Things to keep in mind when calculating the latest personal income tax

Law on Personal Income Tax – Law No. 26/2012/QH13, Circular 111/2013/TT-BTC and Circular 92/TT-BTC. 

Things to pay attention to before calculating personal income tax:

– The time to determine income subject to personal income tax is the time of income payment.

For example: Your company pays employee A's December 2018 salary on January 3, 2019, then calculate personal income tax in January 2019.

– Calculate personal income tax according to the Partial Progressive Schedule: For resident individuals who sign a labor contract of 3 months or more (Including signing a contract of 3 months at many places and quitting work before the end of the labor contract ).

– Calculate personal income tax according to the full tax schedule: For resident individuals who do not sign a labor contract or sign a labor contract of less than 3 months with a total income payment of two million (2,000,000) VND/time or more Tax must be deducted at the rate of 10% on income before paying to individuals.

See more —->> How to calculate personal income tax for labor contracts with less than 03 months of probationary period

Bonuses and annual leave payments after termination of the labor contract are subject to tax at the following rates:

– In case when terminating the labor contract, in addition to the legal severance pay (tax-exempt), the Company also pays other benefits, annual leave and bonuses to the employee, these amounts must be calculated. personal income tax (Clause 2, Article 2, Circular 111/2013/TT-BTC).

– Tax deduction level applies accordingly progressive expression, if paid with the salary of the last month of employment or applicable ratio 10%, if payment is made after the termination of the labor contract (Clause 1, Article 25 of Circular 111/2013/TT-BTC).

(Official Letter No. 7595/CT-TTHT dated August 10, 2017 of Ho Chi Minh City Tax Department)

Prizes won at the year-end party must also be subject to personal income tax:

– Accordingly, in case the Company organizes a lucky draw program to give gifts to employees at the year-end party, the winning value must be added to the salary to calculate personal income tax according to the progressive schedule.

(Official Dispatch No. 4991/CT-TTHT dated June 1, 2017 of Ho Chi Minh City Tax Department)

How to calculate personal income tax for workers residing for less than 3 months:

– Resident individuals who do not sign a labor contract or sign a labor contract for less than 3 months and have a total income of 2,000,000 VND/time or more must Deduction 10% before paying income.

For example: If your company hires seasonal workers and pays: 2,500,000 and an allowance of 200,000, then:

Personal income tax must be paid = (2,500,000 + 200,000) x 10% = 270,000 (Calculated according to the full tax schedule, total income)

– In case an individual has only income that is subject to tax deduction at the rate mentioned above, but the estimated total taxable income of the individual after deducting family circumstances is not yet at the level of having to pay tax, the individual can income as a commitment (according to form 02/CK-TNCN) sent to the income payment organization so that the income payment organization can use it as a temporary basis for not deducting personal income tax.

=> Based on the commitment of the income recipient, the organization paying the income does not deduct tax. At the end of the tax year, the income paying organization must still compile a list and the income of individuals who have not yet reached the tax deduction level (on the form issued with the guiding document on tax management) and submit it to the tax authority. tax office. The individual making the commitment must be responsible for his/her commitment. In case of detection of fraud, it will be handled according to the provisions of the Law on Tax Administration.

– The individual making the commitment must register for tax and have a tax code at the time of commitment.