December 2020: Personal Income Tax Newsletter

  PIT policy

On 23th December 2020, the General Department of Taxation issued Official Letter No. 5465/TCT-DNNCN related to PIT policy in case of inheritance of property.  

In case the beneficiary inherits the property left by the deceased which corresponds to but does not exceed the portion of the property he has received, the heir shall perform the property obligations, unless otherwise agreed.

In case of inheriting land use rights according to the provisions of law but have not fully paid the land use levy debt, the heir shall continue to pay the land use levy debt as prescribed.

Tax policy for house rental activities of non-residents

On 11^th December 2020 , the General Department of Taxation issued Official Letter No. 5265/TCT-DNNCN related to tax policy for house rental activities of non-residents.  

In case a non-resident has a rental property in Vietnam, he/she is subject to the same provisions of the law on VAT, PIT and license fee as resident. Individuals shall declare and pay tax under the guidance in Article 8 of Circular No. 92/2015/TT-BTC of the Ministry of Finance guiding the implementation of VAT and PIT for resident conducting business activities. .

Particularly for license fees, taxpayers are not required to submit license fee declaration dossiers, tax authorities shall base on tax declaration dossiers and tax administration databases to determine and notify annually license fee levels payable to the taxpayer.

The Ministry of Finance issued Circular No. 105/2020/TT-BTC guiding tax registration. This circular takes effect from January 17, 2021. Below is some changes and highlights from the previous circular No. 95/2016/TT-BTC.

TAX MANAGEMENT LAW

Details of tax registrants

Taxpayers subject to tax registration:

•    Through the one-stop-shop mechanism as prescribed at Point a, Clause 1, Article 30 of the Law on Tax Administration
•    Directly with tax authorities as prescribed at Point b, Clause 1, Article 30 of the Law on Tax Administration

In which, the subject of direct registration is the same as before, with the following additions:

•    Foreign suppliers without permanent establishments in Vietnam engaged in e-commerce, digital-based business and other services with organizations and individuals in Vietnam (hereinafter referred to as overseas supplier)
•    In more detail, Enterprises, cooperatives, economic organizations, and individuals who are responsible for withholding and paying on behalf of other taxpayers must declare and determine their tax obligations separately from the provisions of the law on tax administration.

First time tax registration for dependents

According to the provisions of Clause 10, Article 7 of Circular No. 105/2020/TT-BTC, dependents shall submit a tax registration dossier for the first time as follows:

In case an individual authorizes an income-paying agency to register tax for his/her dependents:

- Location to submit tax registration documents: At the income-paying agency.

- Tax registration dossiers of dependents: (No change compared to before)

The income-paying agency summarizes and sends the tax registration declaration form No. 20-DK-TH-TCT issued together with Circular No. 105/2020/TT-BTC to the tax authority directly managing theincome-paying agency. 

In case an individual fails to authorize an income-paying agency to register tax for his/her dependents:

 - Location for submitting tax registration dossiers: Submit to the respective tax authorities as prescribed in Clause 9 Article 7 of Circular No. 105/2020/TT-BTC.

- Tax registration dossier includes: (No change compared to before)

In case individuals subject to personal income tax have submitted an application for registration of dependents for family circumstance reduction before the effective date of Circular No. 95/2016/TT-BTC but have not yet registered tax for the dependent, a dependent shall submit a tax registration dossier specified in Clause 10, Article 7 of this Circular in order to be granted a tax identification number for the dependent.

Notice of suspension of operation, business or resumption of operation after suspension of operation or business ahead of time

According to the provisions of Article 12 of Circular No. 105/2020/ND-CP, when suspending operation or business or continuing to operate or do business ahead of time, taxpayers shall make a notice as prescribed in Clause 1 , Clause 2, Article 37 of the Law on Tax Administration, Article 4 of Decree No. 126/2020/ND-CP and the following provisions:

- Business organizations, households, and individuals that are not subject to business registration shall send the Notice form No. 23/DK-TCT issued together with this Circular to the tax authority directly managing within the prescribed time limit at Point c, Clause 1, Clause 3 and Clause 4, Article 4 of Decree No. 126/2020/ND-CP.

- After the tax authority has issued the notice of taxpayer inactivity at the registered address, the enterprise or cooperative is approved by the business registration agency or cooperative registration agency to suspend business. However, if the taxpayer still owes taxes and other revenues from the state budget, commits violations of the law on tax administration and invoices before the time of inactivity at the registered address, taxpayers must fulfill their tax obligations and outstanding invoices, and comply with decisions and notices of tax administration agencies as prescribed in Clause 2, Article 4 of Decree No. 126/2020/ND-CP.

Obligations that taxpayers must fulfill before tax code deactivation

According to Article 15 of Circular No. 105/2020/TT-BTC, taxpayers specified at Points a, b, c, d, dd, e, g, h, m, n, clause 2, Article 4 of this Circular, before the tax identification number is invalidated, the following obligations must be fulfilled:

- Submit a report on the use of invoices in accordance with the law on invoices.

- Fulfill the obligation to submit tax returns, pay taxes and handle overpaid tax amounts and uncredited value-added tax amounts (if any) as prescribed in Articles 43, 44, 47, 60, 67 , 68, 70, 71 Law on Tax Administration with tax authorities.

- In case the managing unit has dependent units, all dependent units must complete the procedures for Tax code deactivation before tax code deactivation of the managing unit.

For business households and individuals doing business as prescribed at Point i, Clause 2, Article 4 of this Circular, before the tax identification number is invalidated, the following obligations must be fulfilled:

- Submit reports on the use of invoices in accordance with the law on invoices, if any invoices are used.

- Fulfill the tax payment obligation and handle the overpaid tax according to the provisions of Articles 60, 67, 69, 70, 71 of the Law on Tax Administration with tax administration agencies for business households and individuals paying tax under the presumptive tax method.

- Taxpayers fulfill the obligation to submit tax returns, pay taxes and handle overpaid tax amounts and uncredited value-added tax amounts (if any) as prescribed in Articles 43, 44, 47, 60, 67, 68, 70, 71 Law on Tax Administration with tax administration agencies for business households and individuals paying tax according to the declaration method.

For business households that move to small and medium-sized enterprises under the provisions of the Law on Support for Small and Medium-sized Enterprises, before the tax identification number is invalidated, the business household must fulfill its tax obligations to the tax authorities directly managing or send a document to the tax authority to commit that small and medium-sized enterprises converted from business households will inherit all tax obligations of business households in accordance with the law on supporting small and medium enterprises.

For individuals specified at Points k and l, Clause 2, Article 4 of this Circular, before TIN deactivation, they must fulfill the tax payment obligation and handle the overpaid tax amount as prescribed in Clause 2 of this Article . Articles 60, 67, 69, 70, 71 of the Law on Tax Administration with tax administration agencies.