On the Government Portal, Mr. N.Q. H asked, are students who sign a 1-year labor contract with an income of about 4 million VND/month subject to 10% personal income tax deduction according to Circular No. 111/2013/TT-BTC?
If not subject to 10% deduction, by what method is personal income tax calculated in Mr. H's case and with the current income level, does he have to pay tax or not?
Regarding this issue, the 13th base tax of Hanoi city has the following opinions:
Based on Clause 1, Article 25 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Minister of Finance:
1. Tax deduction
Tax deduction is when an organization or individual paying income calculates and deducts the amount of tax payable from the income of the taxpayer before paying income, specifically as follows:
b) Income from salaries and wages
... b.1) For resident individuals who sign labor contracts for three (03) months or more, organizations and individuals paying income shall deduct tax according to the progressive tax schedule, even in cases where individuals sign contracts for three (03) months or more in multiple locations.
b.2) For resident individuals who sign labor contracts for three (03) months or more but quit their jobs before the end of the labor contract, the organization or individual paying income still deducts tax according to the progressive tax schedule.
... i) Tax deduction for some other cases
Organizations and individuals paying wages, remuneration, and other expenses to resident individuals who do not sign labor contracts (according to the guidance at points c, d, clause 2, Article 2 of this Circular) or sign labor contracts for less than three (3) months with a total income payment of two million (2 million) VND/time or more, must deduct tax at a rate of 10% on income before paying to individuals".
Based on Resolution No. 954/2020/UBTVQH14 dated June 2, 2020 of the National Assembly Standing Committee, the family circumstance deduction level for the taxpayer himself is 11 million VND/month.
Based on the above regulations, Mr. H's case of signing a 1-year term labor contract with an income of 4 million VND/month is not subject to 10% tax deduction.
After family circumstance deduction according to regulations, taxable income does not arise, so personal income tax is not payable.
In the process of implementing tax policies, if there are still problems, Base Tax 13 of Hanoi City requests you to contact the Business Management and Support Team 2 - Base Tax 13 of Hanoi City for guidance according to regulations.
