What is personal income tax under Vietnamese Law?

by QuynhHuong

Accordingly, before going into official operation, each company must register and have a tax identification number. Similarly, when entering to work for a business, employees need to have a personal tax code. So, what is personal income tax under Vietnamese Law? Let’s find out with LSX!

  • 2006 Law on Tax Administration
  • Circular No. 95/2016/TT-BTC
  • Circular 111/2013/TT-BTC
  • Circular 110/2015/TT-BTC

What is personal income tax?

Basically, personal income tax is a tax amount that income earners must deduct part of their salary or other revenues into the state budget; after calculating the deductions. Citizens who enjoy the country’s achievements such as infrastructure, social welfare, security, and order… have to contribute part of their income to society through paying taxes.

Accordingly, personal income tax based on the principles of fairness and the ability to pay taxes. Personal income tax is not levied on low-income individuals, just enough to support themselves and their families at the necessary level. Because it is a direct tax, it is often difficult for taxpayers to transfer the tax burden to others. The state can use this tax to encourage work or leisure through the tax schedule. For example, the state may encourage workers to work overtime, increase income by lightly taxing or not taxing additional income due to overtime, or may encourage rest by taxing on this income.

What is personal tax identification?

Thus, an individual tax identification number is a unique tax identification number for the purpose of declaring all of that individual’s income.

Accordingly, each individual is only granted a unique tax code to use throughout the working process in the enterprise. The registration to issue a personal income tax identification number is done at the income paying agency, or at the tax office.

What are the benefits of having personal tax identification?

Firstly, people with tax identification numbers will receive tax deductions for their dependents. Details of deductions for dependents are as follows: a deduction of VND 9,000,000/month for individuals with a tax code and a reduction of VND 3,600,000/month for dependents such as: spouse, father, mother or children. (According to Circular 111/2013/TT-BTC in Article 9, Clause 1, Point c, Item c.2 on family circumstances deduction for dependents)

Second, 10% personal income tax deduction: People with personal tax identification numbers are only temporarily deducted 10% personal income tax (instead of 20% for people without tax codes); when they have current incomes of over one million dong for one time from providing services; for which the individual does not sign a labor contract.

Third, tax reduction for people suffering from natural disasters, unexpected accidents, fatal diseases… Those with personal tax codes, tax authorities will be able to provide free tax guidance.

Fourth, get a tax refund if the individual overpays tax. The refund period is at the end of the year.

Fifth, to be provided with quick and convenient tax services; individuals who already have a tax identification number could organize the tax finalization on behalf of the organization; while individuals without a tax identification number make their own decisions with tax authorities.

Procedure for registration of personal tax identification for foreigners

Step 1: Submit the dossier

Firstly, the applicant shall prepare the dossier for registration of personal tax identification for foreigners; then, submit it at the workplace or the General Department of Taxation.

Step 2: Receive the result

The processing time does not exceed 03 working days from the date the tax authority receives the complete tax registration dossier following the taxpayer.

Thus, after receiving the dossier, the paying tax office shall notify the list of tax identification numbers of individuals who have registered for tax through the collection paying agency.

In fact, the income-paying agency is responsible for notifying each individual with his/her tax identification number or the reason why he/she can not has a tax identification number for the individual to adjust and supplement information.

Lastly, thank you for paying attention to our article on “What is personal income tax under Vietnamese Law?”. Hope that this article will help you solve your problem. In case you have any questions, please feel free to contact Lawyer X for quick and best legal services: +84846175333.

Where can businesses pay taxes?

Accordingly, businesses could pay taxes in the following places: the State Treasury, tax management department, organizations authorized by tax authorities to collect taxes; commercial banks; other credit institutions, and service organizations.

What is the definition of tax?

Hence the regulation of Vietnamese Law, tax is compulsory; non-reimbursable revenue of the State for organizations; and individuals to meet the spending needs of the State for the common good.

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