegates the tax settlement.
b) Issuance of certificates of tax withheld at source in some particular cases:
b.1) If the person does not sign a labor contract or signs a labor contract for less than 03 months, the person is entitled to request the income payer to issue the certificate of tax withheld at source every time tax is withheld, or issue a single certificate of tax withheld at source for multiple withholdings in the same tax period.
Example 15: Mr. Q signs a service contract with company X to cultivate ornamental plants on the company’s premises once per month from September 2013 to April 2014. Company X pays an income of 03 million VND per month to Mr. Q. In this case, Mr. Q may request company X to issue monthly or one certificate of tax withheld at source, which reflect the tax withheld over the period from September 2013 to December 2013, and one certificate of tax withheld at source over the period from January 2014 to April 2014.
b.2) If the person signs a labor contract for more than 03 months, the income payer shall issue only one certificate of tax withheld at source in a tax period.
Example 16: Mr. R signs a long-term labor contract (from September 2013 till the end of August 2014) with company Y. In this case, if Mr. R is required to settle tax at the tax authority and requests company Y to issue the certificate of tax withheld at source, company Y shall issue 01 certificate which reflects the tax withheld from September 2013 till the end of December 2013, and 01 certificate for the period from January 2014 till the end of August 2014.
Thus, after withholding tax as guided in Clause 1 Article 25 of Circular 111/2013/TT-BTC, the income payer shall issue certificates of tax withheld at source at the request of the persons that have tax withheld from their incomes. The certificate of tax withheld at source shall not be issued if the person delegates the tax settlement.
The certificate of tax withheld at source shall not be issued if the person delegates the tax settlement.
- If the person does not sign a labor contract or signs a labor contract for less than 03 months, the person is entitled to request the income payer to issue the certificate of tax withheld at source every time tax is withheld, or issue a single certificate of tax withheld at source for multiple withholdings in the same tax period.
- If the person signs a labor contract for more than 03 months, the income payer shall issue only one certificate of tax withheld at source in a tax period.
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