I. TAX POLICY
1. Taxpayers should not hire unregistered groups or individuals to provide tax settlement services, which may result in the theft of taxpayers’ personal information to commit other illegal acts in cyberspace.
Implementing the directions of the Government and the Ministry of Finance in reforming administrative procedures, developing e-Government and the national digital transformation program, the Tax sector has promoted modernization and application of IT to support taxpayers in declaring, paying taxes and refunding taxes electronically quickly and conveniently.
In supporting individual taxpayers, since 2022, the General Department of Taxation has widely deployed the Etaxmobile application for individual taxpayers. Through the Etaxmobile application, taxpayers can look up information on tax obligations, registration information on personal tax codes, registration information for deductions for dependents, receive tax notifications, pay taxes electronically through a link with a bank account, carry out tax settlement procedures, refund personal income tax, report to the tax authority about incorrect or inaccurate income declared by the paying organization to the tax authority and other utilities that help create favorable conditions for individuals in the process of finding information on tax obligations and tax calculation methods. In addition to the conveniences of electronic tax services that the tax sector has deployed, there are still some cases where individuals use “personal income tax refund services from social networking sites” without verification, and there is even a phenomenon of “brokers” enticing individuals to use tax settlement services, thereby requiring individuals to provide all accounts and passwords of the Etax Mobile application to “individuals who receive the service” to carry out tax refund procedures, which in reality leads to some cases where individuals are taken advantage of and defrauded. In addition, when individuals hire groups and individuals without business registration or tax service practice certificates to provide tax settlement services, their personal information can be stolen to commit other illegal acts in cyberspace.
Currently, the procedure for performing online personal income tax settlement is carried out through the software and website of the General Department of Taxation, creating great convenience for citizens. Taxpayers can take the initiative in time and location, submit documents quickly and easily, without having to go directly to the tax authority to complete the procedures. Therefore, the Large Enterprise Tax Department recommends that individual taxpayers absolutely do not provide personal information to unidentified subjects. Individual taxpayers should submit documents online on the software and website of the General Department of Taxation.
To ensure the rights and interests of taxpayers, the Large Enterprise Tax Department recommends that income-paying enterprises and organizations:
– Propagate and disseminate to employees to register and use electronic transaction accounts with tax authorities to facilitate the settlement and refund of personal income tax, coordinate with the Large Enterprise Tax Department to support and recommend employees to install and use the EtaxMobile application. Individual taxpayers absolutely must not provide personal information, account information, passwords to other subjects to avoid cases where bad subjects take advantage, scam and use illegal accounts.
– Taxpayers do not download or install applications via links (urls) or other unofficial instructions, note some signs of fraudulent applications such as: when installing the application, it often asks for permission to view the screen, input data, control the screen…
– Applications provided by the General Department of Taxation at the following addresses: Tax Declaration Support Application (HTKK) provided on the tax industry’s information page at: https://www.gdt.gov.vn; Electronic tax service portal at: https://thuedientu.gdt.gov.vn; eTax Mobile application provided via Google Play (for devices using Android operating system), Apple Store (for devices using iOS operating system).
2. Determine where to submit personal income tax finalization documents
In January-November 2023, Ms. Vo Thi Thanh Truc (Long An) signed a labor contract and paid social insurance at Company A (the tax authority is the Long An Provincial Tax Department). In December 2023, she signed a probationary contract and had 10% of her personal income tax deducted at Company B (the tax authority is the Dong Thap Provincial Tax Department).
From January 30, 2024 to present, Ms. Truc signed a labor contract, paid social insurance and had her family deducted at the above-mentioned Company B.
She submitted her 2023 personal income tax settlement dossier with an attached labor contract signed on January 30, 2024 with Company B to the Dong Thap Provincial Tax Department. However, she received a notice of non-acceptance of the tax refund request, stating that she was not subject to tax settlement at the Dong Thap Provincial Tax Department.
