Salary and bonus at the end of the year is a hot issue. Knowing the bonuses that do not include personal income tax will help taxpayers know whether they have to pay tax or not or calculate it themselves, as well as estimate the amount of tax they have to pay. So, do Tet bonuses have to pay personal income tax? Today, LSX Lawfirm will give you an article about “Does Vietnam Tet bonus have to pay personal income tax?”, as follows:
Legal grounds
Labor Code 2019
Circular 111/2013/TT-BTC
What is personal income tax?
Personal income tax does not have a definite definition of what type of tax it is. However, you can understand that personal income tax is a tax that income earners must pay into the State budget, which is deducted from wages, salaries, and some other revenues after deductions have been calculated. apart from. Personal income tax is not levied on low-income individuals, so this revenue will be fair to all beneficiaries, contributing to reducing the disparity between classes in society.
There are 2 subjects that must pay personal income tax: Residents and non-residents in Vietnam with taxable income. Specifically:
- Firstly, For resident individuals: Taxable income is the amount arising inside and outside the territory of Vietnam (regardless of where the income is paid).
- Secondly, For non-resident individuals: Taxable income is income generated in Vietnam (regardless of where the income is paid and received).
The role of personal income tax in society
When paying personal income tax in full, it will increase the State budget, income tax is a tool for the State to mobilize a part of wealth into the society thereby creating the budget. And as the economy is growing, personal income tax also has a rapid increase, proportional to the per capita income. In addition, due to the liberalization of the commercial economy, revenue from import and export taxes affect. Therefore, personal income tax becomes more and more important to the state budget.
In Vietnam, the gap between the rich and the poor is still quite clear, the majority of the population has low income. Normally, personal income tax only applies to those with average income or higher, higher than the starting level of taxable income, not to individuals with low income, just enough to support themselves. and family. Therefore, although personal income tax has not yet brought a large source of revenue to the State budget, it plays an important role in reducing the gap between rich and poor in society, contributing to creating equity and equality. equality in society.
Personal income tax helps the State to easily control and manage each individual’s personal income, thereby minimizing illegality such as bribery, trading in prohibited goods, tax evasion, and appropriation of assets State property.
The concept of “reward”
In fact, the Tet bonus, also known as the 13th-month salary, considered a bonus that enterprises reward employees based on production and business results and the level of work completion of employees over a year.
Accordingly, the 2019 Labor Code, which took effect on January 1, 2021, stipulates that a bonus is an amount of money or property or other forms that an employer rewards to employees based on production results. , business, job completion level of employees.
Tet bonus is taxable income
According to the 2012 revised Personal Income Tax Law and pointe, Clause 2, Article 2 of Circular 111/2013/TT-BTC, personal income taxable income includes bonuses, except for non-taxable bonuses such as 04 cases above.
In other words, Tet bonuses are still subject to personal income tax if the total income from salaries and wages is to the extent that tax must pay.
Steps to calculate personal income tax
Step 1: Calculate total income
Step 2: Determine the items that are exempt from personal income tax
And Step 3: Calculate taxable income according to the formula
Step 4: Determine the deductions
And Step 5: Calculate taxable income according to the formula
Step 6: Calculate payable personal income tax according to the formula
The personal income tax rate calculated according to the income level, each level has a corresponding tax rate (clearly specified in Clause 2, Article 7, and Appendix 01/PL-TNCN Circular 111/2013/TT-BTC). ).
After completing step 6, the progressive method will apply to calculate the payable personal income tax.
How to calculate personal income tax for Tet bonuses?
Case 1: The employee signs a contract of 3 months or more
According to Article 7 of Circular 111/2013/TT-BTC, the amount of personal income tax payable on income from salaries and wages calculated as follows:
Personal income tax payable = Taxable income x Tax rate (1)
In there:
Taxable income = Taxable income – Deductions (2)
And Taxable income determines according to the following formula:
Taxable Income = Total Income – Exemptions (3)
Based on the above tax calculation formulas, to accurately calculate the payable tax amount, it is necessary to follow the following steps sequentially
Step 1. Calculate total income from salary and wages
Step 2. Calculate tax-exempt income (if any)
And Step 3. Calculate taxable income according to formula (3)
Step 4. Calculating deductions such as family deduction, compulsory insurance deduction, etc.
And Step 5. Calculate taxable income according to formula (2) Step 6. Calculate the payable income tax amount according to formula (1).
Case 2: The employee does not sign a contract or signs a labor contract for less than 3 months
The point I, Clause 1, Article 25 of Circular 111/2013/TT-BTC stipulates that organizations and individuals pay wages, salaries, and other payments to resident individuals who do not sign labor contracts or enter into labor contracts. Under 03 months with a total income payment of 02 million VND/time or more, the tax must deduct at the rate of 10% of income before paying income to individuals.
That is, organizations and individuals that pay salaries, Tet bonuses, and other incomes to employees from 02 million VND/time or more, 10% will deduct at source before paying income.
Consulting service of LSX Lawfirm
Above is LSX Lawfirm’s advice on the content of the problem “Does Vietnam Tet bonus have to pay personal income tax?“. And all the above knowledge to use in work and life. If you have any questions and need more advice and help, please contact the hotline for the reception. Lawyer X is a place that provides reputable and fast business services at reasonable prices. Customers will be extremely satisfied when using our services.
- FB: www.facebook.com/luatsux
- Tiktok: https://www.tiktok.com/@luatsux
- Youtube: https://www.youtube.com/Luatsux
Related article
Deadline for newly established businesses to pay license tax in Vietnam
Procedures for setting up a company providing tax services in Vietnam
Building a national database on asset and income control in Vietnam
Related questions
The Lunar New Year bonus is not a mandatory requirement for businesses to follow. In other words, the law does not require employers to give Tet bonuses to employees. How much bonus, whether or not to reward will be decided by the employer.
Personal income tax will bring many benefits to society such as contributing to the construction of infrastructure that connects many economic sectors across the country, thereby creating conditions for equitable social development. Taxes are also deducted from social security payments for people: Unemployment insurance, health insurance, retirement benefits, allowances for the poor, benefits for natural disasters, floods, etc.
Personal income tax payable on income from salaries and wages of non-residents is determined as follows: Payable income tax = 20% x Taxable income In there; taxable incomes from salaries and wages of non-resident individuals; is determined as for taxable income from salaries and wages of resident individuals.
Contact LSX Lawfirm
Finally, hope this article is useful for you; answer the question: “Does Vietnam Tet bonus have to pay personal income tax?“. If you need more information, please contact LSX Law firm: at +84846175333 or Email: [email protected].
Conclusion: So the above is Does Vietnam Tet bonus have to pay personal income tax?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
