Every year, after the end of the calendar year, individuals earning income from salaries, wages, and other taxable income are required to carry out personal income tax (PIT) finalization in accordance with regulations. In practice, there are many cases of late filing, incorrect filing, or failure to finalize tax due to misunderstandings regarding subjects, deadlines, and procedures, leading to administrative penalties or unexpected tax liabilities.
The article below, prepared by DNP Viet Nam Law Firm, aims to provide key legal information on deadlines and procedures for personal income tax finalization for income of the previous year, thereby assisting individuals in identifying and limiting potential legal risks and penalties.
1. What is personal income tax finalization?
Legal basis: Clauses 1, 10, and 11 Article 43 of the 2019 Law on Tax Administration.
- Personal income tax finalization is the process whereby an individual aggregates all taxable income for the year, compares it with the amount of tax temporarily paid or withheld, together with applicable deductions as prescribed by law, in order to determine:
- The amount of tax payable in addition;
- Or the amount of overpaid tax to be refunded or offset against the subsequent period.
- Personal income tax finalization is carried out after the end of the calendar year, based on total taxable income, tax already withheld, and applicable deductions.
2. Deadline for personal income tax finalization
Legal basis: Points a and b Clause 2 Article 44 of the 2019 Law on Tax Administration, Article 86 of Circular No. 80/2021/TT-BTC, Section V of Official Letter No. 883/TCT-DNNCN of 2022.
- For income-paying organizations and individuals (conducting PIT finalization for employees): The deadline for submitting PIT finalization dossiers is no later than the last day of the third month from the end of the calendar year (typically March 31 of the following year).
- For individuals directly finalizing tax with the tax authority: The deadline for submitting PIT finalization dossiers is no later than the last day of the fourth month from the end of the calendar year (typically April 30 of the following year).
Notes:
- If the filing deadline coincides with a statutory holiday, the deadline shall be extended to the next working day.
- If an individual is entitled to a tax refund but submits the finalization dossier after the above deadline, no administrative penalty shall be imposed for late submission of the tax finalization dossier.
3. Who is required to finalize personal income tax?
Legal basis: Article 26 of Circular No. 111/2013/TT-BTC.
3.1. Cases in which individuals are required to finalize personal income tax
- Having additional PIT payable after finalization compared to the amount temporarily withheld during the year;
- Having overpaid tax and requesting a refund or offset against the next tax declaration period;
- Having income from multiple sources during the year, in which:
- Not meeting the conditions for authorizing tax finalization to the income-paying organization;
- Or having income that has been withheld but not fully withheld in accordance with regulations.
3.2. Cases exempt from personal income tax finalization
- The additional PIT payable after finalization does not exceed VND 50,000;
- Having income from only one source, which has been fully withheld by the income-paying organization in accordance with regulations, and having no request for a tax refund;
- Individuals who meet the conditions and have authorized tax finalization to the income-paying organization in accordance with regulations.
4. Should individuals self-finalize tax or authorize enterprises?
Legal basis: Point d Clause 6 Article 8 of Decree No. 126/2020/ND-CP.
4.1. Individuals may authorize the income-paying organization to conduct tax finalization if:
- They have income from salaries or wages under a labor contract of 03 months or more with one income-paying organization;
- They are actually working at that organization at the time the organization carries out tax finalization;
- In case the individual simultaneously has incidental income from other sources, authorization is allowed only if the following two conditions are satisfied:
- Such income has been withheld at a tax rate of 10%;
- And the individual has no need to finalize tax for such incidental income.
4.2. Individuals must directly finalize tax if:
- They have income from salaries or wages from two or more income-paying organizations during the year;
- They have foreign-source income subject to declaration and tax finalization in Vietnam;
- They have terminated their labor contract and are no longer working at the income-paying organization at the time the organization carries out tax finalization.
5. Personal income tax finalization dossiers
Legal basis: Subsection 1 Section IV of Official Letter No. 13762/CTHN-HKDCN of 2023.
5.1. For individuals directly finalizing tax with the tax authority
- Personal income tax finalization declaration (Form No. 02/QTT-TNCN) promulgated together with Appendix II of Circular No. 80/2021/TT-BTC.
- Appendix of dependent deduction list (Form No. 02-1/BK-QTT-TNCN).
- Documents evidencing tax withheld or temporarily paid during the year (copies enclosed with originals for comparison), including documents on tax paid abroad (if any).
- Documents evidencing income and tax paid abroad (if foreign income is earned).
- Documents evidencing deductions included in the finalization (such as documents for dependent deductions, dependent registration documents if dependents are registered at the time of finalization).
- Tax finalization authorization letter (Form No. 08/UQ-QTT-TNCN), applicable where the individual authorizes the income-paying organization to finalize tax on their behalf and falls within the authorized cases as prescribed.
5.2. For income-paying organizations/individuals conducting finalization on behalf of others
- Personal income tax finalization declaration (Form No. 05/QTT-TNCN) promulgated together with Appendix II of Circular No. 80/2021/TT-BTC.
- Appendix of detailed list of individuals subject to progressive tax rates (Form No. 05-1/BK-QTT-TNCN).
- Appendix of detailed list of individuals subject to flat tax rates (Form No. 05-2/BK-QTT-TNCN).
- Appendix of detailed list of dependents eligible for dependent deductions (Form No. 05-3/BK-QTT-TNCN).
- Personal income tax finalization authorization letter (Form No. 08/UQ-QTT-TNCN) if finalization is conducted on behalf of individuals under authorization.
6. Methods of submitting tax finalization dossiers
Legal basis: Clause 8 Article 11 of Decree No. 126/2020/ND-CP, Article 32 of Circular No. 80/2021/TT-BTC.
- Online submission via the electronic portal of the General Department of Taxation;
- Direct submission at the competent tax authority.
7. Legal consequences of late or non-finalization of tax
Legal basis: Article 13 of Decree No. 125/2020/ND-CP.
Taxpayers may be subject to administrative penalties for tax violations corresponding to the degree and duration of late submission of tax declaration dossiers as follows:
- Late by 1–5 days with mitigating circumstances: warning;
- Late by 1–30 days: fine of VND 2–5 million;
- Late by 31–60 days: fine of VND 5–8 million;
- Late by 61 days or more or failure to submit dossiers without tax arising: fine of VND 8–15 million;
- Late by more than 90 days with tax arising (tax and late payment interest fully paid before inspection): fine of VND 15–25 million (the maximum fine shall not exceed the amount of tax payable).
“The above content is provided by DNP Viet Nam Law Firm for reference purposes only. For detailed, accurate, and tailored legal advice that meets your specific needs, please contact us using the information provided below.”
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