Ms. Truc asked, was the tax officer’s notification correct? In your case, according to the law, which tax authority should you submit to? Is the time for finalizing personal income tax in 2023 the time of submitting documents to the tax authority or the time of receiving income?
As far as you know, based on Official Dispatch No. 4172/TCT-DNNCN dated September 20, 2023 of the General Department of Taxation on promoting the processing of personal income tax refund dossiers, the time for finalizing personal income tax in the year is determined to be the time of submitting documents to the tax authority.
Regarding this issue, the Dong Thap Provincial Tax Department has the following comments:
In Clause 8, Article 11 of Decree No. 126/2020/ND-CP dated October 19, 2020 of the Government stipulating a number of articles of the Law on Tax Administration, it is stipulated that:
“Article 11. Place of submission of tax declaration dossiers
Taxpayers shall comply with the provisions on the place of submission of tax declaration dossiers as prescribed in Clauses 1, 2 and 3, Article 45 of the Law on Tax Administration and the following provisions:
… 8. Place of submission of tax declaration dossiers for taxpayers who are individuals with tax obligations arising from income from salaries and wages that are subject to personal income tax finalization as prescribed in Point d, Clause 4, Article 45 of the Law on Tax Administration as follows:
… b.2) Resident individuals with income from salaries and wages subject to deduction at source by organizations from two or more places shall submit tax finalization declaration dossiers as follows:
Individuals who have calculated family deductions for themselves at any organization or individual paying income shall submit their tax finalization declaration dossiers to the tax authority directly managing the organization or individual paying that income. In case an individual changes their workplace and the organization or individual paying the last income calculates family deductions for themselves, they shall submit their tax finalization declaration dossiers to the tax authority managing the organization or individual paying the last income. In case an individual changes their workplace and the organization or individual paying the last income does not calculate family deductions for themselves, they shall submit their tax finalization declaration dossiers to the tax authority where the individual resides. In case an individual has not calculated family deductions for themselves at any organization or individual paying income, they shall submit their tax finalization declaration dossiers to the tax authority where the individual resides.
In case a resident individual does not sign a labor contract, or signs a labor contract for less than 03 months, or signs a service provision contract with income at one or more places where 10% has been deducted, the tax finalization declaration must be submitted to the tax authority where the individual resides. Individuals residing in the year with income from salaries and wages at one or more places but at the time of settlement do not work for any organization or individual paying income, the place to submit tax settlement declaration is the tax authority where the individual resides…”.
Based on the above provisions, in the case of Ms. Vo Thi Thanh Truc, from January to November 2023, working at Company A, signed a labor contract and calculated family deductions for herself at Company A managed by the Long An Provincial Tax Department.
By December 2023, Ms. Vo Thi Thanh Truc changed her workplace to Company B managed by the Dong Thap Provincial Tax Department and did not calculate family deductions for herself at Company B, the place to submit tax settlement declaration is the tax authority where the individual resides.
Therefore, according to Notice No. 1485/TB-CTDTH-KDT dated September 17, 2024 of the Dong Thap Provincial Tax Department on the dossier not meeting the conditions for completion The tax authority requests Ms. Vo Thi Thanh Truc to cancel the declaration at the Dong Thap Provincial Tax Department and return the 2023 personal income tax finalization declaration to the tax authority where the individual resides, which is in accordance with tax law regulations.
The Dong Thap Provincial Tax Department informs Ms. Vo Thi Thanh Truc to comply with the provisions of the legal documents cited in this document. Source: Chinhphu.vn
3. If a company pays salaries and wages to employees working at a subsidiary in a province other than the head office, the company is subject to personal income tax allocation
Official Letter No. 53249/CTHN-TTHT dated September 27, 2024 of the Hanoi Tax Department guiding the declaration and payment of personal income tax from salaries and wages for business locations in other provinces
The Hanoi Tax Department received Official Letter No. 1209/2024/VINBRAIN-CV dated September 12, 2024 of VinBrain Joint Stock Company (hereinafter referred to as the Company) on instructions for declaration and payment of personal income tax from salaries and wages for business locations in other provinces. Regarding this issue, the Hanoi Tax Department has the following comments:
– Pursuant to Circular 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance guiding the implementation of a number of articles of the Law on Tax Administration and Decree No. 126/2020/ND-CP dated October 19, 2020 of the Government.
