With the new change in Vietnam today shows the role of Personal Income Tax in today’s life. So what is personal income tax? What is the role of personal income tax? Subjects required to pay personal income tax include? Please refer to the following article by Lawyer X.
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Legal grounds
- Law on Taxation of Personal Income Tax 2007 (amended and supplemented in 2012)
Concept of personal income tax
Currently, there is no exact and specific definition of personal income tax. However, based on the provisions of the law recorded in the Law on Personal Income Tax, Decrees and Circulars guiding, PIT can be understood as follows:
PIT is a direct tax, calculated on the taxpayer’s income after deducting tax-free incomes and deductions for family circumstances.
Features of personal income tax
A tax levied on all individuals with taxable income. Because it is a direct tax, it is often difficult for taxpayers to pass the tax burden on to others. Therefore, the psychology of taxpayers is often heavier when performing this tax obligation than indirect taxes.
Personal income tax is always associated with the social policy of each country.
Taxation of personal income is usually applied according to the principle of partial progressiveness.
Personal income tax is a complex tax. Tax administration; tax collection requires qualifications; high tech; large tax administration costs. Tax administration agencies must know the sources of taxable income, their status of residence in Vietnam, etc.
The role of personal income tax
Contributing to increasing revenue for the State budget:
The economy of our country is growing, and the per capita income of individuals is increasing, so personal income tax will make an important contribution to increasing revenue for the State budget.
Contributing to social justice:
Personal income tax is only levied on income higher than the starting level of taxable income; do not levy taxes on individuals who earn enough to support themselves and their families at the necessary level. There are many countries that also have exemption regulations; tax reduction for individuals carrying a social burden.
In our country today, the incomes of people of all classes are different. The majority of the population has low income. But there are also some individuals with fairly high incomes; especially individuals working in foreign-invested enterprises; in an export processing zone or there are a number of foreigners working in Vietnam. Although personal income tax has not yet brought a large amount of revenue to the State budget.
However, in terms of social justice and the State’s macro-management tools, personal income tax has an extremely important position. Therefore, it is necessary to regulate income tax for those with high incomes; ensure the implementation of social justice policy.
Personal income tax period
- Tax period for resident individuals is prescribed as follows:
a) Tax period by year applicable to income from business; income from salary and wages;
b) The tax period for each time an income is generated applies to income from capital investment; income from capital transfer, minus income from securities transfer; income from real estate transfer; income from winning prizes; income from royalties; income from franchising; income from inheritance; income from gifts;
c) Tax period for each transfer or year for income from securities transfer. In case an individual applies an annual tax period, he/she must register from the beginning of the year with the tax agency.
- Tax period for non-resident individuals is calculated according to each time of income generation, applicable to all taxable income.
Subjects required to pay personal income tax
Persons liable to pay personal income tax are resident individuals with taxable income arising within and outside the Vietnamese territory and non-resident individuals with taxable income arising within the Vietnamese territory. According to Article 2 of the Law on Personal Income Tax of 2007 (amended and supplemented in 2012), specifically:
– A resident is a person who meets one of the following conditions:
- Being present in Vietnam for 183 days or more in a calendar year or counting for 12 consecutive months from the first day of presence in Vietnam;
- Having a regular place of residence in Vietnam, including a place of permanent residence registration or a rented house to stay in Vietnam under a fixed-term lease contract.
– A non-resident individual is a person who does not meet the conditions specified above.
Penalties for late payment, non-payment of personal income tax
Upon receipt of the tax payment notice; but taxpayers who do not pay will not have a specific penalty; which is calculated according to the regulations on late payment interest; This content is clearly specified in Clause 1, Article 42 of Decree 125/2020/ND-CP as follows:
“first. Calculating fines for late payment a) Organizations and individuals that pay late fines for tax and invoice administrative violations will be charged a fine for late payment of fines at the rate of 0.05%/day calculated on the late payment fine.b ) The number of days of late payment of fines, including holidays and days off according to the prescribed regime, is counted from the day following the expiration of the fine payment time limit to the day immediately preceding the date the organization or individual pays the fine to the bank. state books.”
Thus, the amount of late payment of 01 day = 0.05% x Amount of late payment.
Example: Mr. A is obliged to pay personal income tax of VND 50 million; if Mr. A fails to pay by the deadline in the notice, the daily late payment amount that Mr. A must pay is VND 25,000.
Note:
– No late payment fines shall be charged in the following cases:
- During the period of postponement of the execution of the fine decision;
- During the consideration and decision on fines exemption;
- The fine amount has not yet been paid in case the fine is paid many times.
- In case an organization or individual fails to voluntarily pay fines or late payment interest to the state budget, the tax agency directly managing such organization or individual shall notify and urge the organization or individual to individuals pay fines and late payment fines according to regulations.
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Related questions
Payable personal income tax = Taxable income x Tax rate
In there:
Taxable income = Taxable income – Deductions
Taxable income = Gross income – Exemptions
– Family deductions.
– The contributions to the insurance fund, voluntary retirement according to the guidance in Clause 2, Article 9, Circular 111/2013/TT-BTC.
– Charitable, humanitarian and study promotion contributions as guided in Clause 3, Article 9, Circular 111/2013/TT-BTC.
In this case, the individual shall submit a tax registration dossier to the respective tax authority, including:
– Tax registration declaration: Use Form No. 20-DK-TCT.
– Copy of CCCD card or copy of valid ID card for dependents with Vietnamese nationality under 14 years old.
– Copy of passport
Conclusion: So the above is Subjects who are required to pay personal income tax in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
