Personal Income Tax Finalization in Vietnam: What to File

Personal income tax finalization is the yearly check where you add up your income for the calendar year, compare it with the tax already paid, and settle the difference. For the 2016 tax year, the filing window closes on March 31, 2017. That is 90 days after the year ended. This guide shows who must file, who can hand the job to an employer, and what to gather.

Who has to file

Finalization applies to tax residents who earn taxable income in Vietnam. Expats who count as residents are included. Non-residents pay a flat rate on their Vietnam income, so they do not use the yearly finalization. The rules sit in the Law on Personal Income Tax (No. 04/2007/QH12), as amended in 2012, and in Circular 111/2013/TT-BTC from the Ministry of Finance.

You file yourself if you had income from more than one payer during the year. You also file yourself if you earn business income, or if you want to claim back tax you overpaid. Employers file for staff who qualify to authorize them.

Some people do not need to file at all. If your only income was a short job with a flat 10 percent already withheld, and you are not asking for a refund, finalization is usually not required.

Sources: Law on Personal Income Tax No. 04/2007/QH12; Law No. 26/2012/QH13; Circular 111/2013/TT-BTC, Ministry of Finance.

When the deadline falls

The tax year is the calendar year. For 2016, it ran from January 1 to December 31, 2016. You have 90 days from the end of that year to submit your finalization. In practice that means March 31, 2017.

Employers that withheld tax from salaries follow the same 90-day window. They file a summary return for the whole company, and staff who authorized them are covered by it. If you did not authorize your employer, the deadline is yours alone.

Late filing can bring penalties under the tax administration rules. File early if you can. Tax offices tend to be busy in the last week of March.

Sources: Law on Tax Administration No. 78/2006/QH11 as amended; Circular 156/2013/TT-BTC, Ministry of Finance; General Department of Taxation guidance.

Authorize your employer or file yourself

If you worked for a single employer all year and that employer withheld your tax, you can usually sign an authorization. Your employer then files on your behalf. This is the easiest route for most salaried staff.

Ask for the authorization form early in the new year. Keep a copy. The employer will use your tax code, so make sure it is correct and matches your ID or passport.

If you changed jobs mid-year, or held two jobs, you file yourself. Each employer only knows its own payments. Only you can show the full picture.

Sources: Circular 111/2013/TT-BTC, Ministry of Finance, article on authorized finalization.

Documents to gather

Start with your tax code. Every taxpayer needs one. Then collect these items:

• The finalization declaration form for individuals, Form 02/QTT-TNCN.
• Tax withholding certificates from each employer or payer for 2016.
• Registration papers for each dependent you claim, with the dependent's tax code.
• Proof of tax paid abroad, if you earned income outside Vietnam and want credit for it.
• Your ID card or passport details, and bank details if you want a refund.

Employers who file for their staff use Form 05/QTT-TNCN. They also attach a list of the employees covered.

Sources: Circular 156/2013/TT-BTC, Ministry of Finance, forms annexed to the circular; Circular 111/2013/TT-BTC, Ministry of Finance.

Deductions to remember

Two deductions reduce the income that is taxed. The personal deduction is 9 million dong per month. Each registered dependent adds 3.6 million dong per month. These figures come from the 2012 amendment and apply to the whole of 2016.

You only get the dependent deduction if the person is registered. Register dependents with your employer or the tax office before you file. Without that record, the deduction can be refused.

Keep the paper trail simple. A folder with your contract, pay slips, withholding certificates and dependent papers is enough for most people. Hold on to it for several years in case the tax office asks.

Sources: Law No. 26/2012/QH13 on amendments to the Law on Personal Income Tax; Circular 111/2013/TT-BTC, Ministry of Finance.

If you owe tax or are owed a refund

If the finalization shows you owe more, pay the balance to the state budget by the same deadline. If you paid too much, you can ask for a refund or carry the credit to the next period. The declaration form has a box for that choice.

Leaving Vietnam for good is a special case. Expats who end their work and plan to depart should ask their employer or the tax office about finalizing before they go. Do not wait until you are abroad.

The simple order of work is this: confirm your tax code, collect your certificates, decide whether to authorize your employer, then file before March 31. A tax adviser can help if you had several income sources.

Sources: Circular 111/2013/TT-BTC, Ministry of Finance; General Department of Taxation, tax office guidance.

Sources

• Law on Personal Income Tax No. 04/2007/QH12, as amended by Law No. 26/2012/QH13.
• Circular 111/2013/TT-BTC, Ministry of Finance, August 2013.
• Circular 156/2013/TT-BTC, Ministry of Finance, on tax administration.
• General Department of Taxation, Ministry of Finance.