Công văn số 1631/TCT-TNCN về việc chính sách thuế thu nhập cá nhân do Tổng cục Thuế ban hành

To: The Tax Department of Bac Ninh province

In response to Official Letter No. 337/CT-TNCN of March 16, 2009, of the Tax Department of Bac Ninh province inquiring about the personal income tax policy, the General Department of Taxation gives the following opinions:

1. Regarding dossiers evidencing dependants of foreign residents:

Items d and e, Clause 3.1.7, Point 3, Section I, Part B of the Ministry of Finance’s Circular No. 84/2008/TT-BTC of September 30, 2008, guiding the implementation of a number of articles of the Law on Personal Income Tax and guiding the implementation of the Government’s Decree No. 100/2008/ND-CP of September 8, 2008, detailing the implementation of a number of articles of the law on Personal Income Tax stipulates that “If papers evidencing dependants are copies, they must be notarized or certified by the commune-level People’s Committee. If they are neither notarized nor certified, they must be produced together with their originals to tax offices for checking and comparison.”

Under the above guidance, if papers included in dossiers evidencing dependants submitted by foreign residents to Vietnamese tax offices are copies notarized or certified by authorities of their countries of origin, they must be translated into Vietnamese.

Point 2.4, Clause 2, Article 2 of the Ministry of Finance’s Circular No. 62/2009/TT-BTC of March 27, 2009, amending and supplementing Circular No. 84/2008/TT-BTC of September 30, 2008, guiding the implementation of a number of articles of the Law on Personal Income Tax and guiding the implementation of the Government’s Decree No. 100/2008/ND-CP of September 8, 2008, detailing the implementation of a number of articles of the law on Personal Income Tax stipulates that “For employees of economic organizations or non-business administrative agencies who have declared their parents, spouses, children or other eligible persons as dependants in their curricula vitae, they may choose either of the following methods of making dossiers to evidence dependants:

- Method 1: To make only the declaration for dependant registration according to a form provided together with Circular No. 84/2008/TT-BTC, and have it certified by the head of the employing unit on the left side. The head of the employing unit shall take responsibility only for the following details: full name(s) of dependant(s), year(s) of birth and their relations with the taxpayer. Taxpayers shall take responsibility for the accuracy of other details declared by themselves.

In case of a change in dependants, taxpayers may request heads of their employing units to give certification in adjusted declarations.

- Method 2: To comply with the guidance in Item 3.1.7, Point 3.1, Clause 3, Section I, Part B of Circular No. 84/2008/TT-BTC and in this Circular.”

2. Regarding the transfer of real estate between sisters-in-law:

Article 4 of the Law on Personal Income Tax, Article 4 of the Government’s Decree No. 100/2008/ND-CP; Point 1, Section III, Part A of the Ministry of Finance’s Circular No. 84/2008/TT-BTC of September 30, 2008, guiding incomes from real estate transfer eligible for exemption from personal income tax stipulates that “Incomes from transfer of real estate between spouses; parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.”

Under the above guidance, only real estate transfer between blood siblings is eligible for personal income tax exemption. Real estate transfer between sisters-in-law has been reported by the General Department of Taxation to the Prime Minister and will be specifically guided later. Pending further guidance, the Tax Department of Bac Ninh province shall follow current guiding documents.

3. Regarding tax registration and finalization by individuals acting as sale agents:

Individuals acting as goods sale agents (telephone card sellers or telephone charge collectors that earn incomes under contracts or incomes based on turnover of sold products) shall make tax registration, withholding, declaration and finalization under the following guidance:

a/ Tax registration:

Point 1, Article 3 of the Government’s Decree No. 100/2008/ND-CP of September 8, 2008, detailing a number of articles of the Law on Personal Income Tax, and at Point 1, Section II, Part A of the Ministry of Finance’s Circular No. 84/2008/TT-BTC of September 30, 2008, stipulates that individuals acting as goods sale agents are business individuals. So, they shall make tax registration. Tax registration dossiers and places for submission are guided in Point 2, Section I, Part II of the Ministry of Finance’s Circular No. 84/2007/TT-BTC of July 18, 2007, guiding the implementation of the Law on Personal Income Tax.

b/ Withholding of personal income tax:

Article 5 of the Ministry of Finance’s Circular No. 62/2009/TT-BTC of March 27, 2009, stipulates:

“Organizations and individuals that pay commissions to goods sale agents; salaries, wages, remuneration or other sums of money of VND 500,000 or more each time or as the total value of commissions or service charges to service providers, shall withhold personal income tax before paying incomes to these individuals under the following guidance:

- Withholding tax at the single rate of 10% of paid incomes, except for cases in which the Ministry of Finance has given a written guidance on specific temporary withholding rates (for insurance or lottery agency commission).

