Latest 2022 Personal Income Tax Settlement Authorization Requirements

Abbreviations List

PIT: Personal Income; Corp: Corporation; Emp: Employee; ELC: Employment Labor Contract.

Authorization Conditions for Personal Income Tax Settlement

1. What is Personal Income Tax Settlement?

- Personal Income Tax Settlement involves filing tax information for the tax year to determine the personal income tax to be paid, refunded, or carried over to the next tax period.

- Personal Income Tax (PIT) settlement can be conducted in one of two ways:

+ Individuals may settle their taxes directly with the tax authority.
+ Individuals may authorize an income-paying entity to settle taxes on their behalf at the tax authority.

2. Conditions for Authorizing PIT Settlement

Under Article 8 of Decree 126/2020/ND-CP, resident individuals receiving salaries or wages can authorize PIT settlement if they meet the following conditions:

Case 1:

- Signed a labor contract for 3 months or more with a company;

- Actually working there at the time the company processes tax settlement. (Applies even if not working the full 12 months in the year)

Case 2:

Employees transferred from an old organization to a new one can delegate tax settlement to the new entity. Note, the new organization must be established through merger, consolidation, division, separation, business type transformation, or if both organizations are part of the same system.

Case 3:

- Engaged in a labor contract for at least 3 months with a company;

- Actively working there when the company handles the tax settlement (This applies even if not working a full 12 months within the year);

- Earnings from sporadic sources averaging no more than 10 million VND/month have a 10% PIT deduction applied if there's no tax settlement request for this income portion.

3. Example

Example 1:

Ms. A signed a one-year employment contract with B Joint Stock Company, effective from July 1, 2021, to June 30, 2022. In March 2022, while actively working at the company and solely employed there, is Ms. A eligible to delegate her personal income tax settlement to the company?

Answer:

Based on the provided information and the regulations of Article 8, Decree 126/2020/ND-CP, it is observed:

- Ms. A has a one-year employment contract with B Joint Stock Company;
- She works only at one location (B Joint Stock Company);
- During the company's personal income tax settlement period for employees (March 2022), Ms. A was actively employed at company B

=> Therefore, Ms. A meets the criteria to delegate the personal income tax settlement to Company B for the income she received from July 2021.

Example 2:

Ms. A signed a one-year employment contract with B Joint Stock Company, from July 1, 2021, to June 30, 2022. In March 2022, she was working at the company. Additionally, she worked as a part-time sales employee at another company without a formal contract, earning about 3 - 4 million VND per month depending on the clients she secured, with no salary in months she didn't secure any. The company deducted 10% income tax from her payment each time.

When Company B carries out the personal income tax settlement for its employees, can Ms. A authorize Company B to settle her income tax for the earnings from this company?

Answer:

Based on the provided information and according to Article 8 of Decree 126/2020/ND-CP, we find:

- Ms. A signed a one-year contract with B Joint Stock Company;
- As of March 2022, during the company's personal income tax settlement period, Ms. A was employed at Company B.
- She earns additional income from another company, around 3 - 4 million per month, with 10% income tax deducted each payment. She does not request settlement for this income.

(Casual income refers to earnings from wages or payments not through a formal contract and not regular).

=> Thus, Ms. A qualifies to delegate the personal income tax settlement to B Joint Stock Company for the income paid by Company B from July 2021.

If Ms. A wishes to settle the tax for her casual income, she must personally handle it with the tax authorities. She can request tax deduction documents from both Company B and the company paying the casual income for her personal tax settlement.

4. Delegation of Personal Income Tax Settlement Files

4.1 Documents

Personal Income Tax Settlement Delegation File includes:

- Form 08/UQ-QTT-TNCN, the Personal Income Tax Settlement Delegation Form, as issued with Circular 80/2021/TT-BTC. Typically, companies provide this form to their employees for tax settlement. Employees need to fill in the required information and sign the form before submitting it back to their employer.

4.2 Guide on Filling the Documents

Information required from employees in the tax settlement delegation form includes:

- Delegate's full name;
- Delegate's tax identification number;
- Selection of the personal income tax settlement delegation case (employees simply mark their applicable case);
- Tax settlement year;
- Name and tax identification number of the authorized entity (the company where the employee works);
- Employee's signature with full name clearly written.

Employees should ensure all information, especially their own tax ID and the company's tax ID, is accurately provided to avoid errors and corrections.

This information outlines the latest conditions for personal income tax settlement delegation. Readers can verify if their cases qualify for tax settlement delegation and comply accordingly with the regulations.