Is it possible to deduct 10% of personal income tax when trying a job in Vietnam?

In principle, only those with high incomes must pay personal income tax; However, there are many cases where employees try jobs with a low salary, but they are deducted 10% of tax. Is such a business deduction legal? Is it possible to deduct 10% of personal income tax when trying a job? Today, LSX Lawfirm will give you an article about “Is it possible to deduct 10% of personal income tax when trying a job in Vietnam?“, as follows:

Legal grounds

Circular 111/2013/TT-BTC

What is personal income tax?

Personal income tax (Personal income tax) is an amount that income earners have to deduct part of their salary, or from other sources of revenue, into the state budget after deductions have been made. 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).

Is the probationary subject to a 10% personal income tax deduction?

According to Clause 2, Article 3 of the Law on Personal Income Tax; Incomes from salaries and wages determined to be subject to personal income tax.

In which, the point I, clause 1, Article 25 of Circular 111/2013/TT-BTC stipulates that:

“Organizations and individuals that pay wages, remunerations, and other expenses to resident individuals do not sign labor contracts (under the guidance of Points c, d, Clause 2, Article 2 of this Circular) or sign contracts If the employee has less than three (03) months of labor with a total income of two million (2,000,000) VND/time or more, the tax must be deducted at the rate of 10% of the income before paying to individuals.”.

Thus, if there is a probation contract between the employee and the employer or there is a probation agreement in the labor contract of fewer than 3 months, the total salary paid to the employee is VND 2 million or more. Enterprises allowed to deduct 10% of personal income tax before paying employees.

Therefore, if the probationary falls into the above case; then the employer completely allowed to deduct 10% of the salary paid to the employee to pay personal income tax.

What is the role of personal income tax?

Personal Income Tax has the following roles:

• Contributing to increasing State budget revenue, generating revenue for the state budget.
• Contributing to ensuring social justice, helping to reduce the gap between rich and poor. While other taxes are levied on the expenditures of everyone, the state collects Personal Income tax only on those with a decent income or more. The progressive nature helps to close the income gap among individuals.
• Help detect illegal sources of income and control income sources, such as trafficking in prohibited goods; bribery, tax evasion; fraudulent appropriation of state property.

How not to be deducted 10% personal income tax?

According to the point I, clause 1, Article 25 of Circular 111/2013/TT-BTC; if the estimated total income after deduction of family circumstances is not up to the level to pay personal income tax; employees can make commitments to send enterprises; as a temporary basis for not deducting 10% tax.

An employee may make a temporary commitment without tax deduction if he/she fully meets the following conditions: – Having a total income of 02 million VND/time or more.

– Residents sign a probationary contract or a labor contract of fewer than 3 months for probation.

– Only income is subject to a tax deduction (if you work in 02 or more places, you can’t make a commitment).

– Estimated total taxable income after deducting family circumstances is not enough to pay tax (estimate total income is 132 million VND/year or less if there are no dependents).

– Must register for tax and have a tax identification number at the time of commitment.

– If the above conditions are satisfied; employees can download and fill out Form 02/CK-TNCN, and then send it to the business so that 10% of their salary will not be deducted.

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