Ho Chi Minh Tax Department removes shortcomings on Personal Income Tax Finalization

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Individuals participate in support program for Personal Income Tax Finalization.

What income must be finalized?

According to the Tax law, there are 10 incomes subject to Personal Income Tax. So which income must be implement PIT finalization? Which cases do income-paying organizations have to finalize PIT? These questions are often asked by individuals.

According to the representative of the PIT Department, only the income from salaries must be subject to annual PIT finalization. Income paying organizations regardless of whether raising tax deduction or not, must be responsible for declaring tax finalization, and tax finalization on behalf of authorized individuals.

For the time limit of submitting the PIT finalization documents in 2018, Ho Chi Minh City Customs Tax Department said that, for the cases that must make additional payment, the deadline is 1 April 2019. For the case of over payment, requesting for tax refund or tax offset, the documents may be submitted after 1 April 2019.

Answering the question from many individuals of, "whether all individuals earning an income have to implement PIT finalization or not ?" Ho Chi Minh City Tax Department answered that not all individuals finalize PIT, only resident individuals having income from salaries shall be responsible for declaring PIT finalization with the Tax authority when they have to pay additional tax upon tax finalization; or have an overpaid tax, requiring for tax refund or tax offset in the next tax declaration period.

How to implement PIT finalization?

An individual asked that, “from May 2018 until now, I have been working for the company and the company has deducted monthly PIT. However, in February 2019, the company sent a list of staff who have worked for 1 year, and requested them to write a letter from an attorney for finalization. I have worked for the company less than 1 year, while the company deducted my PIT amount, so do I have to submit PIT finalization?

For this question, Ho Chi Minh City Tax Department guides that if the individual only has income at the company in 2018 (including the case that he has not yet worked for 12 months), the employee can authorize the company to make the finalization. If the individual has income from 2 or more places in 2018, he must directly make tax finalization with the tax authority and the income-paying company shall provide documents on deduction of personal income tax to that individual.

Answering questions of individuals who have income from salaries from two or more places subject to tax self-finalization, where to apply for tax finalization documents; Ho Chi Minh City Tax Department said that for individuals receiving income from two or more places are subject to tax finalization at the tax authority, the place for submitting tax finalization is as follows: Individuals subject to family circumstance deduction for themselves at any income-paying organization shall submit tax finalization documents at the tax office directly managing the income-paying organization. If an individual changes the workplace and the organization paying their final income implement the family circumstance deduction for that individual, the PIT documents shall be submitted to the tax agency directly managing the organization paying the final income.

"The foreigner entering to Vietnam for the first time since March 2018. Shall the PIT finalization of the foreigner include incomes of January and February or not? If deducting, shall the PIT be implemented for 10 months or 12 months?

Responding this anwer, Ho Chi Minh City Tax Department stated that according to regulations, if a resident individual is a citizen of a foreign country or territory which has signed an agreement with Vietnam on avoiding double taxation and preventing income tax evasion, the PIT obligation is calculated from the month of arrival in Vietnam for the individual entering Vietnam for the first time until the end of the labor contract and leaving Vietnam (tax calculation for the whole month). Thus, if this foreigner is a resident individual of a citizen of a country that has signed an Agreement with Vietnam, then the PIT finalization for that individual will be calculated from the month of entering Vietnam (March) and is deducted for family circumstance for 10 months. If this foreigner is a resident individual of a country which has not signed the Agreement to avoid double taxation with Vietnam, this individual must synthesize income abroad in January and February into his total income in Vietnam for tax finalization and 12-month family circumstance deduction.