Personal income tax is a tax amount that an income earner has to deduct a part of his salary or from other sources into the state budget after deducting deductions.
Accordingly, PIT is built on the principle of fairness and the ability to pay taxes. The personal income tax is not imposed on low-income individuals who can barely support themselves and their families at the necessary level.
1. Subjects must pay personal income tax
According to Article 2 of the amended and supplemented 2007 Personal Income Tax Law, subjects that need to pay personal tax include:
“Article 2. Taxpayers
Individuals paying personal income tax are resident individuals having taxable incomes specified in Article 3 of this Law arising inside and outside the territory of Vietnam and non-resident individuals having taxable incomes specified in Article 3 of this Law arises in the territory of Vietnam.
Resident individuals are those who meet one of the following conditions:
a) Being present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the date of first presence in Vietnam;
b) Having a permanent residence in Vietnam, including a registered permanent residence or a rented house to stay in Vietnam under a definite lease contract.
Non-resident individuals are those who fail to meet the conditions specified in Clause 2 of this Article. ”
How much income is required to pay personal income tax?
Article 22: If the Law on Personal Income Tax 2007 is amended and supplemented, laborers signing labor contracts with a term of full 3 months or more.
In addition, Circular No. 111/2013 / TT-BTC of the Ministry of Finance guides the implementation of the Law on Personal Income Tax, the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax and Decree No. 65 / 2013 / ND-CP of the Government detailing a number of articles of the Law on personal income tax and the law amending and supplementing a number of articles of the Law on personal income tax. The tax rates are calculated according to the partially progressive tax table as follows:
|Tax bracket||Assessable income / year (million VND)||Assessable income / month (million VND)||Tax (%)|
|1||To 60||To 5||5|
|2||Over 60 to 120||Over 5 to10||10|
|3||Over 120 to 216||Over 10 to 18||15|
|4||Over 216 to 384||Over 18 to 32||20|
|5||Over 384 to 624||Over 32 to 52||25|
|6||Over 624 to 960||Over 52 to 80||30|
|7||Over 960||Over 80||35|
This tax table applies to income from business, salaries and wages which is the total taxable income minus social insurance, health insurance, unemployment insurance, professional liability insurance, etc.
The taxable income of VND 5 million / month in the above table is the remaining income after deduction of deductions (VND 9 million / month for taxpayers themselves and VND 3.6 million / month for each dependent of …)
Personal income tax deductions
Article 9 of Circular No. 111/2013 / TT-BTC, Article 15 of Circular No. 92/2015 / TT-BTC and Decree No. 65/2013 / ND-CP stipulate that personal income tax deductions are deducted from taxable income of individuals before determining taxable income from salaries, business expenses and wages. Accordingly, personal income taxpayers are entitled to a deduction of the following:
Firstly Reduction of family circumstances
According to Article 19 of the Law on Personal Income Tax; Clause 4, Article 1 of the Law amending and supplementing a number of articles of the Law on Personal Income Tax; Article 12 of Decree No. 65/2013 / ND-CP the reduction of family circumstances is done as follows:
a) Reduction based on family circumstances is the amount deducted from taxable income before calculating tax on incomes from business activities, incomes from salaries and wages of taxpayers being resident individuals.
In case a resident earns both income from business and income from salaries and wages, the family circumstance-based deduction shall be calculated once from the total income from business and from salaries and wages.
b) Reduction based on family circumstances
1) taxpayers is 9 million / month, 108 million / year.
b.2) For each dependent, VND 3.6 million / month.
c) Rules for calculating family circumstance-based reduction
c.1) Personal deduction for the taxpayer:
c.1.1) Taxpayers have multiple sources of income from salaries, wages, from business, then at a time (calculated monthly) taxpayers choose to calculate family allowances for themselves at one place.
c.1.2) The foreigner being an individual residing in Vietnam is entitled to deduction of family circumstances for himself from January or from January to Vietnam in case the individual is first present in Vietnam to January end the labor contract and leave Vietnam in the tax year (calculated monthly).
