PERSONAL INCOME TAX (PIT) FINALIZATION Presented by : Finance & Accounting 30 March 2012

Contents Who are subject to PIT finalization? Kinds of PIT & Tax assessment period Preparing tax finalization file Deadline submission

1. Who are subject to PIT finalization? AND 1- Lower tax payment 2- Excess tax refund (optional) 3-Foreigners before getting out of VN  Resident individual 

1. Who are subject to PIT finalization? Staying in VN(12 consecutive months) >= 183 days Having a residential location Having lease contract (house, hotel..) >=90days Add Your Title OR Residential individual

2. Kinds of PIT and Tax assessment period 1.Salary income 1.Capital investment & transfer 2. Real property transfer 3.Winnings or prizes 4.Royalties or Franchises 5.Inheritances or gift  Annual tax assessment period Taxable income  Each occasion when income arise 2. Biz income

2. Kinds of PIT & tax assessment period  Annual tax assessment period Example : 1)Mr. A came to VN since 02 July 2011 (183 days) Tax assessment year 2011 from 1st Jan to 31st Dec ) Mr. B came to Vn since 3 July 2011 (182 days) * 1st tax assessment year : 3rd July 2011~ 2nd July 2012 * 2nd tax assessment year : 1st Jan 2012 ~ 31 Dec st 2nd 3/7/20112/7/2012 1/1/ /12/2012

3. Preparing tax finalization files 5mil Income  Definitions 4.5=5-0.5 (meal allowance) Taxable income (income- non-taxable income) 0.5mil=4.5mil-4mil (personal deduction) Assessable income (Taxable income-deductions) 0.05mil=0.5mil*10% (tax rate) Tax (Assessable income*% tax rate)

3. Preparing Tax finalization files Income : business + salary (wages) Income receivable by employees from employers in monetary or non-monetary forms -Insurance fee which the law doesn’t require employers buy for employees -Membership fees for individuals : sport, artistic… clubs -Other services for individuals in healthcare activities, entertainment, sports and aesthetics -Housing allowance paid by the employer but not exceeding 15% of total taxable income.

3. Preparing Tax finalization files Non-taxable income: –Night shift or overtime salary payable which is higher than the day shift or normal working hours salary. –One-off relocation allowance for expatriates coming to reside in Vietnam. –Airfares for one round trip home leave for expatriates a year. –School fees for children of expatriate employees up to high school level.

3. Preparing Tax finalization files Non-taxable income (Cont): –Meal allowance in cash to the employees (not excess of the stipulated amount)

3. Preparing Tax finalization files Deduction for dependents: 1.6m/month/person 1. Children (including adopted and illegitimate children ) - Under 18 year-old or - Over 18 year-old : studying at university (college) or handicapped and unable to work 2. Husband ( wife)/ parent or parent- in- law - Above the working age - Still of working age as stipulated by law but who is handicapped, unable to work 3. Grandparents/Brothers and sisters/Brothers in law, sister s in law /Grandchildren, nephews and nieces /Other people required by law - Tax payer must directly rear or care for and - Above the working age or handicapped and unable to work

3. Preparing Tax finalization files  Forms (Circular 28/2011/TT-BTC dated 28/02/2011) 09/KK-TNCN - Declaration of tax finalization 1. 09A/PL-TNCN : Income from Salaries, Wages 2. 09B/PL-TNCN : Income from business 3. 09C/PL-TNCN: Dependent deductions (if dependents were registered)  Appendixes

3. Preparing Tax finalization files Taxable incomes (+) Taxable incomes (+) Step 1 Deductions (-) Deductions (-) Step 2 Tax liabilities (=) Tax liabilities (=) Step 3

3- Step 1. Taxable income No.ItemsAmountNotes 1 Total Taxable income [22]=[23+25] a Total taxable income in VN, in which [23]6A+15B Total taxable income for consideration of tax reduction [24]NO b Total taxable income outside VN [25]8A+19B

3- Step 2. Deductions No.ItemsAmountNotes 2 Deductions [26][ ] aFor tax payer [27]4mil/1m bFor dependents [28] 1,6m/p/m- Registered c Charities, humanitarian, study encourage [29] Established as regulation d Compulsory insurances [30] Health, social and unemployed Insurance

3- Step 3. Tax liabilities No.ItemsAmountNotes 3 Total assessable income [31]=[22-26] 4 Tax [32]=[31* tax rate]

3- Step 3. Tax rate Tax Bracket Portion of monthly Assessable income (mil) Tax rate (%) Illustration : Total assessment income 240mil/year (20mil/m) 1Up to 555mil *5%=0.25 2Over 5 to 10105mil *10%=0.5 3Over 10 to 18158mil *15%=1.2 4Over 18 to 32202mil *20%=0.4 5Over 32 to 5225 Monthly tax = Over 52 to 8030 Total (year) 2.35*12=28.2mil 7Over 8035

3- Step 3. Tax liabilities No.ItemsAmountNotes 5 Total paid deducted of tax [33]=[ ] aDeducted [34]9A+18B bPaid [35]12A+17B c Paid outside VN (if any) [36] Max= total tax * outside/total income 6 Reduction of tax [37] Duplication of tax (1 st & 2 nd year)

3- Step 3. Duplication of tax 1 st year : 100 mil PIT 2 nd year :120 mil PIT Duplication of tax from 1/1->2/7/2012 Tax reduction=100mil*6month/12month = 50 mil 1st 2nd 3/7/20112/7/2012 1/1/ /12/2012

3- Step 3. Tax liabilities No.ItemsAmountNotes 7 Tax Payable [38] [ ] >0 8 Excess payment [39] [ ] >0 a Refund requirement [40] bSet-off in next period [41]

4.Deadline submission 90days since day-end of Tax assessment year