TAX FLASHPERSONAL INCOME TAX
18 March 2021

IN THIS ISSUE:

Guidance on 2020 PIT finalization► Guidance on 2020 PIT finalization

The General Department of Taxation recently provided some guidance via its website regarding
2020 PIT finalization under the spirit of the Law onTax Administration No. 38/2019/QH14.

► Official Letter No. 99064/CTHT-TTHT dated 13November 2020 by Hanoi Tax Department onPIT finalization► Official Letter No. 5032/TCT-CS dated 26 November 2020 by General Department of Taxation on quarantine expenses incurred for thepurpose of Covid-19 prevention and control► Official Letter No. 27401/CT-TTHT dated 01 December 2020 by Binh Duong Tax Department on
PIT in connection with allowances and financial
support to employees upon termination of laborcontracts► Official Letter No. 8537/CTHDU-TTHT dated 17
December 2020 by Hai Duong Tax Department
on PIT of foreign employees of the foreign contractor► Official Letter No. 164/CTBNI-TTHT dated 03
February 2021 by Bac Ninh Tax Department on
the sales brokerage fees

We would like to summarize some of the more salient points of such guidance as follows:
Deadline for submission of PIT finalization
dossiers► Regarding individuals directly finalizing PIT withthe tax authority: 30 April 2021.
► Regarding employers: 31 March 2021.
Statutory relief► Personal relief: 11 million dong/ month.
► Dependent relief: 4.4 million dong/ person/month.
The rates above apply from the 2020 tax period.
Cases in which individuals can authorize PIT
finalization
Individuals with a payable PIT amount ofVND50,000 or more or overpaid tax and wishing torequest for a tax refund are liable for preparing the2020 year-end PIT returns.
Individuals may authorize the income payers tohandle the PIT finalization in the following cases:► Individuals who have only one source of income under a labor contract or have income
from other sources but their average monthly
income do not exceed 10 million VND and havebeen subject to 10% PIT withholding.

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► Employees are transferred from one organization to a new one when a company is divided,
split, amalgamated, merged, or converted or
the two companies are in the same system(individuals may authorize tax finalization tothe new employer)

Individuals not eligible for authorization are liable
for finalizing their PIT directly with the tax authorities.
PIT finalization dossiers► In case of PIT authorization:
Form No. 02/UQ-QTT-TNCN; A copy of invoices, proof of charitable donations, humanitarian contributions, study encouragement (ifany) submitted to the employers.
► In case of filing PIT directly with the tax authority:
Tax finalization return form No. 02/QTTTNCN, Appendix form No. 02-1/BK-QTTTNCN, tax deduction vouchers, copies or photos of documents proving the tax amount paidabroad (if any), contributions to charity funds,
other eligible funds (if any), documents proving the amount paid by the company or overseas income payers (if individual has income
from abroad).
Where to file your 2020 year-end PIT returns?
► In case individuals authorizing PIT finalization:
Submit the dossier to the employers.
An Independent member of UHY International► In case individuals directly finalizing PIT: To submit PIT finalization dossiers for individuals withsalary or wage income in two or more sources ofincome to the tax authority where the largest partof income is earned.
► Regarding individuals directly preparing tax finalization electronically: In addition to using theabove tax declaration support application, taxpayers can declare tax directly via the portal of
the General Department of Taxation.
Tax finalization via electronic method
To submit tax returns electronically, taxpayers needto register an Electronic Tax Transaction Accountwith the tax authority.
This helps taxpayers reduce administrative burden
procedures and save taxpayers’ time of visiting tax
offices to fulfill their PIT finalization obligations.
Other notesPayers and individuals should pay attention to benefits in kind such as membership fees for individuals,
expenses for employees’ family members, quarantine expenses etc to ensure no under-declaration oftaxable income and hence, minimizing the PIT risks
upon a PIT audit by the local tax authorities.
In case employers and individuals with PIT finalization obligations require any clarification or support
with effective PIT finalization, please do not hesitate
to contact us.

