Vietnam: After authorizing PIT finalization, how to handle it directly with the tax authority?
Who is authorized to finalize PIT in Vietnam?
Pursuant to Section III of Official Dispatch 6043/CT-TTHT in 2020 which reads as follows:
Individuals authorized to finalize taxes through income-paying organizations:
- Individuals who only have income from wages and wages sign labor contracts for 03 months or more at an income-paying organization and are actually working at that organization at the time of authorizing tax finalization, including cases where the individual has not worked for 12 months of the year at the organization, At the same time, having a current income in other places on average in the month of the year not exceeding VND 10 million has been deducted by the income payer with full tax deduction of 10% tax without tax finalization requirements for this part of income.
- In case the income-paying organization performs the reorganization of the enterprise (division, separation, consolidation, merger, conversion) and the employee is transferred from the old organization to the new organization formed after the reorganization of the enterprise,
If during the year the employee does not have additional income from wages and wages at another place, he/she is authorized to settle the new tax finalization instead, the new organization must recollect PIT withholding documents issued by the old organization to the employee to synthesize income, the amount of tax deducted and finalized PIT on behalf of the employee.
- In case of transferring employees between organizations in the same system such as Corporations, Corporations, Parent-Subsidiary Companies, Head Offices and Branches, the principle of QTT authorization shall also be applied as in the case of reorganization of enterprises.
Note:
- The income-paying organization shall only receive the authorization to settle on behalf of the individual for the portion of income from wages and wages that the individual receives from the income-paying organization, unless the enterprises during the year have division, separation, consolidation, merger, conversion and in case the employee transfers between organizations in the same system such as: Group, Corporation, Parent-Child Company, Head Office and Branches.
- Individuals whose life insurance is purchased by the employer (except voluntary pension insurance), other non-compulsory insurance that accrues premiums that the employer or insurer has deducted PIT at the rate of 10% on the premium amount corresponding to the employer's part as instructed in Clause 2 of Article 14 Circular 92/2015 / TT-BTC is not required to finalize taxes on this income.
- The individual authorizes the organization to pay the settled income instead according to the form No. 02/UQ-QTT-TNCN issued together with Circular No. 92/2015 / TT-BTC, accompanied by a copy of invoices, documents proving charitable, humanitarian and educational contributions (if any).
- In case the income-paying organization has a large number of employees authorized for tax finalization, the income-paying organization may make a list of authorized individuals which fully reflects the contents in form No. 02/UQ-QTT-TNCN, and at the same time commits accuracy, be honest and take responsibility before law for data and contents on the list.
Vietnam: After authorizing PIT finalization, how to handle it directly with the tax authority?
What are the conditions for authorizing PIT finalization in 2023 in Vietnam?
According to the provisions of Clause 6 Article 8 of Decree 126/2020/ND-CP, resident individuals with income from wages and wages authorize PIT finalization for organizations and individuals to pay income if they fall into the following cases:
- Individuals with income from wages and wages sign labor contracts for 03 months or more at a place and are actually working there at the time income-paying organizations and individuals perform tax finalization, even if they do not work for 12 months in the calendar year.
In case an individual is an employee who is transferred from the old organization to the new organization because the old organization merges, consolidates, divides, separates, converts the type of enterprise or the old organization and the new organization in the same system, the individual is authorized to finalize taxes for the new organization.
- Individuals with income from wages and wages sign labor contracts for 03 months or more at a place and are actually working there at the time the organization or individual pays tax finalization income, even if they do not work for 12 months in the calendar year; at the same time, the average current income in other places in the month of the year is not more than 10 million VND and has been deducted PIT at the rate of 10% if there is no tax finalization requirement for this income.
- Individuals who are foreigners who terminate their working contracts in Vietnam declare tax finalization to tax authorities before leaving the country.
In case an individual has not carried out tax finalization procedures with the tax authority, he/she shall authorize the income-paying organization or other organization or individual to finalize tax in accordance with the provisions on tax finalization for individuals.
In case the income-paying organization or other organization or individual receives the settlement authorization, it must be responsible for the amount of PIT payable or be refunded the excess tax amount of the individual.
After authorizing tax finalization, how to handle the individual's direct tax finalization with the tax authority in Vietnam?
Pursuant to Clause 3, Section III of Official Dispatch 6043/CT-TTHT in 2020, there are instructions as follows:
AUTHORIZE TAX FINALIZATION
...
3. Cases of adjustment after authorizing QTT
After authorizing tax finalization, the income-paying organization has made tax finalization on behalf of the individual, if it is found that the individual is directly subject to tax finalization with the tax authority, the income-paying organization shall not adjust the PIT finalization of the income-paying organization, only issue tax withholding documents to individuals according to the settlement number and write in the lower left corner of the tax withholding document the content: "The company ... have finalized PIT on behalf of Mr/Mrs. .... (by authorization) at line (sequence number) ... of Appendix Statement 05-1/BK-TNCN" for individuals to directly finalize taxes with tax authorities.
Thus, according to the guidance of the Hanoi Tax Department, in case the employee is found to be directly subject to tax finalization, the income-paying enterprise shall not adjust the PIT finalization of the income-paying enterprise, only issue tax withholding documents to individuals according to the settlement number and write in the lower left corner of the tax withholding document:
"The company ... have finalized PIT on behalf of Mr/Mrs. .... (by authorization) at line (sequence number) ... of Appendix Statement 05-1/BK-TNCN" for individuals to directly finalize taxes with tax authorities.
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