Each quarter, Acclime Vietnam releases Quarterly HR & Payroll Updates focusing on relevant legislation and regulations, changes released in the previous quarter, official letters released by Vietnam authorities, together with reminders for key dates for implementation of HR & Payroll changes coming into effect.
Guidance for finalisation of Personal Income Tax for the tax period of 2020
To assist with facilitating tax finalisations for the 2020 tax year that are compliant with current regulations, the General Department of Taxation has recently issued a guidelines on the finalisation of annual Personal Income Tax (“PIT”) as below:
1. The increased deductions level
According to Resolution 954 of the Standing Committee of the National Assembly on implementing reductions in PIT for Vietnamese taxpayers for the 2020 tax year:
- The personal deduction increased to VND11,000,000 per month
- The dependent deduction increased to VND4,400,000 per dependant per month
2. Individuals subject to PIT finalisation
As a rule, individuals must finalise PIT in the following cases:
- Has additional tax payable of over VND50,000 after the finalisation. If it is below this level, individuals will be exempted from the finalisation (Decree 126/2020/ND-CP)
- Having overpaid tax and seeking a refund
3. Authorisation for tax finalisation
- Process for individuals authorising the finalisation to the income-paying organisation remains the same as in previous years.
- The authorising individuals are still allowed to apply the increased dependent deductions without going through any additional procedures. Organisations will apply the new level themselves.
4. Deadline for submission of finalisation documents
According to the Law on Tax Administration for the tax period of 2020:
- Enterprises undertaking the tax finalisation, the lodgement will be no later than the last day of the 3rd month from the end of the calendar year
- Individuals undertaking self-finalisation, the lodgement will be no later than the last day of the 4th month from the end of the calendar year
5. Application of tax declaration and finalisation
To support taxpayers and facilitate tax declaration and submission of tax declaration documents, the General Department of Taxation continues to implement the PIT finalisation declaration through electronic applications.
- Use the latest free version available at website https://thuedientu.gdt.gov.vn or
- Declare directly on the e-portal of General Department of Taxation.
However, it is necessary to register an online tax account with the tax authority.
6. Tax payment method
Tax payments can be made through applications such as Internet Banking, Mobile Banking, etc. However, it is necessary to send payment to the accurate account number of the State Treasury, the PIT item code of 1001 and Chapter 557 or 757 (depending on whether it is the Department or Sub-Department level).
In addition, banks’ websites also provide details on account information of each tax office and guidance to pay taxes electronically.
7. Place of filing the finalisation
The General Department of Taxation’s e-portal also assists in identifying the in-charge tax office for finalisation and provides guidance on how to submit the electronic finalisation documents for those who have registered an online tax transaction account. Otherwise, for individuals have not registered an account yet, they must submit the hard copy of the finalisation form directly at the tax office.
2021 minimum monthly wage: no increase in period from 1 January to 30 June, and proposed to increase from 1 July 2021
1. Application of minimum monthly wages from 1 January 2021
The minimum monthly wage will be regularly adjusted by the Government from 1 January every year. However, due to the impact of the COVID-19 epidemic in 2021, on 14 December 2020, the Government issued Decree 145/2020/ND-CP mentioning that the application of minimum monthly wages in 2021 is still following Decree 90/2019/ND-CP which applied for 2020 period. This means that there is no increase in the 2021 minimum monthly salary compared to 2020.
2. Proposing to change the time of minimum monthly wage adjustment
Instead of adjusting the minimum monthly wage on 1 January every year, the Vietnam General Confederation of Labour has recently proposed to change the time of minimum monthly wage adjustment to 1 July each year (according to Notice 1/TB-VPCP of the Office of the Government released on 1 January 2021).
If this petition is approved, the 2021 minimum monthly wage will be applied through two phases:
- From 1 January – 30 June 2021: remain the same minimum monthly wage as in 2020 period
- From 1 July 2021: to be adjusted in accordance with the new provision
An enterprise code is now also the social insurance code and tax code as stated in Decree 01/2021/ND-CP on enterprise registrations
A significant change related to HR & Payroll area indicated in the Decree 01/2021/ND-CP on enterprise registrations which was issued on 4 January 2021 by the Government involves in social insurance code of an enterprise.
Article 8, Clause 1 of Decree states that:
“Each enterprise is issued with a unique enterprise code. This code is also the tax code and the social insurance code of the enterprise.”
This will remove the requirement for enterprise in registering for their social insurance code (different codes for an enterprise to manage Vietnamese and foreign labour) which they need to be conducted previously.
The Circular is effective on 4 January 2021.
Even though the regulation came into effect on 4 January 2021, in practice through working with Social Insurance authority, the lodgement of registration documents to obtain a separate social insurance code for company is still required. We are waiting for more guidance from the authority once the regulation can be applied in practice.
Official letters released
Official Letters are releases showing the Tax and other Authorities’ interpretation and application of Vietnam’s Taxation Laws, providing guidance to taxpayers in Vietnam. In this update, we will focus on official letters indicating HR & Payroll matters.
Expenditures on quarantining for foreign experts serving prevention and control of COVID-19
On 26 November 2020, the General Department of Taxation released the Official Letter 5032/TCT-CS guiding the PIT for COVID-19 quarantine costs of foreign employees.
According the tax authority’s guidance, in case foreign employees have the COVID-19 quarantine costs paid by their employer upon their entry into Vietnam, these payments are considered as their benefits thus they will be included in their taxable income.
Three ways to register e-tax accounts for individuals
On 5 February 2021, the General Department of Taxation issued the Official Letter 377/TCT-DNNCN to promote the implementation of electronic transaction accounts in the tax field for individuals.
Accordingly, taxpayers may register e-tax accounts in one of the following three methods:
- Taxpayers can register online and go directly to the tax authority to obtain their approval and activate e-tax accounts
- Registering e-tax accounts through the National Public Service Portal in case of possessing accounts on the National Public Service Portal
- Taxpayers register directly at tax authorities
Reminder of some key regulations coming into effect in Quarters 1 & 2, 2021
|Regulations||Issued date||Effective date||Key HR & Payroll items no note||Remarks|
|Decision 1666/QD-BHXH on issuing new health insurance card form||3 December 2020||1 April 2021|
|Decree 152/2020/ND-CP on foreign individuals working in Vietnam, along with Vietnamese employed by certain foreign employers.||30 December 2020||15 February 2021||Click here to read our article for this matter|
|Labour Code 45/2019/QH14 (Labour Code 2019)||20 November 2019||1 January 2021||Click here to read our article for this matter|
|Decree 01/2021/ND-CP on enterprise registrations||4 January 2021||4 January 2021||Enterprise code is also the social insurance code that we have mentioned above.|
Note: the regulation is still not applied in practice.