Công văn 3611/CT-TTHT

Dear MITRA ADIPERKASA VIETNAM Co., Ltd.

Address: 4A Floor, Vincom Center Tower, 72 Le Thanh Ton Street, Ben Nghe Ward, District 1, HCMC.
TIN: 0312886947

In reply to your Official Correspondence No. MAP/01/2018-12 dated December 10, 2018 concerning queries about tax policies, the Tax Department would like to give you opinions stated hereunder:

Pursuant to Article 25 in the Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, regarding personal income tax (PIT) withholding:

“ Article 25. Tax withholding and documents on tax withholding

1. “1. Tax withholding

Tax withholding is the income payer’s calculating and withholding the tax payable from the taxpayer’s income before paying the income to the tax payer in the following specific cases:

…

b) Incomes from salaries and wages

b.1) The income payer shall deduct taxes from incomes of residents that sign labor contracts for 03 months or longer according to the progressive tax table, including the persons that sign such contracts at various places.

b.2) The income payer shall still withhold tax from the incomes earned residents that sign labor contracts for 03 months but resign before such labor contracts expire according to the progressive tax table.

b.3) The income payer shall withhold tax from the incomes earned by the foreigners working in Vietnam based on the duration of work in Vietnam written in the contract or letter of introduction according to the progressive tax table (if the person has worked in Vietnam for at least 183 days in the tax year) or the whole income tax table (if the person has worked in Vietnam for fewer than 183 days in the tax year).

…

i) Withholding tax in other cases

The organization or person that pays a total income from 2 million VND to a resident that does not sign a labor contract (as guided in Point c and Point d Clause 2 Article 2 of this Circular) or that signs a labor contract for less than 03 months shall withhold 10% tax on the income before it is paid to that resident.

For the person that earns only a taxable income at the rate as stated above but the total taxable income estimated after personal deductions are made does not reach the taxable level, the person shall make and send a commitment (the form is provided in the guiding documents on tax administration) to the income payer as the basis for temporarily exempting the income from personal income tax.

Based on the commitment made the income earner, the income payer shall not withhold tax.  At the end of the tax year, the income payer shall make a list of persons that earn incomes below that taxable level (the form is provided in the guiding documents on tax administration) and send it to the tax authority. The persons are responsible for the commitments they made. Any deceit discovered shall be penalized in accordance with the Law on Tax Administration.

The persons that make commitments as guided in this Point shall obtain tax registration and have tax identification numbers when the commitments are made”.

Pursuant to Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance, providing instructions on implementation of VAT and PIT with regard to business residents; guiding implementation of several amendments or supplements related to PIT specified in the Law on Amendments and Supplements to several Articles of Laws on Taxation No. 71/2014/QH13 and Government’s Decree No. 12/2015/ND-CP dated February 12, 2015, regulating details about implementation of the Law on Amendments and Supplements to Laws on taxation, and amendments or supplements to several Articles of Decrees on Taxation; 

By your own account, if you have signed a probationary employment contract having the term of less than 3 months with an employee, have withheld PIT at the 10% rate from his/her probationary income, and have signed an official labor contract having the term of at least 3 months with him/her after termination of his/her probationary period and have withheld PIT, calculated according to the progressive taxation table, from his/her wages or salaries, you will not have to re-assess PIT according to the progressive taxation table for his/her probationary period.

When carrying out the annual PIT finalization procedures, you must specify all income payments to your employees who are eligible for authorization for PIT finalization and have already authorized you to do so in the Chart No. 05-1BK-QTT-TNCN of the sample Declaration Form No. 05/QTT-TNCN annexed to the Circular No. 92/2015/TT-BTC; with regard to your employees who are not eligible for authorization for PIT finalization or have quit before the date of PIT finalization, you must clarify their income from wages or salaries already withheld according to the progressive taxation table in the Chart No. 05-1BK-QTT-TNCN, their income already withheld at the 10% rate in the Chart No. 05-2BK-QTT-TNCN of the sample Declaration Form No. 05/QTT-TNCN annexed to the Circular No. 92/2015/TT-BTC as stated above, and then must issue documents evidencing PIT withholding so that these employees can carry out the PIT finalization procedures at their discretion in accordance with regulations in force.

If you sign a labor contract having the term of less than 3 months with a resident employee who receives total income of at least 2,000,000 dong (two million dong) per each payment, and that employee earns only one source of income like this and his/her estimated gross income subject to family relief-inclusive PIT has not reached the taxable amount, he/she may sign and send a commitment (made by using the form No. 02/CK-TNCN annexed to the Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance) to you so that you can use it as a basis to granting him/her a temporary exemption from the PIT withholding requirement according to instructions given in point i of clause 1 of Article 25 in the Circular No. 111/2013/TT-BTC.

We are sending this document for your information and looking forward to your compliance with regulations laid down in legislative documents mentioned herein.