Mr. T, residing in Go Vap District, Ho Chi Minh City, has sent a request to Lawnet for assistance. According to Mr. T, he and his friends have established a charitable group to support individuals in difficult circumstances amidst the complex developments of the Covid-19 pandemic. Mr. T is aware that the income used for charitable purposes is exempt from personal income tax (PIT), but he does not know which documents need to be submitted to the tax authority.
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What documents are required to be exempt from personal income tax when doing charity work in Vietnam? (Illustrative photo)
Regarding this matter, LawNet would like to answer as follows:
***For charity money as income from salary or wages in Vietnam.
The deduction for charitable contributions from taxable personal income is stipulated at point a, clause 3, Article 9 of Circular 111/2013/TT-BTC (amended by clause 6, Article 25 of Circular 92/2015/TT-BTC). Charitable contributions in one of the following cases, if the conditions are met, will be deducted from the taxable personal income before tax calculation:
- Contributions to organizations or facilities that care for and nurture children with special difficulties, people with disabilities, and elderly people without support, established and operating pursuant to Decree 103/2017/ND-CP on the establishment, organization, operation, dissolution, and management of social support facilities. Proof in this case is: legal receipts from the organization or facility.
- Contributions to charity funds, humanitarian funds, and study promotion funds established and operating pursuant to Decree 93/2019/ND-CP on the organization and operation of social funds and charity funds, and other relevant documents on the management and use of funding sources. Proof is: legal receipts issued by the central or provincial organizations or funds.
Thus, the condition for determining a charitable contribution to be deducted from taxable personal income before tax calculation is that the organization/facility or fund you contribute to must be established and operated in accordance with Decree 103/2017/ND-CP, Decree 93/2019/ND-CP, or other related documents on the management and use of funding sources (such as Decree 64/2008/ND-CP, Decree 12/2012/ND-CP…).
If the above conditions are met, this charitable contribution will be deducted from the taxable personal income of the contributor before tax calculation. Proof of charitable contributions for deduction from taxable personal income before tax calculation is legal receipts issued by the organizations, facilities, or funds receiving the contributions.
***For charity money as income from individual business activities in Vietnam.
Personal income tax for individual business persons is guided by Circular 40/2021/TT-BTC. The principle of tax calculation is specified in Article 4 of Circular 40/2021/TT-BTC as follows: Individual business persons with annual gross revenue from production and business activities exceeding 100 million VND are liable for personal income tax and value-added tax; below 100 million VND are exempt from personal income tax and value-added tax.
It can be seen that there is no basis to deduct charitable contributions from taxable personal income for individual business persons.
Thus, if your income is from business, the charitable contribution will not be deductible when calculating personal income tax.
Therefore, to be exempt from personal income tax for charitable contributions, you must submit with your personal income tax return, those legal receipts issued by the organizations, facilities, or funds receiving the contributions, established and operating legally in Vietnam.
Bao Ngoc
- Key word:
- Personal income tax
- Vietnam