Example: Mr. J is a foreigner coming to Vietnam to work continuously from March 5, 2019. On November 20, 2014, Mr. E terminated his labor contract and returned home. From March 5, 2014, Mr. E was present in Vietnam for more than 183 days after returning home. Therefore, in 2014, Mr. E is an individual who resides and is entitled to a reduction of family circumstances for himself from January to the end of November 2014.
c.1.3) If the taxpayer does not deduct personal income for himself / herself or less than 12 months in the tax year, he / she is entitled to full 12 months of tax reduction when making tax finalization according to regulations.
c.2) Reduction of dependents for dependents
c.2.1) The taxpayer is entitled to a deduction for dependents for the dependent if the taxpayer has registered for tax and is granted a tax code.
c.2.2) When the taxpayer registers dependents for dependents, the tax authority will issue a tax code to the dependents and temporarily calculate the family allowances within the year from the date of registration. Dependents who have been registered for family circumstance-based reduction before the effective date of this Circular may continue to enjoy family circumstance-based reductions until their tax identification numbers are granted.
c.2.3) If the taxpayer has not deducted his or her family members’ dependents in the tax year, his / her dependents will be counted from the month when the nurturing obligation arises when the taxpayer makes a tax finalization. and have registrations for dependents reduced. Particularly for other dependents under the guidance at Item d.4, Point d, Clause 1 of this Article, the deadline for registration of family circumstance-based reduction is December 31 of the tax year, past the time limit mentioned above. The deduction for family circumstances cannot be counted for that tax year.
c.2.4) Each dependent is entitled to a deduction only once on a taxpayer during the tax year. In case many taxpayers who have a dependent depend on them, the taxpayer shall agree to register a family circumstance-based reduction for a taxpayer.
d) Dependents include:
d.1) Children: natural children, legally adopted children, illegitimate children, step children of wife, step children of husband, specifically:
d.1.1) Children under 18 years old (calculated according to the month).
For example, taxpayers with children born on November 10, 2018, will be counted as dependents from November 2018.
d.1.2) Children aged 18 years or older with disabilities and incapable of working.
d.1.3) Children currently studying in Vietnam or abroad at university, college, professional secondary school or vocational school, including children aged 18 or older studying at general education level (including during the period of time) wait for university entrance exam results from June to September in grade 12) without income or with the average monthly income of the year from all sources of income not exceeding VND 1,000,000.
d.2) The spouse of the taxpayer satisfies the conditions specified at Point dd, Clause 1 of this Article.
d.3) Natural father and mother; father-in-law, mother-in-law (or father-in-law, mother-in-law); stepfather, stepmother; lawful foster father, adoptive mother of a taxpayer who satisfies the conditions specified at Point d, Clause 1 of this Article.
d.4) Other individuals who are helpless and whose taxpayers are directly raising and meeting the conditions specified at Point dd, Clause 1 of this Article include:
d.4.1) A sibling of a taxpayer.
d.4.2) Grandfather and grandmother; grandfather grandmother; aunts, aunts, uncles, uncle of taxpayers.
d.4.3) Taxpayers’ grandchildren include: siblings, siblings.
d.4.4) Persons who must directly nurture other people according to the provisions of law.
d) Individuals are counted as dependents under the instructions in sections d.2, d.3, d.4, point d, clause 1 of this Article and must meet the following conditions:
đ.1) The person of working age must simultaneously meet the following conditions:
dd.1.1, Disabled, incapable of working.
dd.1.2) Have no income or have monthly average income from all sources of income not exceeding VND 1,000,000.
dd.2) For people outside the working age, they must have no income or have the average monthly income in a year from all income sources not exceeding VND 1,000,000.
e) Persons with disabilities, who are incapable of working under the instructions in Item d.1.1, Point dd, Clause 1 of this Article, are persons governed by the law on disabled people and those who are ill. working capacity (such as AIDS, cancer, chronic kidney failure, …).
g) Documents proving dependents
g.1) For children:
g.1.1) Children under 18 years old: Documents proving a copy of the Birth Certificate and a copy of Identity Card (if any).
g.1.2) Children from 18 years of age or older with disabilities, incapable of working, documents to prove include:
g.1.2.1) A copy of the Birth Certificate and a copy of Identity Card (if any).
