A reader sent a question to the Ministry of Finance about personal income tax (PIT) for employees working at business households. Currently, there are only instructions on VAT and personal income tax for business households based on the ratio to the household's revenue, but there are no specific instructions on personal income tax on wages and wages of employees in business households.
According to regulations on personal income tax, if there is a personal income tax deduction for employees in the month or quarter, the incomepayer must declare according to form 05/KK-TNCN and send it to the tax authority.
At the end of the year, regardless of whether a tax deduction is incurred or not, if income is paid in the year, the incomepayer must declare the tax settlement and settle on behalf of the authorized employee according to form 05/QTT-TNCN.
If the employee requires a personal income tax deduction certificate, the incomepayer must issue a deduction certificate.
So do the above regulations apply to business households?
Regarding this issue, Hanoi City Tax responded as follows:
1. If during the month or quarter, a business household pays income subject to personal income tax and makes a tax deduction (for example: a 10% deduction for individuals who do not sign labor contracts or a deduction according to the progressive form for employees with signed labor contracts), the business household must declare personal income tax according to form 05/KK-TNCN.
- Deadline for submitting declarations: Monthly or quarterly, depending on the form of declaration that the business household has registered with the tax authority.
- Legal basis: Clause 3, Article 19 of Circular 80/2021/TT-BTC.
2. If during the year the business household has paid income and has deducted personal income tax, at the end of the year the business household must settle personal income tax according to form 05/QTT-TNCN with the tax authority.
- Deadline for submitting settlement documents: No later than March 31 of the following year.
- Pursuant to Point d, Clause 6, Article 8 of Decree No. 126/2020/ND-CP dated October 19, 2020: Organizations and individuals paying income from salaries and wages are responsible for declaring tax settlements and settling on behalf of authorized individuals paid by organizations and individuals, regardless of whether there is a tax deduction or not. In case the organization or individual does not pay income, it is not necessary to declare personal income tax.
Therefore, in the year of organization, if an individual does not pay income from salary or wages, it is not necessary to prepare and submit a personal income tax settlement dossier according to regulations.
+ Pursuant to Clause 1, Article 25 of Circular 111/2013/TT-BTC:
"1. Tax deduction for income from salaries and wages
a) Organizations and individuals paying tax deductible income according to the Southern Steering Committee in installments before paying income to individuals who have signed labor contracts for 03 (three) months or more.
b) Organizations and individuals paying tax deductible income at a rate of 10% on pre-payment income to individuals who have not signed a labor contract or signed a labor contract for less than 03 (three) months with a total income payment of VND 2 million/time or more.
In case the individual has only one source of income from wages and salaries, the estimated total income does not exceed the family deduction level (ie not reaching the tax payment threshold), and has a tax code, then make a commitment according to form No. 02/CK-TNCN issued with this Circular to the organization or individual paying income to serve as a basis for temporary non-deduction of personal income tax.
Organizations and individuals who pay non-deductible income in this case must keep the individual's commitment together with the income payment dossier to present when the tax authority checks.
3. If the employee requests to issue a personal income tax deduction certificate, the business household must issue a personal income tax deduction certificate according to the employee's request.
Pursuant to Clause 2, Article 4 of Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government, which stipulates invoices and documents:
When paying the income that has been deducted from personal income tax, enterprises and business households are responsible for issuing a tax deduction certificate at the request of the deducted individual, except in cases where the individual authorizes tax settlement, they do not have to issue a deduction certificate.
The issuance of deduction documents is specifically implemented as follows:
- For individuals who do not sign labor contracts or sign contracts under 03 months: at the request of individuals, businesses, and business households can choose to issue deduction certificates for each tax deduction or combine multiple deductions in a tax calculation period to issue one certificate.
- For individuals who have signed labor contracts for 03 months or more: enterprises and business households will only issue one tax deduction certificate in one tax calculation period.
