In Vietnam, if an enterprise has no employees and does not generate income, it is not required to declare and submit a monthly (or quarterly) personal income tax return to the tax authority.
Article table of contents
Do businesses have to declare personal income tax when there is no income payment in Vietnam? (Illustration)
At point c, clause 2, Article 8 of Decree 126/2020/ND-CP of Vietnam, Personal income tax deducted by income payers that are eligible to declare VAT quarterly and also decide to declare personal income tax quarterly; individuals earning salaries or remunerations (hereinafter referred to as “salary earners”) who decide to declare personal income tax quarterly with tax authorities.
However, Point b, Clause 3, Article 7 of Decree 126/2020/ND-CP stipulates that taxpayers are not required to submit tax returns in the following cases:
a) Taxpayers only conduct business activities that are not subject to tax according to the provisions of tax law for each type of tax.
b)The taxpayer is an individual earning tax-free income as prescribed by personal income tax laws and Point b Clause 2 Article 79 of the Law on Tax Administration of Vietnam, except individuals that receive real estate as inheritance or gift and individuals that transfer real estate
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Article 79. Tax exemption and reduction ... 2. Cases of tax exemption: a) Households and individuals whose annual non-farming land levy is VND 50.000 or smaller; b) Individuals whose annual personal income tax payable on salary or wage is VND 50.000 or smaller; |
c) Export processing enterprises that only export activities are not required to submit value-added tax declaration dossiers.
d) Taxpayers temporarily stop operating or doing business as prescribed in Article 4 of Decree 126/2020 of Vietnam.
dd) The taxpayer submits a dossier for TIN deactivation, except for the case of termination of operation, contract termination or re-organization of the enterprise according to the provisions of Clause 4, Article 44 of the Law on Tax Administration.
At the same time, in Official Dispatch 2393/TCT-DNNCN 2021 on personal income tax declaration promulgated by the General Department of Taxation of Vietnam, it is clearly stated that: Only organizations and individuals that generate and 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. According to this regulation, 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.
Pursuant to the above provisions, tax declaration dossiers are tax declarations and relevant documents and vouchers as a basis for determining the taxpayer's tax obligations to the Vietnamese State budget, which are prepared by the taxpayer and sent to the tax authority. In case organizations and individuals do not generate income, they are not required to declare and submit monthly (or quarterly) personal income tax returns to the tax office .
For example:
LLP company has 7 employees. In July and August 2021, the company does not pay any employees because all employees have an agreement to take unpaid leave due to the impact of the Covid-19 epidemic. Therefore, the LLP company does not have to submit the PIT return for July and August 2021 to the tax office.
In September 2021, LLP company paid salaries for 5 employees to return to work. Salary ranges from 7-11 million VND/person. As such, none of the company's salaried employees have to pay PIT. However, because of the payment of income to the company's employees, the company still has to submit the September PIT return to the tax office.
Finally, in the third quarter of the year, the LLP only has to submit the September PIT return to the tax office.
Bao Ngoc
