Official Dispatch 2783/CTTPHCM-TTHT 2024 Ho Chi Minh City guiding personal income tax finalization for the year 2023

- Pursuant to the Law on Personal Income Tax; the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax; Resolution No. 954/2020/UBTVQH14 dated June 02, 2020 of the National Assembly Standing Committee on adjusting the family circumstance-based reductions for personal income tax; the Government’s Decree No. 65/2013/ND-CP dated June 27, 2013; Circular No. 111/2013/TT-BTC dated August 15, 2013 of Ministry of Finance;

- Pursuant to the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019 of the National Assembly; the Government’s Decree No. 126/2020/ND-CP dated October 19, 2020 detailing a number of articles of the Law on Tax Administration; Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance which takes effect from January 01, 2022, guiding the implementation of a number of articles of the Law on Tax Administration and the Government’s Decree No. 126/2020/ND-CP dated October 19, 2020;

- Pursuant to Circular No. 111/2013/TT-BTC, Article 14 of Circular No. 92/2015/TT-BTC of the Ministry of Finance; Circular No. 79/2022/TT-BTC dated December 30, 2022 (amending and supplementing Point g, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance); Decision No. 40/QD-BTC dated January 13, 2023 of the Ministry of Finance announcing administrative procedures being amended and supplemented in the field of taxation and customs within the function and scope of the Ministry of Finance;

To ensure timely guidance for organizations and individuals to carry out the finalization of personal income tax (PIT) uniformly in accordance with applicable laws on personal income tax and tax administration, Ho Chi Minh City Tax Department shall provide a number of guidelines on the implementation of PIT finalization in 2023 for business establishments in Ho Chi Minh City, individuals paying income to employees (hereinafter referred to as income payers) and individuals who directly make PIT finalization with tax offices as follows:

I. CASES SUBJECT TO TAX FINALIZATION

1. Individuals making tax finalization directly with tax offices

Resident individuals who earn incomes from salaries or wages from two or more employers who fail to satisfy the conditions for tax finalization authorization as prescribed must make PIT finalization declaration directly with tax offices if they have an additional payable tax amount or request refund of overpaid tax amounts or clearing of such amounts against payable tax in the subsequent tax period.

Individuals present in Vietnam for less than 183 days in the first calendar year, but their presence in Vietnam lasts 183 days or more, counting 12 consecutive months from the first day of presence in Vietnam, the first finalization year shall be 12 months continuously since the first day of presence in Vietnam.

Foreign individuals who have completed their working contracts in Vietnam shall make tax finalization declaration with tax offices prior to their departure from the country. In cases where such individuals have not yet completed tax finalization procedures with the tax offices, they must authorize their income payers or other organizations or individuals to finalize tax in accordance with regulations on tax finalization for individuals. In cases where their income payers or other organizations or individuals are authorized to make finalization, they must be responsible for the additional payable PIT amounts or the refunded amounts of overpaid tax of such individuals.

Resident individuals who earn incomes from salaries or wages paid from overseas, and individuals earning incomes from International organizations, Embassies and Consulates whose PIT has not yet been withheld, must make tax finalization directly with tax offices, if they have an additional payable tax amount or request refund of overpaid tax amounts or clearing of such amounts against payable tax in the subsequent tax period.

Resident individuals who earn incomes from salaries or wages and concurrently are entitled to tax reduction due to natural disasters, fires, accidents or serious diseases affecting their tax payment ability, they may not authorize their income payers to make tax finalization on their behalf but shall make tax finalization declaration directly with tax offices in accordance with law regulations.

2. Organizations, individuals paying incomes from salaries or wages

Organizations and individuals paying incomes from salaries or wages shall make PIT finalization declaration, regardless of withholding tax or not, and make PIT finalization on behalf of the authorizing individuals. In case individuals authorizing other organizations to make PIT finalization and having an additional payable tax amount of VND 50,000 or less after tax finalization are entitled to tax exemption, income payers shall declare information of such individuals in their PIT finalization declaration dossiers and shall not summarize the additional payable tax amount of individuals who have an additional payable tax amount of VND 50,000 or less after tax finalization. In cases where the income payers have made PIT finalization before date on which Decree No. 126/2020/ND-CP took effect, such finalization shall not be processed retroactively.

