Vietnam's tax system can be intricate, especially for those who lack expertise in Personal Income Tax (PIT) regulations. Completing annual finalizations, as outlined by the Vietnam Ministry of Finance and General Department of Taxation, is crucial for both organizations and individual taxpayers. In this article, we will provide a comprehensive guide to the PIT finalization process, covering essential circulars and decrees that govern the implementation and reporting schedule. So, What does 'Tax finalization file upon company dissolution' refer to? ACC Group will address your question.

I. What is the tax finalization process when a company is dissolved?

The tax finalization process when a company is dissolved can be complex and involves various steps to ensure that all tax obligations are met. The specific process may vary depending on the jurisdiction and the type of company.

1. Guide and Regulatory Basis for 2022 PIT Finalization

The process, forms of returns, and required documents for PIT finalization in 2022 are governed by Circular 80/2021/TT-BTC, issued by the Ministry of Finance, effective from January 2022. Additionally, Decree 126/2020/ND-CP provides guidance on implementing the Tax Administration Law, further shaping the process.

2. Individuals Subject to Direct (Personal) Finalization

Individuals in Vietnam are subject to personal finalization under various circumstances, including:

a. Tax Residents Receiving Income from Overseas Entities

Residents earning income from overseas entities need to declare their taxable income in the finalization process.

b. Income from International Organizations and Embassies

Individuals receiving income from international organizations and embassies where PIT hasn't been withheld must also declare their income during the finalization.

c. Overseas Share Schemes

Individuals involved in overseas share schemes with taxable income must declare it during the finalization process.

d. Expatriates Staying in Vietnam

Expatriates who stay in Vietnam for less than 183 days during their first calendar year but over 182 days in their first 12 consecutive months must complete the first annual PIT finalization. Those leaving Vietnam are also required to file an annual PIT return before departure.

e. Employment Income with Tax Reduction

Individuals with employment income and eligibility for tax reduction due to disasters, fatal diseases, etc., need to declare their income during the finalization.

3. Income Paying Organizations Subject to Withholding Finalization

Employers are mandated to file an annual PIT finalization for income paid to their employees. For employees who authorize their employers to conduct this finalization, any tax underpayment or overpayment will be calculated and processed through the entity. In cases of employee transfers between organizations, the new organization is responsible for finalizing the PIT for authorized employees.

4. Individuals and Organizations Not Requiring PIT Finalizations

There are specific scenarios where individuals and organizations are exempt from PIT finalizations, including:

a. Minimal Additional PIT Payable

Individual taxpayers whose additional PIT payable after finalization is VND50,000 or less are exempt from PIT finalization.

b. Final PIT Payable Less Than PIT Paid/Withheld

Individuals with final PIT payable less than the PIT paid or withheld during the year and no interest in a refund or offset are not required to finalize.

c. Organizations Not Paying Employee Income

Organizations that did not pay income to employees are exempt from annual PIT finalization.

5. Income Types Not Subject to PIT Finalization

There are also specific income types that are not subject to PIT finalization, including:

a. Irregular Income from Multiple Sources

Individual taxpayers with labor contracts of three months or more with one organization, and concurrent irregular income from other organizations, are exempt from finalizing this irregular income.

b. Life Insurance Premiums

Individual taxpayers with life insurance premiums contributed by their employer are not required to finalize this type of income.

II. Amendments for PIT Finalization Dossiers and Relevant Circumstances

In cases where there is no change in the tax obligation, the taxpayer isn't required to submit an amended tax return. However, they must submit an explanation for supplementary declaration and relevant supporting documents. The specific requirements for amending finalization dossiers vary based on the entity type. Expatriate employees can seek tax exemptions under double taxation agreements (DTAs) to avoid double taxation. The conditions for obtaining such exemptions are outlined, but it's essential to consider the presence of a permanent establishment (PE) in Vietnam, which affects eligibility.

The deadline for annual PIT finalization submission depends on whether you are an income-paying organization or an individual. Organizations must file by the last day of the 3rd month from the end of the calendar year, while individuals submit by the last day of the 4th month from the end of the calendar year.

In conclusion, understanding and complying with Personal Income Tax finalization requirements in Vietnam is essential to avoid potential issues and penalties. Whether you are an individual taxpayer or an income-paying organization, staying informed and meeting the deadlines is crucial.

FAQs

1. Who is required to complete the Personal Income Tax (PIT) finalization in Vietnam?

Various individuals and organizations are subject to PIT finalization, including tax residents with overseas income, expatriates, and income-paying organizations.

2. What is the deadline for submitting the annual PIT finalization in Vietnam?

The deadline varies for organizations and individuals, with organizations required to submit by the last day of the 3rd month from the end of the calendar year, while individuals have until the last day of the 4th month.

3. Are there any exemptions for PIT finalization in Vietnam?

Yes, some individuals and organizations are exempt from PIT finalization, such as those with minimal additional PIT payable or final PIT payable less than the PIT paid or withheld during the year.

4. How can expatriate employees seek tax exemptions under double taxation agreements (DTAs)?

Expatriate employees can seek tax exemptions under DTAs, provided certain conditions are met, including the absence of a permanent establishment in Vietnam.