What is the penalty for non- finalization of PIT according to the current law in Vietnam?
Who must finalize PIT in Vietnam?
According to Section 1, Official Dispatch 9188/CTHN-HKDCN dated March 18, 2022 on Finalization of personal income tax in 2021 issued by Hanoi Tax Department, subjects that must finalize personal income tax are:
1. Individuals with taxable incomes from salaries and wages must directly finalize personal income tax with tax offices
- Residents who earn incomes from salaries or wages, if they have additional payable tax amounts, except for cases the additional payable tax amounts after the annual tax finalization are VND 50,000 or less;
- Individuals with overpaid tax amounts need to request refund or offset in the next tax period.
- Residents who earn incomes from salaries and wages and are considered for tax reduction due to natural disasters, fires, accidents or fatal diseases.
- Residents is a foreigner who ends the contract to work in Vietnam must make a tax finalization declaration with the tax authority before leaving the country.
Note:
+ Individuals present in Vietnam for less than 183 days in the first calendar year, but counting in 12 consecutive months from the first day of presence in Vietnam for 183 days or more, the first settlement year is 12 consecutive months from the first day of presence in Vietnam.
2. Organizations and individuals that pay incomes from salaries and wages must make PIT finalization
Organizations and individuals that pay incomes from salaries and wages are responsible for PIT finalization, regardless of whether tax withholding or not, and PIT finalization on behalf of authorized individuals. In case an individual authorizes an organization to finalize personal income tax and has an additional tax payable after finalization of VND 50,000 or less and is eligible for tax exemption, the income paying organization still declares personal information to be paid. such input in the personal income tax finalization declaration file of the organization and not aggregate the additional payable tax amount of individuals whose additional tax payable after finalization is 50,000 VND or less.
In case an employee transferred from the old organization to the new one because the old organization merges, divides, separates, transforms the type of enterprise or the old organization and the new organization in under the same system, the new organization is responsible for finalizing PIT as authorized by employee for both the income paid by the old organization and the new income paying organization to collect the PIT withholding documents issued by the previous income paying organization to the employee (if any).
Who does not need to finalize PIT?
Pursuant to Section 2 of Official Dispatch 9188/CTHN-HKDCN dated March 18, 2022 on PIT finalization in 2021 issued by Hanoi Tax Department on subjects without PIT finalization as follows:
1. Individuals are not required to make tax finalization
- Individuals not residing in Vietnam but having deductions or temporary payments during the year.
- Residents has overpaid PIT amount without request for tax refund or tax clearing in the next tax period.
- Individuals whose personal income tax amount to pay more after finalizing each year is 50,000 VND or less. Tax-exempt individuals in this case determine the exempted tax amounts themselves, are not required to submit personal income tax finalization dossiers and are not required to submit tax exemption dossiers.
- Individuals earning incomes from salaries and wages, signing labor contracts of 03 (three) months or more at a unit, but having additional incomes elsewhere in the year, on average, not more than 10 (ten) months. ) million dong and has been withheld PIT at the rate of 10%, if there is no request, no tax finalization is required for this income.
- Individuals whose employer buys life insurance (except voluntary retirement insurance), other optional insurance with accumulated premiums that the employer or insurance enterprise has deducted. except for PIT at the rate of 10% on the insurance premium amount corresponding to the part purchased or contributed by the employer to the employee, the employee is not required to finalize PIT on this income.
2. Organizations are not required to make tax finalization
Organizations that do not have income from wages and salaries are not required to declare PIT finalization.
What is the penalty for non- finalization of PIT according to the current law?
Pursuant to Article 13 of Decree 125/2020/ND-CP on penalties for tax or invoice-related administrative violation, the amounts of penalty for late or non-finalization of PIT as follows:
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 Article 13 of Decree 125/2020/ND-CP, the amounts of penalty for late or non- finalization of PIT is the amounts of penalty for organizations. In Clause 5, Article 5 of Decree 125/2020/ND-CP, the amounts of penalty for individuals with non-finalization of PIT will be 1/2 of the amounts of penalty for the organization.
The above some information are about PIT finalization. Best regards!
Thư Viện Pháp Luật