In cases where a employee is transferred from one organization to another because the former is merged, consolidated, divided, split or transformed, or the two organizations belong to the same system, the new organization shall be responsible for making PIT finalization as authorized by such individual also for the income paid by the old organization and the new income payer shall withdraw the PIT withholding document already issued by the old organization to the individual (if any).

In cases where institutional or individual income payers suffer from dissolution, bankruptcy or termination of operation, termination of contracts or business restructure, they must declare PIT finalization up to the time of dissolution, bankruptcy, or termination of operations, termination of contracts or business restructure. In case of ownership transformation (excluding equitized state-owned enterprises), if the enterprise founded after the transformation inherits all tax obligations of the enterprise subject to transformation, the former shall not be required to declare PIT finalization until the time when there is a decision on the ownership transformation, such enterprise only declares finalization at the end of the year.

3. Authorization to make PIT finalization

Resident individuals who have income from salaries or wages may authorize institutional or individual income payers to make PIT finalization on their behalf, specifically as follows:

- Individual earning incomes from salaries or wages who signs labor contracts of 3 months or more with one employer and is still working for such employer at the time when the institutional or individual income payers make tax finalization, even in cases where he/she has worked for less than full 12 months in a year. If the employee is transferred from old organization to a new organization after the former is subject to merger, consolidation, division, separation, ownership transformation or if the old organization and the newly founded organization belong to the same system, such individuals may authorize the newly founded organization to make tax finalization on their behalf.

- Individual earning incomes from salaries or wages who signs labor contracts of 3 months or more with one employer and is still working for such employer at the time when the institutional or individual income payers make tax finalization, even in cases where he/she has worked for less than full 12 months in a year; and concurrently earns current incomes from other employers with an average monthly income not exceeding VND 10 million and have his/her tax withheld at the rate of 10% without requesting tax finalization for such income.

- After such individuals have made authorization for tax finalization and their income payers have performed tax finalization on their behalf, if it is discovered that such individuals are subject to direct tax finalization with the tax offices, the income payers shall not adjust the PIT finalization of the income payers and shall issue a tax deduction document to the individuals according to the finalization number and write in the lower left corner of the tax deduction document the following content: "The business (name)... has performed PIT finalization on behalf of Mr./Mrs.... (as authorized) in line (serial number) ... of Appendix List 05-1/BK-TNCN" for those individuals to directly finalize tax with tax offices. In cases where the institutional or individual income payers use electronic PIT withholding documents, another PIT withholding document printed from the original PIT withholding documents added with the above content shall be issued to tax payers.

II. CASES NOT SUBJECT TO TAX FINALIZATION

1. For individuals

Individuals earning income from salaries or wages in the following cases shall not be subject to PIT finalization:

- Individuals whose PIT amount must be paid after each year's finalization is VND 50,000 or less. The tax-exempt individuals in this case shall determine the tax amount to be exempted by themselves and shall not be required to submit a PIT finalization dossier or submit a tax exemption dossier. In cases where the finalization period from 2019 or earlier has been finalized before the date on which Decree No. 126/2020/ND-CP took effect, such amount shall not be processed retroactively;

- Individuals whose payable PIT amount is less than the tax amount temporarily paid without requesting a tax refund or tax clearance in the subsequent tax declaration period;

- Individuals earning incomes from salaries or wages who sign labor contracts of 3 months or more with one employer and concurrently earn current incomes from other employers with an average monthly income not exceeding VND 10 million and have their tax withheld at the rate of 10% but do not request tax finalization for such income.

- Individuals for whom their employers buy health insurance (except voluntary pension insurance) or other kinds of optional insurance with accumulated premiums and these employers or insurers have withheld personal income tax at the rate of 10% of the premiums already paid or contributed by the employers, the employees shall not be required to make personal income tax finalization for such income.

2. For organizations and individuals paying income from salaries and wages

Organizations and individuals paying income from salaries and wages that are not subject to PIT finalization include: organizations and individuals that do not pay income during the year; organizations and individuals paying income temporarily suspend their operations and business for the entire calendar year.

III. FAMILY CIRCUMSTANCE-BASED REDUCTIONS

1. Levels of family circumstance-based reductions

Levels of family circumstance-based reduction shall be prescribed in Resolution No. 954/2020/UBTVQH14 dated June 02, 2020 of the National Assembly Standing Committee, specifically as follows:

- Reduction for the taxpayer, which is VND 11 million/month (VND 132

million/year);

- Reduction for each dependent of a taxpayer, which is VND 4.4 million/month.

