Vietnam: Notes on personal income tax refund

1. Cases of PIT refund

According to Clause 2 Article 8 of the Law on Personal income tax 2007 of Vietnam amended in 2012, individuals are entitled to tax refund in the following cases:

- Their paid tax amounts are larger than payable tax amounts;

- They have paid tax but their taxed incomes do not reach a tax-liable level;

- Other cases decided by competent state agencies.

Thus, individuals in the above-mentioned cases are entitled to tax refund. It should be noted that the refund of personal income tax applies to the persons that have registered and obtain tax codes when they submit the tax settlement form (Clause 1 Article 28 of the Circular No. 111/2013/TT-BTC).

2. Procedure for PIT refund

PIT refund is conducted according to 28 of the Circular No. 111/2013/TT-BTC of the Ministry of Finance of Vietnam, specifically as follows:

- If the person that has delegated the income payer to settle tax, tax refund shall be made via the income payer:

+ The income payer shall offset the overpaid and underpaid tax;

+ After offsetting, the overpaid tax shall be offset against the tax in the next period or refunded on request.

- The person that declares tax directly may choose to claim a tax refund or offset it against the tax in the next period at the same tax authority.

It should be noted that the person eligible for the refund of personal income tax that submits the tax settlement behind schedule is exempt from fines for overdue tax statement.

It can be seen that if the taxpayer declares tax himself/herself, overpaid tax shall be refunded or offset against the tax payable in the next period (Article 23 of Circular No. 92/2015/TT-BTC).

* Authorization to finalize PIT

According to Official Dispatch No. 636/TCT-DNNCN of the General Department of Taxation of Vietnam, a resident salary earner may authorize the salary payer to finalize tax if:

- The salary earner has an employment contract with duration of at least 03 months and is working for the salary payer in reality when the salary payer carries out PIT finalization procedures, even if the salary earner has not worked for a full period of 12 months in the calendar year. 

In case an employee is re-assigned to a new organization after the old organization is acquired, consolidated, fully or partially divided, or converted, or to a new organization that is in the same system as the old organization, the employee may authorize the new organization to finalize PIT.

- The salary earner has an employment contract with a duration of at least 03 months and is working for the salary payer in reality when the salary payer carries out PIT finalization procedures, even if the salary earner has not worked for a full period of 12 months in the year, and earns an average monthly irregular income not exceeding 10 million VND on which 10% PIT has been deducted and does not wish to have this income included in the PIT finalization dossier.

- An individual that is a foreigner whose employment contract in Vietnam has ended shall submit a tax finalization dossier to the tax authority before exit. If he/she has not completed PIT finalization procedures with the tax authority, he/she may authorize the income payer or another entity to complete PIT finalization procedures with the tax authority as per regulations. 

The income payer or the authorized entity must pay tax arrears if tax is underpaid or will receive a refund in case tax is overpaid.

It can be seen that those who do not fall into the cases eligible for authorization to finalize PIT must directly settle the settlement with the tax agency according to regulations.

* Dossier for PIT refund:

Dossier for PIT refund shall follow Article 23 of Circular No. 92/2015/TT-BTC of the Ministry of Finance of Vietnam amending Article 53 of Circular No. 156/2013/TT-BTC:

- In case income payer is authorized by taxpayers to makes annual tax statements on their behalf:
After offsetting overpaid tax against tax arrears and tax is still overpaid, the income payer shall submit an application for tax refund to the supervisory tax authority.  An application for tax refund consists of:

+ A request for refund (form 01/ĐNHT enclosed with Circular No. 156/2013/TT-BTC).

+ Photocopies of tax receipts bearing the signature of the legal representative of the income payer.

- If tax is overpaid in case the wage earner directly declares tax, makes the annual tax statement:

The wage earner is not required to submit the application for tax refund. Instead, he/she shall write the amount of tax refund in box 47 “Amount of tax refund” or box 49 “Tax offset against next period” in the tax statement form No. 02/QTT-TNCN.

* Places to submit applications for tax refund:

According to Point a Clause 1 Article 58 of Circular No. 156/2013/TT-BTC, places to submit applications for tax refund are prescribed as follows:

- The application for tax refund of an organization or individual that is a taxpayer and has a TIN shall be submitted to their supervisory tax authority.

- The application for tax refund of an organization or individual that is not a taxpayer shall be submitted to the Department of Taxation of the province where the headquarter of the organization or the permanent residence of the individual is situated.

- The applications for tax refund of income payers or individuals that submit the terminal declarations directly shall be submitted to place where the terminal declarations are submitted.

Bao Ngoc

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