Under what circumstances are companies issued with certificate of personal income tax withholding for multiple deductions within a tax period for employees in Vietnam?

Under what circumstances are companies issued with certificate of personal income tax withholding for multiple deductions within a tax period for employees in Vietnam?

In Clause 2, Article 4 of Decree 123/2020/ND-CP, there are regulations on rules for issuance, management and use of invoices and records as follows:

1. When selling goods or providing services, the seller shall issue and send invoices to buyers (including goods/services used for sales promotion, advertising or as samples, goods/services gifted, donated, exchanged or used as salary payment to employees and internal use (except goods which are internally rotated in production process), and goods rented, lent or returned). Such invoices shall have adequate contents written according to the provisions in Article 10 hereof, except e-invoices which must follow the standard format prescribed by tax authorities as prescribed in Article 12 hereof.

2. When deducting personal income tax or collecting taxes, fees or charges, the organization responsible for tax deduction or the tax, fee or charge collector shall make and give certificates of personal income tax withholding or receipts of taxes, fees or charges to persons whose income is deducted or payers. Such records/receipts must contain adequate information as prescribed in Article 32 hereof. If electronic receipts are used, they must follow the standard format prescribed by tax authorities. If an individual authorizes tax declaration, no certificates of personal income tax withholding are issued.

If a person does not sign an employment contract or signs an employment contract for less than 03 months, the income payer is entitled to issue a certificate of personal income tax withholding for either each deduction or multiple deductions within a tax period. If a person signs an employment contract for 03 months or longer, the income payer shall issue a certificate of personal income tax withholding in a tax period.

3. Before using invoices/receipts, enterprises, business entities, other organizations, household/individual businesses, and tax/fee/charge collectors must apply for registration for the use of such invoices/receipts with tax authorities or follow procedures for announcement of issue of such invoices/receipts in accordance with the provisions in Article 15, Article 34 and Clause 1 Article 36 hereof. Tax authorities shall make announcement of issue of invoices/receipts which are printed according to their orders according to the provisions in Clause 3 Article 24 and Clause 2 Article 36 hereof.

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Thus, the company is granted a certificate of personal income tax withholding for multiple deductions in a tax period for employees when the employee does not sign a labor contract or signs a labor contract for less than 3 months in Vietnam.

If a labor contract is signed for 3 months or more, the company will only grant an individual a certificate of personal income tax withholding in a tax period in Vietnam.

What information does a certificate of personal income tax withholding in Vietnam comprise?

In Clause 1, Article 32 of Decree 123/2020/ND-CP, there are regulations on certificate of personal income tax withholding with the following contents:

1. A certificate of personal income tax withholding contains the following information:

a) Name, form number, reference number and ordinal number of the certificate of personal income tax withholding;

b) Name, address and TIN of the applicant;

c) Name, address and TIN of the taxpayer (if available);

d) Nationality (if the taxpayer is not a Vietnamese citizen);

dd) Taxable income, time of income payment, total taxable income, PIT amount deducted, income amounts received;

e) Date of the certificate of personal income tax withholding;

g) Full name and signature of income payer.

In case of electronic certificate of personal income tax withholding, digital signature is required.

If employees have authorized tax finalization for their company, does the company need to issue a certificate of personal income tax withholding in Vietnam?

At Point a, Clause 2, Article 25 of Circular 111/2013/TT-BTC, there are provisions on tax withholding and certificate of tax withheld at source as follows:

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, in case the employee has authorized the tax finalization for the company, the company does not need to issue a certificate of personal income tax withholding to the employee in Vietnam.

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