PERSONAL INCOME TAX (PIT) FINALIZATION

Presented by : Finance & Accounting 30 March 2012

Contents

Who are subject to PIT finalization?

Kinds of PIT & Tax assessment period

Preparing tax finalization file

1

2

3

4 Deadline submission

1. Who are subject to PIT finalization?

AND

1- Lower tax payment2- Excess tax refund (optional)3-Foreigners before getting out of VN

Resident individual

1. Who are subject to PIT finalization?

Staying in VN(12 consecutive months) >= 183 days

Having a residential location

Having lease contract (house,hotel..) >=90days

Add Your TitleAdd Your TitleORResidential Residential individualindividual

2. Kinds of PIT and Tax assessment period

1.Salary income

1.Capital investment & transfer

2. Real property transfer

3.Winnings or prizes

4.Royalties or Franchises

5.Inheritances or gift

Annual tax assessment period

Taxable Taxable incomeincome

Each occasion when income arise

2. Biz income

2. Kinds of PIT & tax assessment period

Annual tax assessment period

Example :

1) Mr. A came to VN since 02 July 2011 (183 days)

Tax assessment year 2011 from 1st Jan to 31st Dec 2011

2) Mr. B came to Vn since 3 July 2011 (182 days)

* 1st tax assessment year : 3rd July 2011~ 2nd July 2012

* 2nd tax assessment year : 1st Jan 2012 ~ 31 Dec 2012

1st2nd

3/7/2011 2/7/2012

1/1/201231/12/2012

3. Preparing tax finalization files

5mil IncomeIncome

Definitions

4.5=5-0.5 (meal allowance) Taxable incomeTaxable income

(income- non-taxable income(income- non-taxable income))

0.5mil=4.5mil-4mil (personal deduction) Assessable incomeAssessable income

(Taxable income-deductions)(Taxable income-deductions)

0.05mil=0.5mil*10% (tax rate) TaxTax

(Assessable (Assessable income*% tax rate)income*% tax rate)

3. Preparing Tax finalization files

Income : business + salary (wages)

Income receivable by employees from employers in monetary or non-monetary forms

- Insurance fee which the law doesn’t require employers buy for employees

- Membership fees for individuals : sport, artistic… clubs

- Other services for individuals in healthcare activities, entertainment, sports and aesthetics

- Housing allowance paid by the employer but not exceeding 15% of total taxable income.

3. Preparing Tax finalization files

Non-taxable income:

– Night shift or overtime salary payable which is higher than the day shift or normal working hours salary.

– One-off relocation allowance for expatriates coming to reside in Vietnam.

– Airfares for one round trip home leave for expatriates a year.

– School fees for children of expatriate employees up to high school level.

3. Preparing Tax finalization files

Non-taxable income (Cont):

– Meal allowance in cash to the employees (not excess of the stipulated amount)

3. Preparing Tax finalization files

• Deduction for dependents: 1.6m/month/person

• 1. Children (including adopted and illegitimate children )

- Under 18 year-old or - Over 18 year-old : studying at university (college)

or handicapped and unable to work

• 2. Husband ( wife)/ parent or parent- in- law - Above the working age - Still of working age as stipulated by law but

who is handicapped, unable to work

• 3. Grandparents/Brothers and sisters/Brothers in law, sister s in law /Grandchildren, nephews and nieces /Other people required by law

- Tax payer must directly rear or care for and - Above the working age or handicapped and unable

to work

3. Preparing Tax finalization files

Forms (Circular 28/2011/TT-BTC dated 28/02/2011)

09/KK-TNCN - Declaration of tax finalization

1. 09A/PL-TNCN : Income from Salaries, Wages

2. 09B/PL-TNCN : Income from business

3. 09C/PL-TNCN: Dependent deductions (if dependents were registered)

Appendixes

3. Preparing Tax finalization files

Taxable incomes(+)

Taxable incomes(+)

Step 1Step 1

Deductions(-)

Deductions(-)

Step 2Step 2

Tax liabilities(=)

Tax liabilities(=)

Step 3Step 3

3- Step 1. Taxable income

No. Items Amount Notes

1

Total Taxable income [22] =[23+25]

a

Total taxable income in VN, in which

[23] 6A+15B

Total taxable income for consideration of tax reduction

[24] NO

bTotal taxable income outside VN

[25] 8A+19B

3- Step 2. Deductions

No. Items Amount Notes

2

Deductions [26] [27+28+29+30]

a For tax payer [27] 4mil/1m

b For dependents [28]1,6m/p/m-

Registered

cCharities, humanitarian, study encourage

[29]Established

as regulation

dCompulsory insurances

[30]

Health, social and

unemployed Insurance

3- Step 3. Tax liabilities

No. Items Amount Notes

3 Total assessable income [31] =[22-26]

4 Tax [32] =[31* tax rate]

3- Step 3. Tax rate

Tax Bracket

Portion of monthly

Assessable income (mil)

Tax rate (%)

Illustration :

Total assessment income 240mil/year (20mil/m)

1 Up to 5 5 5mil *5%=0.25

2 Over 5 to 10 10 5mil *10%=0.5

3 Over 10 to 18 15 8mil *15%=1.2

4 Over 18 to 32 20 2mil *20%=0.4

5 Over 32 to 52 25Monthly

tax0.25+0.5+1.2+0.4=

2.35

6 Over 52 to 80 30 Total (year)

2.35*12=28.2mil7 Over 80 35

3- Step 3. Tax liabilities

No. Items Amount Notes

5

Total paid deducted of tax [33] =[34+35+36]

a Deducted [34] 9A+18B

b Paid [35] 12A+17B

cPaid outside VN

(if any)[36]

Max= total tax * outside/total

income

6 Reduction of tax [37]Duplication of tax (1st & 2nd

year)

3- Step 3. Duplication of tax

1st year : 100 mil PIT2nd year :120 mil PIT Duplication of tax from 1/1->2/7/2012

Tax reduction=100mil*6month/12mon

th = 50 mil

1st2nd

3/7/2011 2/7/2012

1/1/201231/12/2012

3- Step 3. Tax liabilities

No. Items Amount Notes

7 Tax Payable [38][32-33-37]

>0

8

Excess payment [39] [32-33-37]

>0

a Refund requirement [40]

b Set-off in next period [41]

4.Deadline submission

90days since day-end of Tax assessment year