2. Reduction for dependents

To be eligible for reductions for dependents, taxpayers must register for reductions for dependents as prescribed by law. In cases where the taxpayers have not calculated reductions based on family circumstances for dependents in the tax year, the reduction for dependents shall be calculated from the month when the care obligation arises, when such taxpayers perform tax finalization and register for family circumstance-based reduction for their dependents. Particularly for other dependents, in accordance with the instructions in Item d.4, Point d, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, the deadline to register for family circumstance-based reduction shall be December 31 of the tax year. After the above deadline, family circumstance-based reduction shall not be counted for such tax year.

In cases where such taxpayers make authorization for tax finalization but the family circumstance-based reduction for dependents in the tax year has not been calculated, the reduction for dependents shall also be calculated from the month when the care obligation arises and when such taxpayers conduct authorization finalization and register for reductions based on family circumstances through the income paying organization.

Employees that are working at affiliated units or business locations and are paid income from salaries and wages from headquarter in another province can register for family circumstance-based reduction for dependents at the tax office administering the headquarter or the tax office administering the affiliated units or business locations. In cases where employees register for family circumstance-based reduction for dependents at the affiliated unit or business location, such unit or business location shall be responsible for transferring documents proving the employee's dependents to the headquarter. The headquarter shall be responsible for reviewing and storing documents proving dependents in accordance with law regulations and presenting them when tax offices inspect and examine taxes.

In cases where individuals change their workplace, they must still register and submit documents proving dependents in accordance with the guidelines in Item h.2.1.1.1, Point h, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance.

3. Application dossier for family circumstance-based reductions for dependents

a) For individuals submitting registration dossiers for dependents directly at the tax offices, the documents shall include:

+ Registration form for dependents made using Form No. 07/DK-NPT-TNCN issued together with Appendix 11 of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

+ Dossiers proving their dependents in accordance with instructions at Circular No. 79/2022/TT-BTC dated December 30, 2022 of the Ministry of Finance (amending and supplementing Point g, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance).

+ In cases where the dependent is directly raised by the taxpayer, confirmation must be obtained from the People's Committee of the commune/ward where the dependent resides using Form No. 07/XN-NPT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

b) In cases where individuals register for family circumstance-based reduction for dependents through their institutional or individual income payers, such individuals shall submit a registration application for dependents in accordance with instructions in Point a, Clause 3, Section III of this official dispatch to their institutional or individual income payers. The institutional or individual income payers shall sum up using the Appendix Table of registration for dependents for individuals eligible for family circumstance-based reduction, Form No. 07/THDK-NPT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance and submit to the tax offices in accordance with law regulations.

IV. PROCEDURES FOR TAX FINALIZATION DECLARATION

1. Tax finalization declaration

1.1. Dossiers for PIT finalization declaration

At Point b, Item 9.2 and Point b, Item 9.9, Clause 9, Appendix I issued with the Government’s Decree No. 126/2020/ND-CP dated October 19, 2020 regulating dossiers for PIT finalization declaration

Clause 2, Article 87 of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance provides guidelines as follows: “2. Tax declaration forms specified in this Circular apply to tax periods from January 1, 2022, onward. For the declaration of tax finalization of the 2021 tax period, the tax declaration forms specified in this Circular shall also be used.”

Accordingly, PIT finalization declarations from the 2021 tax period shall be as follows:

a) For individuals making PIT finalization declarations directly with tax offices, the dossier for PIT finalization declarations shall comprise:

- A PIT finalization declaration made using Form No. 02/QTT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

- An Appendix list of family circumstance-based reductions for dependents made using Form No. 02-1/BK-QTT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

+ Copies (from the originals) of documents proving the withheld and temporarily paid tax amount in the year, and tax amount paid overseas (if any). In cases where the income payers do not issue tax withholding documents to individuals because the income payers have ceased operations, tax offices shall base on the tax’s database to consider and process the tax finalization dossier for such individuals without requiring tax withholding documents. In cases where institutional or individual income payers use electronic PIT withholding documents, the taxpayers shall use a copy of the electronic PIT withholding documents (the hard copies printed by the taxpayers themselves, converted from the original electronic PIT withholding documents sent by institutional or individual income payers to taxpayers).

