Tax accounting


For the people, taxpayers' money paid into the State budget will be used by the State on things such as investment in infrastructure construction, social security, education, health, security and order, defense and those are the benefits that people enjoy in general.

I. What is personal income tax?

a) Concept:

Personal income tax (PIT) is the amount of tax that the income earner must deduct part of his salary or from other sources of income into the state budget after the deductions have been calculated.

PIT is a tax:

  • Monthly (for monthly earners) or by time of income payment (For seasonal workers)
  • Deduction of PIT before the time of income payment.
  • Declaration: Monthly or quarterly (Depending on the conditions of the business)
  • PIT finale: By year

b) Method of calculating PIT

There are 3 ways to calculate PIT from wages for 3 different subjects:

  • Subject 1: Sign a labor contract with a term of 3 months or more: Calculate PIT according to the progressive schedule of each part.
  • Subject 2: Sign a labor contract with a term of less than 3 months or not sign the labor contract: Calculate 10% of the total income.
  • Subject 3: Non-resident individuals (usually foreigners): Tax rate of 20%

c) Notable notes

  1. Family deductions:
  • Self-deduction: From July 1, 2020, 11,000,000/month will be reduced
  • Dependents: From July 1, 2020, a reduction of 4,400,000/person/month (Unlimited registration of dependents but 1 dependent shall only be counted as deductible to one taxpayer)
  • Deductions for compulsory insurance, charitable, humanitarian, and academic donations.
  1. Pit final settlement:shall be made when additional taxes are incurred or refund requests are made. It is possible to authorize the final settlement of PIT.

II. Why pay personal income tax?

PIT is a tax that a person with a certain income will deduct and pay to the state. So why pay personal income tax, let's find out:

a) Increase revenues for the State budget

The payment of personal income tax helps the State to have more revenues to be able to ensure the implementation of the prescribed welfare regimes as well as investment in the construction of public works (electricity, roads, schools, stations …) to serve the essential needs of people's lives.

b) Income regulation reduces the gap between rich and poor

The payment of personal income tax also contributes to the implementation of social justice. Because people who pay PIT are people with personal income levels higher than the starting point of taxable income, those people whose income can feed themselves and their families. Therefore, the payment of PIT is to balance the level of wealth and poverty between classes that contributes to limiting discrimination between rich and poor.

c) Growth of the country's economy

Paying personal income tax contributes to promoting the growth of the economy while attracting human resources, ensuring competition in the region.

d) Ensuring that the income of the individual is legal

When carrying out procedures for paying personal income tax, taxpayers need to declare the incomes. From there, the state can control the revenues of legitimate individuals or not.

Iii. The latest Personal Income Tax Payment Law

According to the law on personal income tax payment, there are income levels that need to be paid personal income tax including:

  • Income from the business with an income not exceeding VND 100 million/ year.
  • Income from work expenses (wages, salaries) includes salaries in kind or money and allowances, bonuses, allowances as prescribed by law
  • Income from starting from the beginning such as interest on loans or money participating in dividends and shares,….
  • Income from the transfer of capital in organizations or companies or the transfer of ownership of corporate shares.
  • Income from the sale, transfer of real estate, technology transfer or intellectual property rights,…
  • Pay personal income tax from receiving gifts, winnings such as lotteries or promotions,…
  • Pay personal income tax from the inheritance of family property.

As such, the contents related to personal income tax payment have been brought to you by us in the article above. With little experience, we hope that the basic information above can help you in some way.