Question 81: Employees must finalise PIT by themselves if in the tax year they earn incomes from 2 sources: (i) LCs; and (ii) contracts on other projects?

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As prescribed by the law on PIT, for resident individuals who sign LCs of at least 3 months, Employers will make tax deductions as per the partially cumulative tariff, including the case where Employees sign LCs of at least 3 months with many Employers[1]. For resident individuals who do not sign LCs or sign LCs of less than 3 months and have a total income of at least 2 million dong, organisations or individuals who pay wages, remunerations or other amounts to these Employees must make a tax deduction of 10% the income before making payments[2].

Regarding tax finalisation, Employees can authorise Employers to finalise PIT on their behalf if Employees earn income from salaries, wages from LCs of at least 3 months and are working for Employers at the time of tax finalisation, including those who have not spent full 12 months working for Employers in the year, and also earn current income from other sources with an average of not more than VND10 million/month which has been subject to a tax deduction of 10% by those who pay the income, and the Employees do not request to finalise PIT on this income portion[3]. Supposing that the Employees are resident individuals who sign LCs of at least 3 months and are working under the LCs at the time of tax finalisation, the finalisation of PIT will be implemented based on particular circumstances:

  • If Employees earn current income from the contracts on outside projects with an average of at least VND10 million/month in the tax year which has been subject to a tax deduction of 10% by those who pay the income, Employees must finalise PIT by themselves and cannot authorise the Employers to finalise tax for them. In this case, the taxable income in the year will be the total income from salaries, wages from LCs plus the remunerations or wages from the contracts on outside projects[4]. Employers paying salaries, wages under LCs and those who pay remunerations, wages or other amounts under the contracts on outside projects must provide Employees with the source documents of PIT deduction so they can finalise PIT[5].
  • On the other hand, if Employees earn current income from the contracts on outside projects with an average of not more than VND10 million/month in the tax year which has been subject to a tax deduction of 10% by those who pay the income, and do not request to finalise tax on this current income, they can authorise the Employers to finalise tax on the income from salaries, wages that they receive from the Employers.

[1]Article 25.1(b.1) Circular 111/2013/TT-BTC dated 15/08/2013

[2]Article 25.1(i) Circular 111/2013/TT-BTC dated 15/08/2013

[3]Article 16.2 (a.4) Circular 156/2013/TT-BTC dated 06/11/2013 as amended and supplemented by Circular 92/2015/TT-BTC dated 15/06/2015

[4]Article 7.4 (b) Circular 111/2013/TT-BTC dated 15/08/2013

[5]Article 25.2 Circular 111/2013/TT-BTC dated 15/08/2013