Circular No. 113/2011/TT-BTC dated August 04, 2011 of the Ministry of Finance amending, supplementing the Circular No. 62/2009/TT-BTC dated March 27, 2009, the Circular No. 02/2010/TT-BTC dated January 11, 2010 and the Circular No. 12/2011/TT-BTC dated January 26, 2011

WITHHOLD PERSONAL INCOME TAX FOR VND 1 MILLION INCOMES

On August 04, 2011, the Ministry of Finance issued the Circular No. 113/2011/TT-BTC amending, supplementing the Circular No. 62/2009/TT-BTC dated March 27, 2009, the Circular No. 02/2010/TT-BTC dated January 11, 2010 and the Circular No. 12/2011/TT-BTC dated January 26, 2011.

Organizations and individuals that pay commissions to goods sale agents; salaries, wages, remuneration or other sums of money to individuals performing services of VND 1,000,000 or more each time shall withhold personal income tax before paying incomes to these individuals (in previous regulations, performing services of VND 500,000 or more each time shall withhold personal income tax).

This Circular regulates two levels of tax withholding for individuals who haven’t had tax code instead of the sole level ò 10% as previous regulations). In particular,  Withholding tax at the single rate of 10% of paid incomes for individuals who have tax code and 20% of paid incomes for individuals who don’t have tax code, except for cases for  which the Ministry of Finance has given a written guidance on specific temporary withholding rates (for insurance or lottery agency commission).

To sign labor contract, service contract with individuals, organizations of labor contracts and service contracts will be responsible for informing individuals on above percentage of withholding rate so that individuals can make procedure on obtaining tax code.

In case individuals earn only incomes subject to tax withholding (including also insurance or lottery agents) at the above rate but their estimated total taxable incomes after deducting family circumstance-based reductions are not high enough to be taxed, these individuals shall make written commitments and send them to income payers for use as a temporary basis for delay of personal income tax withholding.

The tax rate taxed incomes applies to individuals earning incomes from transfers of real estate, houses, apartment which are supplied certificates of land use rights, and house and apartment ownership is 25% on the transfer revenue (Transfer price – Cost price).

In case cost price (buying price and related expenses) does not have sufficient proving invoices and vouchers, the tax rate of 2% of the transfer price will apply; in case it is found that the transfer price is not stated in the contract and or declared lower than the land price and registration fee calculation set by the provincial-level People’s Committee, tax shall be calculated at the tax rate of the land price and registration fee calculation set by the provincial-level People’s Committee.