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The deadline to finalize your annual private revenue tax (PIT) for 2021 is developing.
Taxpayers who’re required to finalize their annual PIT instantly with the tax authorities ought to submit PIT returns earlier than the top of April of the next 12 months. With extra environment friendly submitting strategies and heavy penalties for non-compliance, it’s important for each employers and people to know the necessities of PIT submitting clearly and put together prematurely.
In a latest webinar, Thang Vu, Supervisor, Tax at Dezan Shira & Associates helped viewers perceive the obligations of the employer in addition to the worker for the preparation and submission of PIT. To make clear the conditions the place laws differ from actuality, Thang gave real-life examples and instances to assist perceive particular person revenue tax obligations and equip taxpayers with the data to behave in a well timed and compliant method. Whereas the total webinar will be considered right here, we now have highlighted components of the webinar under.
What’s the objective of annual PIT finalization?
It’s a frequent statutory obligation by people to precisely assess the taxpayers’ liabilities or entitlements. It is usually performed to schedule tax funds, tax refunds, or another functions as crucial.
All tax residents are required to summarize their assessable revenue earned between January 1 and December 31 and calculate the tax payable on such revenue. As soon as assessed, PIT have to be reported and filed with the tax authorities which completes the annual finalization.
Who’s topic to annual PIT finalization?
For tax functions, this implies a resident who has stayed in Vietnam for 183 days or extra in a calendar 12 months. The size of keep in Vietnam doesn’t need to be steady. People who’ve residency in Vietnam are additionally topic to annual PIT finalization
Non-residents will not be required to finalize their PIT in Vietnam.
What’s topic to annual PIT finalization?
Solely revenue of wage and wages is topic to PIT, resembling your wage, wages, revenue on gross sales, allowances offered by the employer resembling meals and journey allowances, and bonus in money. Different incomes resembling rental revenue from funding properties, dividends, royalties, capital beneficial properties, and different sorts resembling lottery, and inheritance will not be topic to PIT, nevertheless, they’re taxed individually utilizing totally different tax varieties.
What are the everyday allowances and advantages topic to PIT?
There are a number of. Housing allowances resembling hire and fuel are topic to PIT. Nonetheless, the precise assessable quantity is capped at 15 p.c of the worker’s assessable revenue. For instance, if an worker’s annual revenue is US$100,000 a 12 months, their assessable housing allowance will likely be capped at US$15,000 per 12 months.
Different allowances topic to PIT embrace if the portion of lunch allowance is greater than VND 730,000 (US$31.76). Member funds resembling golf membership, healthcare, and spa are additionally exempt for sure workers. Sure workers are additionally topic to PIT on consulting and tax companies.
Flight tickets for the international worker to their dwelling international locations annually is tax-free, but when the corporate is beneficiant and in addition pays for flights for the worker’s members of the family, then these are topic to PIT.
How do you calculate taxable revenue for PIT?
The taxable revenue for PIT dedication is to find out the assessable revenue which incorporates wage and wages, allowances, different benefits-in-kind, and efficiency bonuses. Nonetheless, workers are eligible for private deductions equal to VND 11 million (US$478) as properly VND 4 million (US174) per dependent. Different deductions embrace social insurance coverage, medical health insurance and retirement funds, and any donations to accepted charities and humanitarian organizations.
Who will be registered as dependents?
Dependents that may be registered embrace the taxpayer’s youngsters, which embrace organic youngsters, adopted youngsters, illegitimate youngsters, and stepchildren. The youngsters must be lower than 18 years outdated, or if they’re 18 and over however undergo from some incapacity or are at present enrolled in a college with a month-to-month revenue inside a 12 months that’s lower than VND 1 million (US$44).
Different eligible dependents embrace spouses, dad and mom, stepparents, nieces, and nephews, nevertheless these are topic to sure circumstances.
Who’s required to finalize PIT?
PIT finalization is just not required if the payable PIT quantity is lower than VND 50,000 (US$2.5) or the payable PIT quantity is lower than the provisional tax paid or tax withheld however the taxpayers select to not obtain the refund.
As well as, PIT finalization is just not required for people who’ve wage and wages from a number of sources that’s lower than VND 10 million (US$435) and topic to 10 p.c PIT withholdings.
Our recommendation is to request your employer to give you your month-to-month payslips with embrace your PIT withholdings to estimate your estimated tax payable utilizing progressive tax charges. This may aid you assess your taxable revenue. It’s all the time safer to finalize your PIT moderately than face steep fines by the tax authorities.
Are you able to describe the overall procedures to finalize your annual PIT?
Taxpayers ought to evaluation their whole revenue earned in the course of the 12 months and do a self-assessment. They will then estimate their whole PIT payable and examine with the payable PIT quantity to the withheld PIT and provisional PIT paid in the course of the 12 months.
The ultimate step is to file the PIT finalization return and pay tax cost if there’s a shortfall. Taxpayers must also be ready for any clarification if the tax authority request it.
What are the deadlines for submitting?
The deadline for group and worker salaried people is March 31 of yearly. For people submitting on to the tax authorities it’s sometimes April 30, so the final day of the fourth month of the calendar 12 months. Nonetheless, the deadline excludes public holidays and weekends, and as such, this 12 months’s deadline can be Might 4.
The place are you able to finalize your PIT?
Taxpayers can ask their employers to finalize PIT and submit it to the tax authorities on their behalf. Nonetheless, if people wish to file individually, they’ll submit it to the native managing tax workplace the place the employer is positioned. For people that earn revenue from two or extra employers, they’ll select one tax workplace the place the employers are positioned, ideally the one the place probably the most revenue is earned or the tax workplace the place the person resides.
Taxpayers can interact a specialised tax marketing consultant or an expert agency to deal with and finalize PIT on their behalf.
Why are tax refunds typically tough for international workers?
Usually, international workers are paid greater than native colleagues, due to this fact greater pay equals excessive danger. To make sure taxes are duly collected, tax authorities scrutinize all paperwork and confirm if PIT assessed is true, significantly for international workers. As well as, international workers typically have extra advantages than locals or have a wage break up between international locations, or could have inappropriate wage preparations. Tax authorities, due to this fact, look rigorously to evaluate if there are any discrepancies, which can delay refunds.
What are the tax compliance necessities when leaving Vietnam for a international worker?
International workers whose employment contract is about to run out are required to finalize their PIT earlier than departure. They will additionally entrust their employer to take action on their behalf. The deadline to conform is inside 45 days upon departure. Taxpayers ought to totally adjust to tax necessities when leaving Vietnam as they may return to Vietnam sooner or later or might have affirmation of tax remittance for tax filling functions in different international locations.
About Us
Vietnam Briefing is produced by Dezan Shira & Associates. The agency assists international buyers all through Asia from places of work internationally, together with in Hanoi, Ho Chi Minh Metropolis, and Da Nang. Readers could write to vietnam@dezshira.com for extra assist on doing enterprise in Vietnam.
We additionally keep places of work or have alliance companions aiding international buyers in Indonesia, India, Singapore, The Philippines, Malaysia, Thailand, Italy, Germany, and the United States, along with practices in Bangladesh and Russia.
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