In Vietnam, the information on tax laws is still not well disseminated to every citizen. Labor in Vietnam is also quite vague in understanding the regulations and sanctions on taxes, fees and insurance. In particular, personal income tax (personal income) is one of the taxes that we need to understand.
With many years of experience in the field of tax – accounting – auditing consultancy, Pham and Associates are pleased to be allowed to give personal income tax advice so that people can understand better this tax.
1. What is personal income tax?
Personal income tax (personal income tax) is an amount that the income earner has to pay part of his salary or other income sources into the state budget. The amount of the payment depends on personal income according to a clear and specific formula.
When is the personal income tax calculated? The time to calculate personal income tax is specified at Point b, Clause 2, Article 8 of Circular 111/2013 / TT-BTC: The time for calculating personal income tax is the time for personal income payment. For example, the company pays you on the 5th monthly, it is also the time to calculate personal income tax.
2. Who is the PIT payer?
Many people wonder if they are subject to personal income tax or not? Article 2 of the Law on Personal Income Tax stipulates that taxpayers are as follows:
“1. Personal income tax payers are resident individuals having taxable incomes specified in Article 3 of this Law which arise inside and outside the territory of Vietnam and non-resident individuals having taxable incomes specified in Article 3 of this Law which arise 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 regular place of residence in Vietnam, including a registered place of 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 “.
In addition, the law also stipulates two more groups of subjects that need to finalize PIT: individuals with income from salaries and salary payers. These subjects are responsible for declaring tax finalization and must provide additional tax amounts or tax amounts or offset tax on subsequent declarations.
3. What methods of personal income tax are calculated?
The method of calculating personal income tax is divided into 03 methods as follows:
Method 1: Calculate personal income tax according to the partially progressive table (applicable to employees signing labor contracts with a term of 03 months or more)
Method 2: Calculate personal income tax on the basis of 10% deduction (applicable to employees who do not sign a contract or a contract of less than 03 months and have an income of VND 2,000,000 or more )
Method 3: Calculate personal income tax on the basis of 20% deduction (applicable to non-residents in Vietnam) determined by taxable income minus salaries and x 20% tax rate
4. Advice on how to calculate personal income tax
With the three methods of calculating personal income tax as above, there are still many people who are confused about how the formula is applied exactly. Therefore, we would like to consult your personal income tax with the corresponding calculations as follows.
- For employees signing labor contracts with a term of 03 months or more
Payable personal income tax = Taxable income x tax rate
Taxable income = Total salary – VND 9,000,000 – (VND 3,600,000 x number of dependents)
Tax rate is as follows:
- For employees who do not sign labor contracts or sign contracts but are under 3 months old and earn 2,000,000 VND or more / time
The employee will be charged a personal income tax of 10% of the total income for each payment
Example: Mr. Nguyen Van A receives VND 3,000,000 in wages / month, the personal income tax amount Mr. A has to pay is VND 3,000,000 x 10% = VND 300,000.
- For individuals not residing in Vietnam
The personal income tax of a non-resident individual in Vietnam is determined by the taxable income minus salaries and x 20% tax rate.
5. Pham and Associates are always available to advise customers on PIT
With a team of employees with the best tax knowledge, Pham and Associates are always ready to advise every customer on issues related to PIT. If you have any questions or are unclear about this tax, you can contact us directly via the website or phone number to receive the fastest and most accurate personal income tax advisory service.
Pham and Associates support the personal income tax declaration and finalization for individuals in need throughout the country. All information please contact us at the address below.
PHAM & ASSOCIATES TAX – ACCOUNTING – AUDITING CO.,LTD
No.12, Alleys 49 Huynh Thuc Khang Street, Lang Ha Ward, Dong Da District, Ha Noi, Vietnam
Phone: 0902483186
Email: support@ketoanthuehanoi.vn