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PIT finalization

PIT regarding allowances and support for
employees upon contract termination

A lump sum contract is signed between a corporate
taxpayer and a non-business individual who represents a group of individuals to perform the agreed
work as agreed. In case the taxpayer withholds
10% PIT upon making the payments, however, unable to determine the respective income of eachindividual in the group, when finalizing PIT using
the form 05/QTT-TNCN, the taxpayer declares thesalary and wage amounts paid to the group leader
in the Form 05-2/BK-QTT-TNCN.

► Regarding severance allowances for employee
who has ceased working under the provisionsof the Social Insurance Law and the LaborCode:

At the end of the year, individuals must sum up all
income from wages and remunerations paid in thetaxable year to finalize PIT with the tax authority ifthey are subject to PIT finalization.
(Official Letter No. 99064/CTHT-TTHT dated 13
November 2020 by Hanoi Tax Department on PITfinalization)

Expenditures on quarantines for foreign
experts
Expenditures on quarantining serving prevention
and control of Covid-19 upon entry into Vietnam forforeign employees will be treated as benefits which
they are entitled to. Therefore, the quarantine
related fees are included in employees’ taxable
income.

Not being included in taxable income.

► Regarding bonuses included in salaries andwages paid by the employer when theemployee ceases employement, the severance
allowances paid higher than the standard
prescribed under the Law on Social Insurance
and the Ministry Labor Law:
To add to total salary and wages and deduct
PIT using progressive tax rates.
► Regarding financial support paid to employees(not being mentioned in the provisions of theLabor Code and the Law on Social Insurance)
after termination of the labor contract:
Withhold 10% PIT on the total amounts paid inexcess of VND2 million.

(Official Letter No. 27401 / CT-TTHT dated 01 December 2020 of Binh Duong Tax Department on
PIT treatment of the allowances and financial support to employees upon termination of labor contracts)(Official Letter No. 5032/ TCT-CS dated 26 November 2020 issued by General Department of Taxation on quarantining fees for foreign employees)

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Helping you prosperPIT of the foreign contractor’s foreign employees
In case a foreign contractor appoints its foreign employees to support with contract implementation, andthe employees are not present in Vietnam and get
paid overseas by the foreign contractor, the Vietnamese contracting party is responsible for informing theforeign contractor about foreign employees’ PIT obligations in Vietnam as well as providing information
about foreign employees (to the local tax authorities)
as required under the applicable regulations.
In case, as agreed in the contract, the Vietnamese
contracting party is responsible for fulfilling all the PIT
obligations of these foreign employees, experts, theVietnamese contracting party will be required to withhold 20% PIT (as for non-resident individuals).
(Official Letter No. 8537/CTHDU-TTHT dated 17 December 2020 issued by Hai Duong Tax Department
on PIT of foreign employees of the foreign contractor)

Sale brokerage payments
In case a foreign person (non-resident individual)
provides brokerage services to sell products overseas for a Vietnam entity, such service is treated asarising outside Vietnam and hence, not subject toFCT.

CONTACTUHY Auditing & Consulting Company Limited
Nguyen Trung Thanh - Deputy Director General
E: thanhnt@uhyvietnam.com.vn
Tran Thi Bo - Director
E: bott@uhyvietnam.com.vn
Phung Thi Oanh –Director
E: oanhpt@uhyvietnam.com.vn
Franklin Bak - Director
E: bakjw@uhyvietnam.com.vn
K. Muraishi - Director
E: muraishik@uhyvietnam.com.vn
Hanoi Head Office
5th Fl, B2 Tower, Roman Plaza, To Huu Road
Nam Tu Liem District, Hanoi, S.R. of Vietnam
Tel: +84 245 678 3999
Fax: +84 243 755 7448
Ho Chi Minh Office
5th Floor, 146 Nguyen Cong Tru, Thai Binh Ward, District 1, Ho Chi Minh City
Tel: +84 283 820 4899
Fax: +84 283 820 4909
Website:www.uhy.vn
Facebook: UHY Tax Centre
UHY Training Centre

On the other hand, if the brokerage is to sell theproducts in Vietnam, the fees will be subject to PIT.
(Official Letter No. 164/CTBNI-TTHT dated 03 February 2021 by Bac Ninh Tax Department on PIT of thesales brokerage fees)

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