Personal Taxes

Particulars of laws on personal earnings tax refunds in Vietnam

The personal income tax refund is a problematic issue for most employees that have a high income. Although the amount of money refunded might not be much, it is the right of each employee in Vietnam’s society. So, what are the details of regulations on personal income tax refunds in Vietnam?

Personal income tax refund

Refund of personal income tax is the procedure by which the tax authority refunds the overpaid tax amount of a taxpayer (in the final settlement year).

Nonetheless, it should be noted that the personal income tax refund can only be conducted if the employees fully comply with the regulations of the tax law.

Regulations on the refund of personal income tax

According to article 23 of Circular 92/2015/TT-BTC, the conditions for personal income tax refunds are as follows:

Refund of personal income tax is only applicable to individuals who already have a tax identification number at the time of requesting a tax refund.

For individuals who have authorized tax settlement for organizations or individuals to make the final settlement, the individual’s tax refund shall be conducted through those organizations or individuals.

If an individual directly settles the personal income tax refund in Vietnam, if he/she has an overpaid tax amount, he/she shall be entitled to a tax refund, or the amount of money will be reserved for the next period of calculating payable personal income tax.

Tax refund for income-paying organizations and individuals that make settlements on behalf of individuals authorized to make tax finalization

In case income-paying organizations and individuals after offsetting the overpaid or underpaid tax amount of individuals and has an overpaid tax amount, if the individual who is subjected to personal income tax required the tax agency to refund the overpaid tax amount, income-paying organizations and individuals shall file the tax refund dossier to the tax agency.

Tax refund for individuals earning income from salaries or wages that they themselves directly settle taxes with tax authorities

If there is an overpaid tax amount, the individual is not required to submit a tax refund dossier, but only needs to write the tax amount requested for the refund.

The amount of overpaid tax can be transferred to the taxpayer’s account or it can be reserved for the following period of personal income settlement. This is according to the choice of the individual who is subjected to personal income tax.

Calculating the overpaid personal income tax amount to be refunded

If the taxpayer wants to know if they have paid excess or insufficient personal income tax this year, they must make a final settlement. Individuals can make a final settlement in one of two forms: Do the final settlement directly with the tax agency or authorize an income-paying agency (if eligible).

The formula for calculating overpaid personal income tax amount is as follows:

Overpaid PIT amount = Paid PIT amount – PIT payable according to tax settlement

If the result of this formula is positive, it is an overpaid amount, and the taxpayer can ask for a refund of the excessive amount.

On the other hand, if the result is negative, it is an underpaid amount, and the taxpayer will have to pay the difference amount to the tax agency.

After businesses or individuals carry out the PIT refund calculation and figure out the amount needed to be refunded, they need to submit their PIT refund dossiers to the tax agency.

After receiving the refund dossier, within 06 working days from the date of receipt of complete tax refund dossiers, tax agencies are responsible for handling PIT refund procedures according to Clause 3, Article 58 of Circular No. 156/2013/TT-BTC.

If the subjects of inspection are under the group following the ‘inspection first, tax refund later’, the tax agency will have 40 working days from the date of receipt of the PIT refund dossier to finish the PIT refund procedures.

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