Overtime and overtime pay are at least 150% of salary
According to Clause 1, Article 98 of the 2019 Labor Code, employees who work overtime will be paid according to the unit price of salary, or the actual salary.
If employees go to work on a weekday: The enterprise must pay at least 150% of the salary.
If employees go to work on a weekly day off: The enterprise must pay at least 200% of the salary.
If employees go to work on a holiday or a day off with a salary: The enterprise must pay at least 300% of the salary, not including the salary for the holiday for those who receive a day salary.
Income exempt from personal tax for overtime pay and overtime
Pursuant to the content of Point i, Clause 1, Article 3 of Circular 111/2013/TT-BTC, there are regulations. In particular, in Article 4 of the Law on Personal Income Tax and Article 4 of Decree No. 65/2013/ND-CP, tax-exempt income includes:
Income from salary, wages for working at night, overtime is paid higher than the salary, wages for working during the day, working within the prescribed hours of the Labor Code. Specifically as follows:
The salary and wages paid are higher due to having to work at night, working overtime are exempted from tax based on the actual salary and wages paid for working at night, and overtime is deducted from the salary and wages calculated according to the normal working day.
Organizations and individuals who pay income must make a statement clearly reflecting the time spent at night, overtime, and the salary paid for overtime and overtime to employees. This list is kept at the income paying unit and presented upon request by the tax authority.
According to the regulations on income exempt from personal income tax (PIT), income from salary, wages for working at night, overtime is paid higher than the salary, wages for working during the day, working within the hours prescribed by the Labor Code.
Accordingly, overtime pay is exempt from personal income tax but will not be completely exempt, but only be exempted from tax for income paid higher than salary and wages worked for hours according to the Labor Code.
The salary and wages paid for working at night and overtime are exempt from personal income tax based on the actual salary and wages paid for working at night and overtime will be deducted from the salary and wages calculated on normal working days.
How to calculate personal income tax for overtime pay and overtime
According to the draft Law on Personal Income Tax (amended), the tax rate is proposed to be reduced from 7 levels to 5 levels, with the gap between levels increasing gradually by 10, 20, 30 and 40 million VND/month; the corresponding tax rates are 5%, 15%, 25%, 30% and 35%. The highest tax rate of 35% applies to taxable income over VND 100 million/month.
There are 5 steps to calculate personal income tax for overtime pay and overtime pay, readers can apply:
Step 1: Calculate taxable income according to the formula:
Taxable income = Total income received from salaries, wages - Tax-exempt items
Readers get the total income they receive, deducting the money they are paid higher for working at night and working overtime.
Step 2: Calculate the deductible amounts
Step 3: Calculate taxable income according to the formula:
Taxable income = Taxable income - Reductions
Step 4: Calculate the tax payable according to the formula:
Personal income tax payable = Taxable income x Tax rate
For example: Mr. Nguyen Van An works at a wood product factory, with a salary paid per normal working day according to the provisions of the Labor Code of VND 40,000/hour.
In case individuals work overtime on normal days, individuals are paid 60,000 VND/hour, the tax-exempt income is:
60,000 VND/hour - 40,000 VND/hour = 20,000 VND/hour.
In case individuals work overtime on holidays or public holidays, individuals are paid 80,000 VND/hour, the tax-exempt income is:
80,000 VND/hour - 40,000 VND/hour = 40,000 VND/hour.