g.1.2.2) A copy of the certificate of disability in accordance with the law on people with disabilities.
g.1.3) The child is attending school at the levels instructed in Item d.1.3, point d, clause 1 of this Article, the proving dossier includes:
g.1.3.1) A copy of the Birth Certificate.
g.1.3.2) A photocopy of your student ID card or a certified copy of the school or other documents proving you are attending a university, college, professional secondary school, high school or school profession.
g.1.4) In case of adopted children, illegitimate children, stepchildren, apart from the documents in each case mentioned above, the documents proving that there must be other documents to prove the relationship such as: copy of decision recognition of adoption, decision to recognize the adoption of fathers, mothers, children of competent state agencies …
g.2) For spouse:
– Copy of Identity Card.
– A copy of the household registration book (proving the husband and wife relationship) or a copy of the marriage certificate.
In case the wife or husband is of working age, apart from the papers mentioned on the documents proving, there must be other papers proving that the dependents are incapable of working as a copy of the certificate of disability as prescribed by law. laws on people with disabilities for people with disabilities who are incapable of working, a snapshot of medical records for people with working conditions (such as AIDS, cancer, chronic kidney failure, etc.).
g.3) For biological parents, father-in-law, mother-in-law (or father-in-law, mother-in-law), stepfather, stepmother, lawful adoptive father, lawful adoptive mother, a dossier of proof comprises:
– Copy of Identity Card.
– Legal papers to determine the relationship of dependents with taxpayers such as photocopies of household registration book (if having the same household registration book), birth certificate, decision on recognition of recognition of parents, children of competent state agencies.
In case of working age, apart from the above papers, documents proving that there must be additional papers proving that they are disabled, incapable of working as in the certificate of disability as prescribed by law. For people with disabilities who are incapable of working, a snapshot of medical records for those who are incapable of working (such as AIDS, cancer, chronic kidney failure, etc.).
g.4) For other individuals as guided in item d.4, point d, clause 1 of this Article, the following documents are required:
g.4.1) Copy of Identity Card or Birth Certificate.
g.4.2) Legal papers to identify custody responsibilities as prescribed by law.
In case dependents of working age, apart from the above papers, documents proving that there must be additional papers proving their inability to work such as photocopies of certificates of disability according to the provisions of law on People with disabilities for people with disabilities who are incapable of working, a snapshot of medical records for those who are incapable of working (such as AIDS, cancer, chronic renal failure, etc.).
The documents specified in Item g.4.2, Point g, Clause 1 of this Article are any legal documents that determine the taxpayer’s relationship with dependents such as:
– A photocopy of papers defining the nurturing obligations as prescribed by law (if any).
– A photocopy of the household registration book (if there is the same household registration book).
– Copy of temporary residence registration of dependents (if not in the same household registration book).
– A self-declaration of the taxpayer, made according to the form promulgated together with a guiding document on tax administration, certified by the commune-level People’s Committee of the locality where the taxpayer resides on the dependent’s residence.
– A taxpayer’s self-declaration, made according to the form promulgated together with the tax administration instruction document, certified by the commune-level People’s Committee where the dependent is residing, that the dependent is currently residing in the locality Phuong and no one nourishes (in case not live together).
g.5) The resident individual is a foreigner, if there is no documentation according to the instructions for each specific case mentioned above, there must be similar legal documents as a basis for proof of dependents.
g.6) For taxpayers working in economic organizations, administrative and non-business agencies with parents, spouses (children), children and others eligible for being dependent If the taxpayer has declared clearly in the taxpayer’s resume, the dossier proving that the dependents comply with the instructions in Items g.1, g.2, g.3, g.4, g.5, point g, paragraph 1, This or only need a dependent registration form according to the form attached to the tax administration guidelines certified by the head of the unit to the left of the declaration.
The head of the unit is only responsible for the following contents: full name of dependents, year of birth and relationship with taxpayers; Other contents, taxpayers declare themselves and bear the responsibility for children.
The second number Deduction for insurance contributions and voluntary retirement funds
– Insurance premiums include: social insurance, health insurance, unemployment insurance, professional liability insurance for a number of industries subject to compulsory insurance.
