Nội dung toàn văn Official Dispatch No. 937/TCT-TNCN, On 2006 personal income tax finalization
THE MINISTRY OF FINANCE | SOCIALIST REPUBLIC OF VIET NAM |
No. 937/TCT/TNCN | Hanoi, March 06, 2007 |
To: Provincial/municipal Tax Departments
The finalization of income tax on high-income earners (hereinafter referred to as personal income tax – PIT) shall be carried out under the provisions of the Ordinance on Income Tax on High-Income Earners and current guiding documents. Besides, the Ministry of Finance and the General Department of Taxation issued in 2006 a number of documents specifically guiding the determination of taxable income, non-taxable income and income for tax calculation, etc., for a number of business lines and professions. To ensure that the 2006 PIT finalization is conducted consistently according to regulations, the General Department of Taxation requires Tax Departments to pay attention to the following matters:
1. The determination of working mission allowances not liable to PIT:
Working mission allowances not liable to PIT are regulated in the Ministry of Finance’s Circulars No. 118/2004/TT-BTC of December 8, 2004, and No. 91/2005/TT-BTC of October 18, 2005. For units currently applying the levels of allowance (for domestic and overseas working missions) suitable to their operation or production and business characteristics and when those allowances are accepted to be accounted as their reasonable expenditures, working mission allowances paid to their employees are not liable to PIT provided that they do not exceed the level specified in the above two Circulars of the Ministry of Finance.
Particularly for projects or programs signed between the Vietnamese Government and foreign governments or organizations and for each of those projects or programs the Vietnamese Government has approved the specific working mission allowance limits, working mission allowances paid to their employees are also not liable to PIT.
2. Some specific cases of determination of taxable incomes of foreigners:
- For foreigners who, upon retirement, receive pension allowances from their overseas parent companies, if they had some times working in Vietnam, their pension allowances are liable to PIT corresponding to their working periods in Vietnam. Their taxable income shall be calculated according to the following formula:
PIT-liable income | = | Received pension allowance | x | Period of working in Vietnam ---------------------------------------------- Total period of working in Vietnam and overseas for which the allowance is paid |
- For foreigners working as non-residents in Vietnam and having incomes of which income earned from their work performed in Vietnam cannot be separated, their total income earned in Vietnam shall be determined by either of the following methods:
Total income earned in Vietnam | = | Number of days of working in Vietnam | x | Incomes being (pre-tax) salaries and remuneration earned elsewhere | + | Other taxable (pre-tax) incomes earned in Vietnam |
Total number of working days in the year |
(*) Total number of working days in the year is calculated according to the relevant provisions of the Labor Code of Vietnam.
Or:
Total income earned in Vietnam | = | Number of days of presence in Vietnam --------------------- 365 days | x | Incomes being (pre-tax) salaries and remuneration earned elsewhere | + | Other taxable (pre-tax) incomes earned in Vietnam |
Example: Mr. Takamura, a Japanese, was sent by Japan-based company X to work on a part-time basis in a representative office of company X in Vietnam from January 1, 2006. His monthly salary of USD 10,000 (USD 120,000 a year) is paid by company X. The total period of Mr. X’s presence in Vietnam is 150 days, of which the number of actual working days is 105 (he is a non-resident in Vietnam). The total number of working days in 2006 is 260 days. Mr. Takamura’s income earned in Vietnam can be determined by either of the following two methods:
+ Method 1:
Total income earned in Vietnam | = | 105 days ---------------------- 260 days | x | USD 120,000 | = | USD 48,462 |
The payable PIT amount: USD 48,462 x 25% = USD 12,115
+ Method 2:
Total income earned in Vietnam |
= | 150 days ----------------------- 365 days |
x |
USD 120,000 |
= |
USD 49,315 |
The payable PIT amount: USD 49,315 x 25% = USD 12,328
- For foreigners working in Vietnam who have not yet determined as residents or non-residents in Vietnam and have additional incomes from extra-jobs done outside their main working places (for example, a foreigner working at a representative office who also has income from writing royalties or teaching remunerations), their income-paying agencies shall withhold 10% of each payment of VND 500,000 or more as PIT and grant tax withholding documents to those foreigners. At year end or before leaving Vietnam, those foreigners shall make declarations for PIT finalization with tax offices in order to determine payable tax amounts according to regulations.
3. Some other issues:
- Regarding incomes earned at non-public establishments by individuals managed by public establishments defined in the Government’s Decree No. 53/2006/ND-CP of May 25, 2006, which replaces the Government’s Decree No. 73/1999/ND-CP of August 19, 2006: The guidance in the General Department of Taxation’s Official Letter No. 3570/TCT-TNCN of September 22, 2006 shall be complied with.
- The PIT withholding and finalization with respect to individuals acting as agents of pyramid selling organizations will continue complying with the guidance provided in the General Department of Taxation’s Official Letter No. 1179/TCT-TNCN of April 3, 2006 (under which tax finalization declaration Form No. 08/TNTX promulgated together with the Ministry of Finance’s Circular No. 12/2005/TT-BTC of February 4, 2005, is replaced by Form No. 08a/TNTX or 08b/TNTX promulgated together with the Ministry of Finance’s Circular No. 41/2006/TT-BTC of May 12, 2006).
For individuals acting as collectors of electricity, water or telephone charges without business registration, the PIT withholding and finalization shall be made as for pyramid selling agents under the guidance provided in Official Letter No. 1179/TCT-TNCN From 2007, the PIT withholding and finalization for those individuals must comply with the guidance in the Ministry of Finance’s Official Letter No. 6209/BTC-TCT of May 17, 2006.
- The retrospective collection of PIT from income-paying units that have not yet withheld 10% of total paid income must comply with the guidance provided in the Ministry of Finance’s Official Letter No. 6170/BTC-TCT of May 17, 2006, guiding the PIT withholding.
- Regarding tax payment accounts of income-paying agencies: PIT amounts calculated according to the partially progressive table of rates and declared according to form No. 03a/TNTX shall be remitted into the state budget account (TK 741); withheld PIT amounts equal to 10% of current personal incomes declared according to Form No. 03b/TNTX shall be remitted into the PIT custody account (TK 920). When making annual finalizations, income-paying units may not make clearing but shall separately monitor tax amounts to be paid (if any) into these two accounts. When writing remittance notes for amounts to be additionally remitted after finalizations are made, these units shall separate amounts remitted into the PIT custody account (TK 920) from amounts remitted into the state budget account (TK 741).
The General Department of Taxation would like to notify the above contents to provincial-level Tax Departments for implementation guidance. Should any problems arise, provincial-level Tax Departments should promptly report them to the General Department of Taxation for study and solution.
(Photocopies of the above Official Letters are enclosed herewith)
| FOR THE GENERAL DIRECTOR OF TAXATION |
