Personal Income Tax (PIT) is a type of tax that many people encounter, but not everyone fully understands. This article will simply explain how to pay personal income tax, who is required to pay, and how to do it correctly to avoid trouble. Let’s dive in!
1. What is Personal Income Tax?
Personal Income Tax (PIT) is the amount of money you must pay to the government based on your income. This income can come from:
- Salary and bonuses from work.
- Income from business or trading.
- Income from investments, real estate sales, or winnings (such as lottery prizes or high-value gifts).
But don’t worry, not every income requires tax payment! There are many cases where you may be exempt or eligible for reductions.
2. Who Has to Pay Personal Income Tax?
Below are the individuals required to pay Personal Income Tax (PIT):
People Residing Long-Term in Vietnam (Resident Individuals)
You are considered a “resident individual” if:
- You live in Vietnam for 6 months (183 days) or more in a year.
- You have a permanent residence in Vietnam (owned or long-term rented house).
If you fall into this group, you must pay PIT on all income, whether earned in Vietnam or abroad.
People Staying in Vietnam Short-Term (Non-Resident Individuals)
If you are in Vietnam for less than 6 months, you only pay personal income tax on income earned in Vietnam.. For example:
- Salary from a job in Vietnam.
- Money from selling land and houses in Vietnam.
3. When Is It Not Necessary to Pay Personal Income Tax?
There are some cases where you do not have to pay personal income tax, for example:
- Low income: If your monthly salary is below 11 million VND (this figure may change), you do not have to pay taxes after deducting exemptions.
- Exemption for families:
- You are entitled to a reduction of 11 million VND per month for yourself.
- If you have young children or elderly parents, you receive an additional reduction of 4.4 million VND per person per month.
- Some special income:
- Gift money, scholarships under 10 million VND per time.
- Money from the sale of real estate between spouses, parents, and siblings.
4. How is Personal Income Tax Calculated?
Depending on the case, personal income tax is calculated differently:
- Residents: The tax is calculated at a gradually increasing percentage, from 5% to 35%, based on income after deductions and exemptions.
- Non-residents: Typically, 20% of income earned in Vietnam is withheld directly.
- Some special cases: Such as winning a prize, selling securities, may be subject to a 10% deduction upon receiving the money.
Simple exampleYou earn 20 million VND/month from salary. After deducting 11 million VND exempted, you have 9 million VND subject to tax. The tax will be calculated according to the corresponding percentage rate.
5. How to Properly Pay Personal Income Tax?
Paying personal income tax is not difficult if you do it the right way.
- If you work for a company: The company will automatically deduct taxes from your salary and submit them on your behalf.
- If you are self-employed or freelancing: You need to declare and pay taxes yourself, usually every 3 months or at the end of the year.
- Deadline for submission:
- The company submits before the 20th of the following month.
- Individuals must submit their self-declaration before the end of April of the following year.
6. Tips for Easily Filing Personal Income Tax
- Keep documents such as contracts and invoices related to income.
- Learn more on the website of the General Department of Taxation.
- If it seems complicated, please ask an accountant or tax expert for help!
Paying personal income tax is the responsibility of those who have income as regulated. Just understand clearly which group you belong to, how much income you have, and the exempted amounts, and you will easily do it right. If you have any questions, please contact H&P GROUP – Hotline: 028.6650.4729.