- In case individuals acting as goods sale agents (including also insurance or lottery agents) or performing services earn no income other than the income subject to tax withholding at the above rate and their estimated total taxable incomes after deducting family circumstance-based reductions are not high enough to be taxed (for example, an individual earns an annual income of less than VND 48 million, for single persons, or less than VND 67.2 million, for those with one dependant entitled to full 12-month reduction, or less than VND 86.4 million, for those with 2 dependants entitled to full 12-month reduction), they shall make written commitments (according to a form provided together with this Circular, not printed herein) and send them to income payers for use as a temporary basis for temporary non-withholding of 10% personal income tax. Based on income recipients’ commitments, income payers shall temporarily not withhold the tax but shall still supply lists of these recipients to tax offices at the end of the year. These individuals shall take responsibility for their commitments.and be handled for any fraud therein under the Law on Tax Administration.”

c/ Finalization of personal income tax:

Individuals acting as sale agents shall make tax declaration for finalization under the guidance of Clause 2.2, Point 2, Section II, Part D of the Ministry of Finance’s Circular No. 84/2008/TT-BTC of September 30, 2008.

Individuals acting as agents and earning both incomes from wages or remunerations and from agency operation shall make tax declaration for finalization under the guidance of Item 2.4, Point 2, Section II, Part B of the Ministry of Finance’s Circular No. 84/2008/TT-BTC of September 30, 2008.

4. Regarding personal income tax for foreigners leaving Vietnam before June 30, 2009:

- Under the guidance of Point 2, Article 1 of the Ministry of Finance’s Circular No. 27/2009/TT-BTC of February 6, 2009, guiding the prolongation of the time limit for personal income tax payment, subjects ineligible for prolonged time limit for personal income tax payment include:

“Residents earning incomes from real estate transfer or won prizes;

Non-residents (including also those not present in Vietnam or leaving Vietnam before June 30, 2009) earning incomes from business activities; wages or remunerations; real estate transfer; won prizes; inheritance; or gifts.”

- Under the guidance of Clause 1.2, Section 1 of the Ministry of Finance’s Official Letter No.1823/BTC-TCT of February 18, 2009:

“Non-residents earning incomes in Vietnam who are ineligible for prolonged time limit for tax payment include:

- Individuals not present in Vietnam.

- Individuals leaving Vietnam before June 30, 2009.

- Individuals who arrive in Vietnam on January 1, 2009, or after but have an unknown date of their departure from Vietnam, and have no registered place of permanent residence or no house lease contract of a term of 90 days or more in Vietnam.”

Under the above guidance, foreign non-residents who leave Vietnam before June 30, 2009, are ineligible for prolonged time limit for tax payment. The personal income tax declaration and payment by non-residents comply with the guidance of Part C of the Ministry of Finance’s Circular No. 84/2008/TT-BTC of September 30, 2008, applicable to non-residents.

5. Point 1 of the Ministry of Finance’s Official Letter No. 1845/BTC-TCT of February 18, 2009, stipulates that “For incomes from wages, remuneration and rewards which originate from production or business results in 2008 but are paid on January 1, 2009, personal income tax shall be calculated and paid under the Law on Personal Income Tax. Income payers shall calculate personal income tax amounts to be withheld and at the same time temporarily prolong the time limit for personal income tax payment from January 1, 2009, to the end of May 31, 2009, under the guidance of the Ministry of Finance’s Circular No. 27/2009/TT-BTC of February 6, 2009.”

The finalization of personal income tax on incomes earned in 2008 complies with the guidance of the Ministry of Finance’s Circular No. 81/2004/TT-BTC of August 13, 2004, guiding the implementation of the Government’s Decree No. 147/2004/ND-CP of March 27, 2004, detailing the implementation of the Ordinance on Income Tax on High-Income Earners, and personal income tax shall still be calculated for full 12 months.

The General Department of Taxation would like to give the above answers to the Tax Department of Bac Ninh province for information and guidance for local tax offices, income payers and taxpayers.

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