Taxpayers are obligated to declare their taxes so that the tax authorities can manage and collect taxes according to regulations. Therefore, a question that many organizations and individuals are concerned about is whether they are required to declare taxes even if they do not generate personal income?
1. Even if no personal income tax is incurred, you still need to file a tax return.
According to Point b, Clause 3, Article 7 of Decree 126/2020/ND-CP, individuals with income exempt from tax as prescribed by law, as stipulated in Point b, Clause 2, Article 79 of the Law on Tax Administration, except for individuals receiving inheritance or gifts of real estate, are not required to submit tax declaration documents.
According to the amended regulations in Official Letter No. 5189/TCT-CS dated December 7, 2020, from the General Department of Taxation, all organizations and individuals paying income, even without monthly/quarterly tax deductions, are still required to declare taxes.
Based on the above regulations, on July 1, 2021, the General Department of Taxation issued Official Letter 2393/TCT-DNNCN stating that only organizations and individuals that generate taxable income subject to personal income tax are required to declare personal income tax. If an organization or individual does not generate taxable income subject to personal income tax, they are not subject to the Personal Income Tax Law. Accordingly, organizations and individuals are not required to declare personal income tax for the month/quarter in which they did not generate personal income.
Therefore, organizations and individuals that pay monthly salaries to employees are required to file personal income tax returns, even if none of the employees are subject to personal income tax. If no salary is paid in a given month, then no return for that month needs to be filed.
2. If no salary payments are made, is it still necessary to submit an annual tax return?
Based on Point d, Clause 6, Article 8 of Decree 126/2020/ND-CP, it is stipulated that:Organizations and individuals paying income from salaries and wages are responsible for filing tax returns and settling tax on behalf of individuals authorized by the organization or individual paying the income, regardless of whether tax withholding occurs or not. If the organization or individual does not pay any income, they are not required to file a personal income tax return."
Therefore, regardless of whether personal income tax is incurred or not, businesses must still submit the Personal Income Tax Final Settlement Declaration no later than March 30th of each year to finalize the tax settlement for the preceding tax period.
If a business makes no payments throughout the year, meaning it doesn't pay salaries to any employees, then the business is not required to submit a Personal Income Tax Final Settlement Declaration.
3. Penalties for late submission of personal income tax returns.
According to regulations, the deadline for submitting personal income tax returns is March 31st. Those who violate this deadline will be subject to penalties, with specific fines applied as per regulations. Article 13 of Decree 125/2020/ND-CP states as follows:
- A warning will be issued if submission is 1-5 days late, provided there are mitigating circumstances.
- An administrative fine of 2.000.000 to 5.000.000 VND will be imposed for late payment of 1-30 days, except in the cases mentioned above.
- An administrative fine of 5.000.000 to 8.000.000 VND will be imposed if the payment is 31-60 days late.
- Administrative fines ranging from 8.000.000 to 15.000.000 VND will be imposed for late submission of tax returns (61-90 days); over 91 days without tax liability; failure to submit the tax return and no tax liability arising; and submission of the tax return but... Failure to submit the accompanying appendices on tax management for businesses with related-party transactions.
- An administrative fine of VND 15.000.000 to VND 25.000.000 will be imposed if tax payments are delayed by more than 90 days, provided the taxpayer has already paid the full amount before the tax authority announces an inspection or issues a report.