Under the applicable laws
on Personal Income Tax (“PIT”), the Employer as the income-paying
organization who pays income subject to PIT, must conduct tax declaration and
tax finalization in accordance with the guidelines on procedures and
documentation in the documents providing guidelines on tax management.
The principles of tax
declaration are notably as follows:
i.
The Employer withholds PIT make tax declaration on a monthly or
quarterly basis. No tax declaration is required if no PIT is withheld in the
month or quarter by the income-paying organization or individual.
ii.
Tax declaration on a monthly or quarterly basis is determined once from
the first month in which tax is withheld and applies for the entire tax
assessment year. In case the Employer withholds 50 million Vietnam Dong or more
of tax in a month on at least one type of personal income tax declaration form
must make tax declaration on a monthly basis, , except for income-paying
organizations and individuals in the category of quarterly value added tax
declaration. If not, the Employer will be subject to tax declaration on a
quarterly basis.
iii.
Regardless of whether tax is withheld, the Employer is responsible for
declaring PIT finalization and finalizing PIT on behalf of authorizing
individuals. In case the employee does not authorize the Employer to perform
the annual PIT finalization, the Employer will provide only the PIT
finalization declaration to the employee and the employee will be responsible
for the annual PIT finalization at the tax authority.
Besides, the Employer is
responsible for registration works, e.g. register for tax code in case the
staff does not have that one at the time of employment or register for the
staff’s dependants at the time of employment or when having the change on the
information of the dependant.
The Employer is also
responsible for tax withholding by the calculation and deduction of the amount
of tax payable from the income of the staff before paying such income under the
applicable laws on PIT.
In case the locally engaged
staff is a resident individual who signs a labour contract for three months or
more, the Employer withholds tax in accordance with the progressive tax tariff,
including the case where the staff signs contracts for three months or more in
more than one locations.
In case the locally engaged staff is a resident
individual who signs a labour contract for three months or more but terminates
employment before the expiry of the contract, the Employer still withholds tax
in accordance with the progressive tax tariff.