PIT calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam

PIT calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Cases where organization or individual shall declare and pay tax on behalf of another individual in Vietnam

According to Clause 1, Article 8 of Circular 40/2021/TT-BTC (amended in Circular 100/2021/TT-BTC), an organization or individual in Vietnam shall declare and pay tax on behalf of another individual in the following cases:

(1) The organization leases property from the individual under a lease contract which prescribes that the lessee is the taxpayer;

(2) The organization has business cooperation with the individual;

(3) The organization pays bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash, compensations for breach of contract, other compensations for fixed tax payers;

(4) The organization in Vietnam is a partner of an overseas digital platform provider (without permanent establishment in Vietnam) and pays the individual for digital information products and/or services under agreement with the overseas digital platform provider;

(5) Organizations including owners of e-commerce platforms declare and pay tax on behalf of individuals under authorization according to the regulations of civil laws;

(6) Individuals declare and pay tax on behalf of others who are taxpayers under authorization according to regulations of civil laws.

2. PIT calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam

Methods of calculating PIT for organizations and individuals that declare and pay tax on behalf of individuals according to Clauses 2 and 3, Article 8 of Circular 40/2021/TT-BTC are as follows:

- The organization or individual declares and pays tax on behalf of another individual as instructed in Clause 1 of this Article shall declare and pay tax as follows:

+ In the cases specified in (1), the organization shall declare and pay tax monthly, quarterly, separately or annually as prescribed by tax administration laws.

+ In the cases specified in (2), (3), (4), (5) the organization shall declare and pay tax monthly or quarterly as prescribed by tax administration laws.

+ In the cases specified in (6), the organization or individual shall declare and pay tax as authorized by the individual in accordance with tax administration laws.

- In case the individual earns a revenue of not exceeding 100 million VND/year at multiple locations, the individual estimates or determines that the total revenue exceeds 100 million VND/year, he/she may authorize the paying organization to declare and pay tax on the revenue generated at the authorized unit in the tax year.

In case a fixed tax payer also receives bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash, compensations for breach of contract, other compensations in addition to presumptive revenue, the paying organization shall declare and pay tax on the actual amounts in the tax year on behalf of the individual.

In case an organization declares and pays tax on behalf of an individual who leases out his/her property, the revenue of not exceeding 100 million VND/year as the basis for determination of eligibility for tax exemption shall be determined in accordance with Point c Clause 1 Article 9 of Circular 40/2021/TT-BTC.

Le Truong Quoc Dat

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