Handbook | Personal Income Tax Settlement for Directors

1. Who is required to file a personal income tax return?

According to the regulations of personal income tax law, those required to file personal income tax returns include organizations and individuals paying income, and employees who have income during the tax period.

2. Deadline for personal income tax settlement

Based on: Point d, Clause 3, Article 10 and Clause 4, Article 8 of Circular 156/2013/TT-BTC, specifically:

Point d, Clause 3, Article 10 of Circular 156/2013/TT-BTC stipulates:

"The deadline for submitting annual tax returns is no later than the 90th day from the end of the calendar year or fiscal year."

Clause 4, Article 8 of Circular 156/2013/TT-BTC stipulates:

"If the last day of the deadline for resolving administrative procedures coincides with a statutory holiday, the last day of the deadline will be considered the next working day after that holiday."

Accordingly, the deadline for settling personal income tax for 2019 is March 30, 2020.

3. Authorization for personal income tax settlement

3.1. Cases where authorization is granted

* Conditions for authorizing a business to settle accounts on your behalf

According to Article 16 of Circular 156/2013/TT-BTC (amended and supplemented by Article 21 of Circular 92/2015/TT-BTC), individuals with income from salaries and wages may authorize the organization or individual paying the income to settle their tax obligations on their behalf in the following cases:

– Individuals whose only income is from salaries and wages under a labor contract of 03 months or more with an organization or individual paying the income, and who are actually working there at the time of authorizing tax settlement, even if they have not worked for a full 12 months in the year.

– Individuals with income from salaries and wages under a labor contract of 03 months or more with an organization or individual paying the income, and who are actually working there at the time of authorizing tax finalization, even if they do not work for a full 12 months in the year, and who also have incidental income from other sources averaging no more than 10 million VND per month in the year, and whose income has already been subject to a 10% withholding tax by the income-paying entity without requesting tax finalization for this income.

– Individuals who are transferred from their old organization to a new organization in cases where the old organization undergoes division, separation, merger, acquisition, or business transformation. At the end of the year, if the employee authorizes the new organization to settle their tax obligations, the new organization must collect the personal income tax withholding certificates issued by the old organization to the employee (if any) to use as a basis for aggregating income, the amount of tax withheld, and settling the tax on behalf of the employee.

Note:

– Organizations and individuals paying income only perform tax settlement on behalf of individuals for the portion of income from salaries and wages that the individual receives from the organization or individual paying the income.

– In cases where an organization makes payments after a division, separation, merger, acquisition, or conversion of a business and performs tax settlement under the authorization of employees transferred from the old organization, the new organization is responsible for settling taxes on both the income paid by the old organization and the new organization.

* Authorization documents

According to Clause 2, Article 16 of Circular 156/2013/TT-BTC (amended by Clause 3, Article 21 of Circular 92/2015/TT-BTC), individuals should prepare the authorization documents as follows:

– Authorization form according to mẫu số 02/UQ-QTT-TNCN;

– Copies of invoices and documents proving charitable, humanitarian, and educational contributions (if any).

3.2. Cases where authorization is not permitted

According to Official Letter 5749/CT-TNCN, employees are not allowed to authorize their employers to settle their personal income tax in the following cases:

– Employees who meet the eligibility requirements for authorization but have already received a personal income tax deduction certificate from their employer should not authorize the employer to handle their tax settlement, except in cases where the employer has revoked and canceled the previously issued tax deduction certificate.

– Employees who have income from salaries and wages and have signed labor contracts of 03 months or more with a business, but are no longer working for that business at the time of authorizing tax settlement.

– Employees with income from salaries and wages who have signed labor contracts of 03 months or more with an enterprise, and who also have incidental income that has not been taxed or has been taxed insufficiently (including cases where the income is below the tax-deductible threshold and cases where the income is above the threshold but no tax has been deducted).

– Employees who have income from salaries and wages and have signed employment contracts of 03 months or more with multiple businesses.

– Employees whose only source of income has been subject to a 10% withholding tax (including cases where the only source of income is from a single source).

– The employee has not registered for a tax identification number.

– Employees with income from salaries and wages who are also eligible for tax reduction due to natural disasters, fires, accidents, or serious illnesses cannot authorize tax settlement; instead, they must self-declare their tax returns along with the tax reduction application documents as guided in Clause 1, Article 46 of Circular 156/2013/TT-BTC.

4. The amount of personal income tax payable on income received in 2019.

4.1. Basis for tax calculation

According to Article 7 of the Circular 111 / 2013 / TT-BTCThe basis for calculating tax on income from salaries and wages is taxable income and tax rate, specifically:

Taxable income is determined by subtracting the following deductions from taxable income:

+ Personal deductions;

+ Contributions to insurance and voluntary retirement funds;

+ Charitable, humanitarian, and educational contributions.

4.2. Tax Calculation Formula

In which:

Taxable income is determined as follows:

See more: The latest guide to calculating personal income tax from salaries.