– Contributions to the voluntary pension fund
+ The contribution to the voluntary pension fund is deducted from the taxable income according to the actually generated but not exceeding one (01) million dong / month (12 million dong / year) for employees participating in the voluntary retirement products under the guidance of the Ministry of Finance, including cases of participating in many funds. The basis for determining deductible income is a photocopy of the voucher of payment (or payment of fees) granted by the voluntary retirement fund.
– Assuming that the employee’s voluntary pension fund is VND 800,000 / month, equivalent to VND 9,600,000 / year, the deduction from taxable income is VND 9,600,000 / year.
– Assume that the contribution to the voluntary pension fund is VND 2,000,000 / month, equivalent to VND 24,000,000 / year, the deductible contribution to the voluntary retirement fund of employees is VND 12,000,000. /year.
c) Foreigners being individuals residing in Vietnam, Vietnamese people being resident individuals who work abroad and earn incomes from business, salaries and wages abroad who have participated in the payment of Compulsory insurance according to the regulations of the country where the resident resides, or works similar to the provisions of Vietnamese law such as social insurance, health insurance, unemployment insurance, liability insurance Compulsory careers and other compulsory insurance (if any) shall be deducted from such insurance premiums from the taxable income from business, salaries and wages when calculating personal income tax.
Foreign individuals and Vietnamese who have participated in the above-mentioned insurance contributions abroad will be temporarily deducted from income for tax deduction in the year (if there are vouchers) and calculated according to the official number if individuals carry out tax finalization according to regulations. In case there is no document to temporarily reduce the deduction in the year, it will be deducted once when making tax finalization.
d) Insurance contributions and contributions to the voluntary pension fund of any year shall be deducted from the taxable income of that year.
d) The documents proving the above deductible insurance premiums are copies of the insurance receipts of the insurance organization or the income-paying organization’s certification of the deducted and paid insurance sum (the school). income-paying organizations on behalf of).
Thusday, Discount for charitable, humanitarian and study promotion contributions
a) Charitable, humanitarian and study promotion contributions shall be deducted from taxable income from business income, salaries and wages before tax calculation of resident taxpayers including:
a.1) Payments to organizations and facilities that care for and nurture children in extremely difficult circumstances, people with disabilities, and elderly people without support.
The institutions of childcare and care for disadvantaged children and people with disabilities must be established and operate in accordance with the Government’s Decree No. 68/2008 / ND-CP of May 30, 2008. The Government shall stipulate conditions and procedures for establishment, organization, operation and dissolution of social charity establishments; Decree No. 81/2012 / ND-CP dated October 8, 2012 of the Government amending and supplementing Decree No. 68/2008 / ND-CP dated May 30, 2008 of the Government stipulating conditions and procedures for successful establishment. establishment, organization, operation and dissolution of social charity establishments and the Government’s Decree No. 109/2002 / ND-CP of December 27, 2002 amending and supplementing a number of articles of Decree No. 195 / The Government CP dated December 31, 1994 details and guides the implementation of a number of articles of the Labor Code regarding working hours and rest time.
Documents proving the contribution to organizations and facilities that care for and nurture children in extremely difficult circumstances, people with disabilities, the elderly and helpless elderly are the lawful receipts of organizations and agencies. facility.
a.2) Expenses for contribution to charity funds, humanitarian funds and study promotion funds established and operating under the Government’s Decree No. 30/2012 / ND-CP of April 12, 2012 on the organization and operation of social funds, charity funds, activities for charitable, humanitarian and study promotion purposes, not for profit purposes and prescribed in other documents related to management , use of funding sources.
Documents proving that charitable, humanitarian or study promotion contributions are lawful collection vouchers issued by central or provincial organizations and funds.
b) The charitable, humanitarian or study promotion contributions arising in a year shall be deducted from the taxable income of that tax year, if the deduction is not completely deducted from the taxable income of the tax calculation year next.
The maximum deduction level shall not exceed the taxable income from salaries, wages and business income of the tax year in which a humanitarian or study charity donation arises.
Above is the lawyer ‘s share on current personal income tax deductions. If you have any questions regarding personal income tax payment, please contact with us follow the hotline 0982.466.166 or email firstname.lastname@example.org.
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