- Copies of tax withholding certificates (clearly stating the tax has been made according to which PIT declaration form) issued by the income payers or copies of bank documents for tax amount paid abroad with confirmation of taxpayers in cases where, according to foreign law, the foreign tax offices do not issue a confirmation of the tax amount paid.

- Copies of invoices and documents proving contributions to charity funds, humanitarian funds, and study promotion funds (if any).

- Documents proving the amount of money paid by the overseas income payer in case the individuals receive income from international organizations, Embassies, Consulates and receive income from foreign countries.

- Registration dossier for dependents made in accordance with the guidelines at Point a, Clause 3, Section III of this Official Dispatch (if calculating reductions for dependents at the time of tax finalization for dependents who have not been registered as dependents).

b) For institutional or individual income payers, the dossier for PIT finalization declarations shall comprise:

- A PIT finalization declaration, made using Form No. 05/QTT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

- A List of individuals subject to tax calculation according to the partially progressive tariff made using Form No. 05-1/BK-QTT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

- A List of individuals subject to tax calculation according to the whole income tariff made using Form No. 05-2/BK-QTT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of Ministry of Finance.

- A List of dependents for family circumstance-based reductions, made using Form No. 05-3/BK-QTT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of Ministry of Finance.

c) In cases where individuals authorize their income payers to make tax finalization on their behalf, they shall make a written authorization to make PIT finalization from the tax period 2021 made using Form No. 08/UQ-QTT-TNCN issued together with Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021 of Ministry of Finance.

1.2. Additional declaration of PIT finalization declaration dossiers

- In cases where organizations or individuals making additional declarations do not change their tax obligations, they only have to submit an Explanation for additional declarations and related documents, and do not have to submit an additional declaration form.

- In cases where organizations or individuals have not submitted an annual tax finalization declaration, taxpayers shall make additional declarations into the tax declaration dossiers of the month or quarter which has errors or omissions and concurrently synthesize the additional declaration data into the annual tax finalization declaration dossier.

- In cases where organizations or individuals have submitted their annual tax finalization declaration dossier:

+ For individuals who directly declare taxes or directly finalize taxes, they only have to make additional declarations to the annual tax finalization declaration dossier.

+ For organizations and individuals that pay income from salaries and wages, they must simultaneously make additional declarations to the annual tax finalization declaration dossier and make additional declarations to the monthly or quarterly declaration forms which have errors or omissions.

2. Places for submitting tax finalization declaration dossiers

Places for submitting the PIT finalization dossiers must comply with specific guidelines in Clause 8, Article 11 of the Government’s Decree No. 126/2020/ND-CP dated October 19, 2020. In cases where individuals declare and submit their PIT finalization declaration at the website https://canhan.gdt.gov.vn, the system shall assist the tax office in determining the finalization based on information related to tax obligations arising in the year which are declared by individuals.

The places to submit the PIT finalization dossiers shall be specifically determined as follows:

2.1. For income payers: shall submit PIT finalization declaration dossiers to the tax offices directly managing them.

2.2. For individuals making tax finalization directly with tax offices:

- Resident individuals who earn salary or wages from one employer and are eligible to self-declare tax during the year shall submit tax finalization declaration dossiers to the tax office where such individuals directly declare tax during the year in accordance with Point a, Clause 8, Article 11 of Decree No. 126/2020/ND-CP. In cases where individuals earn salaries or wages from two or more employers, including cases of having both income subject to direct declaration and income on which PIT already withheld by the income paying organization, such individuals shall submit a tax finalization declaration dossier to the tax office of the locality where they earn the largest income in the year. If it is impossible to determine the largest income in the year, such individuals may submit the tax finalization dossier to the tax office directly managing the income payer or tax office of the locality where they reside.

- Resident individuals with income from salaries and wages subject to withholding by the income paying organization at source from two or more employers shall submit a tax finalization declaration dossier as follows:

+ Individuals who have family circumstance-based reductions of PIT for themselves counted by the institutional or individual income payer shall submit their tax finalization declaration dossier to the tax office directly managing such income payer. In cases where individuals work for more than one employer and the last employer has counted family circumstance-based reductions of personal income tax for them, such individuals shall submit a tax finalization declaration dossier to the tax office managing the last employer. In cases where individuals change their workplace and the last employer has not counted family circumstance-based reductions of personal income tax for them, such individuals shall submit a tax finalization declaration dossier to the tax office where they reside. In cases where individuals have not been counted for family circumstance-based reductions at any income payer, they shall submit a tax finalization declaration dossier at the tax office where they reside.