5. Documents and procedures for personal income tax finalization

5.1. For organizations and individuals paying income (businesses)

* Tax return filing documents

Based on: Sub-section b.2.1, section b.2, point b, clause 1, Article 16 of Circular 156/2013/TT-BTC; clause 2, Article 21 and clause 7, Article 24 of Circular 92/2015/TT-BTC.

Organizations and individuals paying income from salaries and wages, regardless of whether tax withholding occurs or not, must file tax returns using the following forms:

– Declaration form No. 05/KK-TNCN issued together with Circular 92/2015/TT-BTC.

– Form No. 05-1/BK-TNCN issued together with Circular 92/2015/TT-BTC.

– Form No. 05-2/BK-TNCN issued together with Circular 92/2015/TT-BTC.

– Form No. 05-3/BK-TNCN issued together with Circular 92/2015/TT-BTC.

* Where to submit the application

According to point c, clause 1, Article 16 of Circular 156/2013/TT-BTC, the place for submitting the 2019 tax return is stipulated as follows:

– Organizations and individuals paying income, which are production and business establishments, must file tax returns with the tax authority directly managing the organization or individual.

– Organizations paying income that are central agencies; agencies under or directly affiliated with ministries, branches, or provincial People's Committees; or provincial-level agencies shall file tax returns at the Tax Department where the organization's head office is located.

– The income-paying organization is an agency under or directly subordinate to the People's Committee at the district level; the district-level agency submits the tax declaration to the Tax Sub-department where the organization's head office is located.

– Organizations paying income, such as diplomatic missions, international organizations, and representative offices of foreign organizations, file tax returns at the Tax Department where the organization's head office is located.

* Tax payment deadline

The deadline for filing personal income tax returns for 2019 is March 30, 2020.

5.2. For individuals who directly settle their tax obligations.

According to Clause 2, Article 16 of Circular 156/2013/TT-BTC, as amended by Clause 3, Article 21 of Circular 92/2015/TT-BTC, individuals with income from salaries and wages who are not authorized to have their tax finalized by the income-paying organization or individual must file their tax return directly with the tax authority using the following form:

– Tax return form No. 02/QTT-TNCN issued together with Circular 92.

– Appendix form No. 02-1/BK-QTT-TNCN issued with Circular No. 92 if there is a registration for family allowance deduction for dependents.

– Copies of documents proving the amount of tax withheld, the amount of tax provisionally paid during the year, and the amount of tax paid abroad (if any).

Individuals commit to being responsible for the accuracy of the information on the copy. If the income-paying organization does not issue a tax deduction certificate to the individual because the organization has ceased operations, the tax authority will use its database to review and process the individual's tax return without requiring a tax deduction certificate.

If, according to foreign laws, foreign tax authorities do not issue a certificate of tax payment, the taxpayer may submit a copy of the certificate of tax withholding (clearly stating that the tax has been paid according to the declaration). income tax)) issued by the income payer or a scanned copy of a bank document for the amount of tax paid overseas, certified by the taxpayer.

- Copies of invoices and vouchers proving the contribution to the charity fund, the humanitarian fund, the study promotion fund (if any).

– Individuals receiving income from international organizations, embassies, consulates, and from abroad must provide documentation proving the amount paid by the entity or organization paying the income overseas.

6. Personal income tax refund

Basis: Article 28 of Circular 111/2013/TT-BTC and Article 53 of Circular 156/2013/TT-BTC, as amended by Article 23 of Circular 92/2015/TT-BTC.

6.1. Conditions for tax refund

– Personal income tax refunds only apply to individuals who have a tax identification number at the time of requesting the refund.

– For individuals who have authorized the income-paying organization or individual to perform tax settlement on their behalf, the individual's tax refund will be processed through the income-paying organization or individual.

– Individuals who directly settle their tax obligations with the tax authorities are entitled to a refund or the excess amount paid will be offset against the tax payable in the next period.

Therefore, to be eligible for a personal income tax refund, the following conditions must be met:

– There is an overpayment of taxes;

– Must have a personal income tax identification number at the time of requesting the tax refund;

– A tax refund has been requested.

6.2. Personal Income Tax Refund Application

* Tax refund for organizations and individuals paying income who perform tax finalization on behalf of individuals who have authorized them to do so.

In cases where an organization or individual pays income and, after offsetting any overpaid or underpaid taxes of individuals, has an overpaid tax amount, if they request a refund from the tax authorities, the organization or individual paying the income must submit a tax refund application to the tax authority directly managing them.

The tax refund application includes:

– Request for refund of state budget revenue, form No. 01/DNHT.

– Copies of documents and receipts for personal income tax payments, with a commitment signed by the legal representative of the organization or individual paying the income, taking responsibility for the accuracy of the copy.

* Tax refund for individuals who directly file their tax returns.

For individuals with income from salaries and wages who directly settle taxes with the tax authority, if there is an overpayment of tax, the individual does not have to submit a tax refund application but only needs to record the amount of tax requested for refund in item [47] – “Tax refunded to taxpayer's account” or item [49] – “Total tax offset for future occurrences” in the tax settlement declaration form No. 02/QTT-TNCN when settling taxes.”

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