I. Legal Basis

The 2019 Tax Management Law has established an important legal framework for tax management, clearly defining the responsibilities of organizations and individuals in declaring and paying taxes. According to this law, individuals are obligated to self-declare their income and pay personal income tax (PIT) on time. To facilitate this process, Decree 126/2020/ND-CP has specifically guided the procedures and regulations related to tax obligations, emphasizing the importance of transparency and accuracy in tax reports.

Additionally, Official Letter 636/TCT-DNNN provides detailed instructions on the personal income tax settlement process. In this letter, the tax authority emphasizes the need for individuals to meticulously check related documents and invoices to ensure that all reported information is accurate and valid, thus avoiding errors during the settlement process.

Furthermore, Circular 80/2021/TT-BTC specifies the implementation of personal income tax settlement obligations, clarifying the conditions and regulations regarding family deductions as well as tax-exempt income. This offers greater clarity for individuals when declaring and paying taxes, particularly in the context of frequently changing regulations.

To ensure a smooth personal income tax settlement process in 2024 and avoid unnecessary risks, individuals need to pay attention to several important issues. First and foremost, income declaration must be carried out accurately and completely, ensuring that all income sources are documented. Additionally, individuals should carefully check and store relevant documents and invoices to present when necessary.

The deadline for submitting the settlement documents is also a crucial factor that individuals must understand. Late submission of documents may result in penalties, making it essential to adhere to the specified timelines. Moreover, deductions and tax-exempt income should be thoroughly reviewed to optimize the tax amount owed.

Finally, if individuals do not comply with the aforementioned regulations, they could face fines of up to 25 million VND as stipulated in Decree 125/2020/ND-CP. Therefore, understanding the regulations and fulfilling tax obligations is vital to protect one’s rights and avoid unnecessary legal risks.

II. When is the Deadline for Submitting Personal Income Tax Settlement?

The deadline for submitting personal income tax settlements is an important factor that individuals need to pay attention to in order to fulfill their tax obligations on time. For annual tax settlement documents, the final deadline for submission is the last day of the third month following the end of the calendar year or financial year. For annual tax declaration documents, the deadline for submission is the last day of the first month of the calendar year or financial year.

For individuals directly settling personal income tax, the settlement documents must be submitted no later than the last day of the fourth month following the end of the calendar year. For business households and individuals paying taxes by the flat rate method, the deadline for submitting tax declaration documents is December 15 of the preceding year.

Specifically, the deadlines for declaring and settling personal income tax for income received in 2023 are as follows. If an individual has income from wages and authorizes tax settlement to the organization or individual paying the income, the tax settlement deadline will be March 31, 2024. In the case where an individual has income from wages and directly settles personal income tax with the tax authority, the deadline will be April 30, 2024. Understanding these deadlines helps individuals fulfill their tax obligations accurately and avoid unnecessary legal troubles.

III. Who Must Settle Personal Income Tax?

Settling personal income tax is an obligation that many entities must fulfill, including organizations and individuals paying wages and salaries. For employees who have signed contracts lasting three months or longer and are working at their workplace, personal income tax settlement may be authorized to the organization or individual disbursing the income.

Additionally, individuals directly settling with the tax authority must pay attention to certain criteria. Specifically, these individuals include those who have tax amounts owed or excess payments and request refunds or offsets against the next tax declaration period. However, cases where the tax owed after settlement for each year is less than 50,000 VND, or the tax owed is less than the tax accrued without requesting a refund or offset for the next period, are not required to settle.

Moreover, individuals present in Vietnam for less than 183 days during the first calendar year, or 183 days or more over a continuous 12-month period from the first day of presence in Vietnam, are also required to settle their taxes. Especially for foreigners, they must also settle their taxes before exiting after the termination of their employment contracts in Vietnam. Understanding the relevant entities and regulations regarding tax settlement will help individuals and organizations fulfill their legal responsibilities.

IV. Penalties for Late Personal Income Tax Settlement

When individuals or organizations fail to settle personal income tax on time, they may face various forms of penalties. Penalties can include warnings or fines, with the minimum penalty being 2 million VND and the maximum reaching 25 million VND.

Specifically, a warning applies to cases of late submission of tax declaration documents by 1 to 5 days with mitigating circumstances. If the documents are submitted late from 1 to 30 days, the monetary penalty will range from 2 million to 5 million VND. For late submissions ranging from 31 to 60 days, the penalty will increase from 5 million to 8 million VND.

When documents are submitted late from 61 to 90 days, the penalty will be between 8 million and 15 million VND. The behaviors penalized in this range include submitting documents late from 61 to 90 days, submitting documents late for 91 days or more without generating a tax obligation, or failing to submit tax declaration documents without generating a tax obligation. Additionally, failure to submit annexes as per tax management regulations will also incur penalties within this framework.

Finally, if tax declaration documents are submitted late for more than 90 days and a tax obligation is incurred, the penalty will range from 15 million to 25 million VND. Besides monetary penalties, late tax payments will also incur interest at a rate of 0.03% per day on the overdue tax amount. This means that the interest on a one-day delay will be 0.05% of the overdue amount. These regulations aim to ensure that tax obligations are fulfilled seriously and on time.

The late payment interest calculation = 0.03%/day on the overdue tax amount.
The interest for one day of late payment = 0.05% x the overdue amount.

V. What Documents Are Required for Personal Income Tax Settlement?

The personal income tax (PIT) settlement documents are an essential part of fulfilling individual tax obligations. For individuals settling directly with the tax authority, certain essential documents must be included. First and foremost, individuals must submit a personal income tax settlement declaration form using Form 02/QTT-TNCN. Additionally, the appendix detailing family deductions for dependents must also be attached, using Form 02-1/BK-QTT-TNCN.

To substantiate the tax withheld or provisionally paid during the year, individuals need to provide copies of related documents. If there is any tax paid abroad, this documentation must also be included. A copy of the tax withholding certificate and invoices related to contributions to charity funds, humanitarian funds, or educational funds are also essential components of the settlement documents. Lastly, if individuals receive income from international organizations, embassies, or consulates, documentation proving the amounts paid by those entities is necessary.

For the personal income tax settlement documents of organizations or individuals paying income, the tax settlement declaration form will use Form 05/QTT-TNCN. Additionally, the detailed appendix for individuals subject to tax under the progressive tax table (Form 05-1/BK-QTT-TNCN) and the detailed appendix for individuals subject to the flat tax rate (Form 05-2/BK-QTT-TNCN) must also be submitted. Lastly, organizations must provide an appendix detailing dependents for family deductions, using Form 05-3/BK-QTT-TNCN. These documents help the tax authority accurately verify and confirm the tax obligations of individuals.

VI. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

■ Contact Hankuk Law Firm

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