Clarifications on Finalizing Personal Income Tax

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Mar. 9 – Letter 451/TCT-TNCN issued by the General Department of Taxes last month shed light on several tax issues associated with finalizing personal income tax for 2009.

The new issues highlighted in the letter include the following:

  • For employees that worked less than 12 months in 2009, the portion of the bonus exempt from PIT will be determined prorata according to the actual working months during the year
  • Bonus for 2008 but paid during January to June 2009 is exempt from PIT
  • The taxable value for transport to and from work will be calculated based on the duration for usage of the transportation, fuel cost, etc.
  • Taxable value for accommodation provided by the company will be calculated based on a prorate of the depreciation cost according to the ratio of the individual accommodation to the total office area

Concessional treatment of 15 percent still applies for cases dealing with:

  • Fixed payment of stationery, telephone where the corporate income tax regulations do not stipulate a cap; the limit decided by the Board of Management/Director/Board of Members will be used
  • For determination of taxable income in cases of: a) retirement allowance paid by the parent company upon retirement; and b) Vietnam sourced income for foreigners working in Vietnam and overseas will be based on formulas provided by the agency
  • Guidance on calculation of PIT reduction in case of having income from within and outside an economic zone
  • Employers must first secure an authorization letter from each employee before being allowed to undertake PIT finalization on behalf of their employees
  • 2009 PIT is calculated on the basis of average monthly taxable income (divided by 6) and monthly tax rates
  • Supporting documents for dependant relief can be submitted at the time of submission of the final returns
  • PIT payment receipts are not required to be issued to each employee unless they are required to do direct finalization with the tax authorities or apply for PIT refund/offset against the next period liabilities

For more information on complying with tax issues in Vietnam contact