+ In Article 12, guidance on the allocation of tax obligations of taxpayers with centralized accounting who have dependent units and business locations in provinces other than the head office:
+ In Article 19, guidance on tax declaration, tax calculation, allocation and payment of personal income tax:
Based on the above provisions, in case the Company pays salaries and wages to employees working at dependent units in provinces other than the head office, the Company is subject to personal income tax allocation according to the provisions of Clause 1, Article 19 of Circular No. 80/2021/TT-BTC. The Company shall declare, calculate, allocate and pay personal income tax in accordance with the provisions of Clause 2 and Clause 3, Article 19 of Circular No. 80/2021/TT-BTC.
4. Contractual fines are only accounted for at a maximum of 8%
Enterprises incur a contract violation fine of 12%/value of the breached contractual obligation (according to the terms of the signed contract). According to the provisions of the Commercial Law 2005, “the level of commercial contract violation fines is agreed upon by the parties in the contract, but not exceeding 8% of the value of the breached contractual obligation”. In this case, at what level should the Enterprise calculate the deductible expenses when calculating corporate income tax?
Journal of Corporate Finance:
Pursuant to Article 301. Penalties for violations of the Commercial Law No. 36/2005/QH11
“The penalty for breach of contractual obligations or the total penalty for multiple violations shall be agreed upon by the parties in the contract, but shall not exceed 8% of the value of the breached contractual obligation, except for the case specified in Article 266 of this Law”
Pursuant to Article 4 of Amendments and supplements to Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Clause 2, Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) Circular 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance stipulates deductible and non-deductible expenses when determining taxable income.
“2.36. Fines for administrative violations include: traffic violations, violations of business registration regimes, violations of accounting and statistics regimes, violations of tax laws including late tax payment fees as prescribed by the Law on Tax Administration and other administrative fines as prescribed by law.”
Accordingly, in case an Enterprise incurs expenses for fines and compensation due to violations of economic contracts (purchase and sale of ordinary goods, not construction) with customers, it will only be calculated as 8% corporate income tax expense as prescribed. Source: https://taichinhdoanhnghiep.net.vn
I. LABOR – EMPLOYMENT
1. Fine up to 25 million VND if foreigners lack work permits
How will foreign workers working in Vietnam without work permits be fined?
Lawyer Nguyen Thu Thuy, YouMe Law Firm:
Clause 3 and Clause 5, Article 32, Chapter II of Decree No. 12/2022/ND-CP stipulating administrative sanctions in the fields of labor, social insurance, and Vietnamese workers working abroad under contracts (Decree No. 12/2022/ND-CP) stipulates violations of regulations on foreigners working in Vietnam as follows:
3. A fine of VND 15,000,000 to VND 25,000,000 shall be imposed on foreign workers working in Vietnam who commit one of the following acts:
a) Working without a work permit or without a document confirming that they are not subject to a work permit as prescribed by law;
b) Using a work permit or a document confirming that they are not subject to a work permit that has expired.
5. Additional forms of sanctions
Expulsion of foreign workers working in Vietnam for violating the provisions of Clause 3 of this Article.
Clause 1, Article 6 of Decree No. 12/2022/ND-CP stipulates the level of fines, the authority to impose fines and the principles applicable to repeated administrative violations as follows:
Thus, foreign workers working in Vietnam without a work permit may be fined from VND 15,000,000 to VND 25,000,000 and expelled from Vietnam according to the above provisions. Source: https://laodong.vn
