3 notes when declaring personal income tax under the new law

1. Income under 11 million VND/month still has to declare tax

Specifically, at Point b, Clause 3, Article 7 of Decree 126/2020 amending the regulations, organizations and individuals paying income that does not incur personal income tax deductions on a monthly or quarterly basis must still declare taxes.

"Article 7. Tax declaration dossier

3. Taxpayers are not required to submit tax returns in the following cases:

b) Individuals with income exempted from tax according to the provisions of the law on personal income tax and the provisions at Point b, Clause 2, Article 79 of the Law on Tax Administration, except for individuals receiving inheritance or gifts of real estate; transferring real estate".

Income under 11 million VND/month still has to declare tax. Illustrative photo

"Article 16. Tax declaration and payment of personal income tax

1. Tax declaration and payment for organizations and individuals paying income subject to personal income tax

a) Tax declaration principles

a.1) Organizations and individuals paying income with personal income tax deductions must declare tax monthly or quarterly. In case the organization or individual paying income does not incur personal income tax deductions during the month or quarter, they do not have to declare tax..."

Thus, according to the new regulations in Decree 126/2020, organizations and individuals paying income that does not incur personal income tax deductions on a monthly or quarterly basis must still declare taxes.

For example: People with income from salary below the family deduction level (ie below 11 million VND/month) do not have to pay personal income tax, but organizations and individuals paying income still have to declare tax.

2. Non-resident individuals with income from salaries and wages are not required to declare and settle personal income tax.

Pursuant to Point d.3, Clause 6, Article 8 of Decree 126/2020/ND-CP, individuals with additional tax payable or overpaid tax who request a refund or offset in the next tax declaration period shall directly declare and settle personal income tax with the tax authority, except in the following cases:

- Individuals with additional tax payable after settlement of each year from 50,000 VND or less (new);

- Individuals whose tax payable is less than the provisionally paid tax amount without requesting a tax refund or offset against the next tax declaration period;

- Individuals with income from salary and wages who sign a labor contract for 3 months or more at a unit, and have irregular income in other places with an average monthly income of no more than 10 million VND in the year and have had personal income tax deducted at a rate of 10%, if there is no request, do not have to finalize tax on this income;

- For individuals whose employers purchase life insurance (except voluntary pension insurance), other non-compulsory insurance with accumulated insurance premiums, for which the employer or insurance company has deducted personal income tax at a rate of 10% on the insurance premium amount corresponding to the portion purchased or contributed by the employer for the employee, the employee does not have to finalize personal income tax on this portion of income (new).

3. Conditions for quarterly tax declaration for taxpayers subject to monthly personal income tax declaration

Pursuant to Point a, Clause 1, Article 8 and Clause 1, Article 9 of Decree 126/2020/ND-CP,taxpayerIf you are eligible to declare personal income tax on a quarterly basis, you can choose to declare personal income tax on a quarterly basis, specifically:

- Taxpayers who are required to declare value added tax monthly if their total revenue from sales of goods and provision of services in the previous year is VND 50 billion or less are eligible to declare value added tax quarterly. Revenue from sales of goods and provision of services is determined as the total revenue on value added tax declarations of tax periods in the calendar year.

If the taxpayer makes centralized tax declarations at the head office for dependent units and business locations, the revenue from the sale of goods and provision of services includes the revenue of the dependent units and business locations.

- In case the taxpayer has just started operating or doing business, he/she can choose to declare value added tax quarterly. After 12 months of production and business, from the calendar year following the year that has completed 12 months, the revenue of the previous calendar year (complete 12 months) will be used to declare value added tax monthly or quarterly.

Thus, businesses need to compare with the conditions for declaring quarterly value added tax as a basis for declaring quarterly personal income tax for employees of their businesses.

Note: Quarterly personal income tax declaration is determined once from the first quarter in which the tax declaration obligation arises and is applied stably throughout the calendar year.

In addition to the above 3 notes, taxpayers need to remember the deadline for personal income tax settlement in 2020 as follows:

- If authorizing an organization (enterprise, cooperative, etc.) or individual to pay income, the tax settlement deadline is the last day of the 3rd month from the end of the calendar year (delayed by 1 day).

- If individuals directly settle with the tax authority, the final settlement deadline has been postponed by 01 month compared to before (the last day of the 4th month from the end of the calendar year).

- Individuals who have a tax refund request can submit it at any time without being subject to administrative penalties for late submission of documents.