+ In cases where resident individuals do not sign any labor contracts or sign labor contracts of less than 03 months, or sign a service provision contract with income from one or more employers and have their tax withheld at the rate of 10%, they shall submit a tax finalization declaration dossier at the tax office where they reside.

+ Resident individuals who have income from salaries or wages from one or more employers during the year but at the time of finalization do not work at any institutional or individual income payer, they shall submit a tax finalization declaration dossier at the tax office where they reside.

- Resident individuals who have income from salaries or wages directly subject to PIT finalization with the tax office and have a dossier requesting tax reduction due to natural disasters, fires, accidents, or serious illnesses, they shall submit the tax finalization at the tax office where they submit the dossier requesting for tax reduction. The tax office handling tax reduction request shall be responsible for handling tax finalization dossier in accordance with law regulations.

V. TIME LIMIT FOR SUBMISSION OF TAX FINALIZATION DECLARATION DOSSIERS

Pursuant to the provisions at Points a and b, Clause 2, Article 44 of the Law on Tax Administration No. 38/2019/QH14 of the National Assembly, the deadline for declaring and submitting personal income tax finalization dossier shall be as follows:

- For income payers: The deadline for submitting tax finalization declaration dossiers shall be the last day of the 3^rd month from the end of the calendar year.

- For individuals directly make tax finalization: The deadline for submitting tax finalization dossiers shall be the last day of the 4^th month from the end of the calendar year. In cases where individuals that have PIT amount to be refunded but delays in submitting tax finalization declaration as prescribed shall not be administratively sanctioned for the act of making tax finalization declaration beyond the prescribed time limit.

- In case the deadline for submitting tax finalization documents coincides with a prescribed holiday, the deadline for submitting tax finalization dossiers shall be counted as the next working day after that holiday in accordance with the provisions of the Civil Code.

VI. NOTES WHEN PERFORMING PERSONAL INCOME TAX FINALIZATION

1. Organizations and individuals paying income must ensure that 100% of taxpayers have their full tax code stated in declaration forms for the personal income tax finalization issued together with Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

2. Income paying organizations shall fully declare all individuals receiving income and subject to personal income tax at their unit, including cases that have not yet reached the tax withholding level and cases of having the sole income subject to tax withholding at the rate of 10% while their total taxable income after subtracting family circumstance-based reductions is not enough for tax payment as estimated (prescribed at Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of Ministry of Finance).

3. Currently, tax offices have implemented measures to propagate and guide taxpayers being individuals who are not eligible for authorizing income paying organization to make finalization on their behalf, but are required to make direct finalization with tax offices to declare and pay tax in accordance with law regulations. It is recommended that income paying organizations provide guidelines for such individuals to learn about regulations on subjects who must make tax finalization directly with tax offices so that these taxpayers can make tax finalization in accordance with law regulations and avoid law violations. At the same time, income payers must fully and promptly issue tax withholding documents for individuals to make tax finalization directly with the tax offices (as prescribed in Clause 2, Article 4 of Decree 123/2020/ND-CP dated October 19, 2020).

4. Individuals performing personal income tax finalization directly with the tax offices must declare full information about their income payer (if any) on declaration form 02/QTT-TNCN so that the tax offices have a basis to assign the proper section to handle promptly and in accordance with law regulations.

Tax offices encourage individuals to use electronic tax declaration form (according to instructions in Official Dispatch No. 535/TCT-DNNCN dated March 3, 2021 of the General Department of Taxation), and electronic tax payment for individuals on mobile devices (according to instructions in Official Dispatch No. 4899/TCT-CNTT dated December 14, 2021). On the website of Ho Chi Minh City Tax Department at: http://tphcm.gdt.gov.vn or http://hcmtax.gov.vn, software, installation instructions, account sign-up instructions and instructions to declare personal income tax finalization have been posted so that income payers can easily perform personal income tax finalization electronically.

During the implementation process, if there are any problems, taxpayers are requested to contact the directly managing tax office for guidance and support./.

For the Director

The Deputy Director

NGUYEN TIEN DZUNG