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Personal Income Tax Refund Procedures for Foreigners
Procedures and documents for personal income tax (PIT) refunds for foreigners are issues of concern to many experts and foreign workers in Vietnam, especially at the time of annual tax settlement. According to Vietnamese law, if foreigners working in Vietnam meet the conditions and request a tax refund, they can completely receive back the personal income tax they have paid in excess of the prescribed amount. However, for this process to take place smoothly and quickly, taxpayers need to clearly understand the legal regulations, dossier components, and steps to carry out the tax refund procedure. Understanding the process not only helps save time and costs but also ensures the legal rights of foreign workers in the working environment in Vietnam.
Conditions to refund personal income tax for foreigners
Foreigners working in Vietnam who incur personal income tax obligations are divided into two categories: resident individuals and non-resident individuals. In case a foreigner is a resident individual according to the provisions of the law on personal income tax, the tax calculation, tax calculation method, tax payable, tax settlement, or personal income tax refund is applied similarly to Vietnamese individuals who are residents according to the provisions of the law on personal income tax.
See details on how to calculate taxes at “4 Steps to Calculate Personal Income Tax for Foreigners”
Pursuant to Clause 2, Article 8 of the Law on Personal Income Tax 2007 and Article 12 of Circular 151/2014/TT-BTC, individuals are entitled to a personal income tax refund in one of the following cases:
– The amount of income tax paid is greater than the amount of tax payable.
– The individual has paid income tax but has taxable income that is not yet taxable.
– Other cases as decided by the competent state agency.
In addition, according to Article 28 of Circular 111/2013/TT-BCT, the individual must have a tax refund request to carry out the procedure (can declare online at https://thuedientu.gdt.gov.vn/).
If the individual is eligible for a tax refund but does not have a refund request, it will be offset against the next tax declaration period (offset against the following year).
Procedures to refund personal income tax for foreigners
Case 1: Personal income tax refund through organizations or individuals that only pay income (organizations or individuals that pay income declare taxes on behalf of others under authorization)
Step 1: Submit application
In case the organization or individual paying income has offset the overpaid or underpaid tax of individuals with overpaid tax, if there is a request for a refund from the tax authority, the organization or individual paying income shall submit a personal income tax refund dossier to the tax authority directly managing it.
– Personal income tax refund dossier includes:
+ Personal income tax refund request (application for refund of state budget revenue) according to form No. 01/DNHT.
+ Photocopies of documents and personal income tax payment receipts of the taxpayer and the legal representative of the organization or individual paying the income signed a commitment to take responsibility for the copy.
– Number of dossiers: 01 set.
Step 2: Receive and process requests
Case 2: Individuals directly settle personal income tax with the tax authorities
Individuals with income from salaries and wages who directly settle personal income tax with the tax authority and have excess tax paid do not have to submit a tax refund application.
Individuals who directly settle taxes only need to write the tax amount requested for refund in index number [47]—”Amount of tax refunded to the taxpayer’s account” or index number [49]—”Total amount of tax offset for the following period’s occurrences” on the income tax settlement declaration form No. 02/QTT-TNCN when making tax settlement.
Some notes on personal income tax refund for foreigners
Foreigners who need to get a personal income tax refund should pay attention to the following issues:
- Personal income tax refunds only apply to individuals who have registered and have a tax code at the time of submitting personal income tax settlement dossiers.
- For individuals who have authorized tax settlement for organizations or individuals who only pay income to perform tax settlement on their behalf, the tax refund of that individual is made through the organization or individual paying income. The organization or individual paying income will offset the overpaid or underpaid tax of the individuals. After offsetting, if there is an overpaid personal income tax, it will be offset in the following period, or the income tax will be refunded if there is a request for a refund.
- For individuals who are subject to direct tax declaration with the tax authority, they can choose to have their personal income tax refunded or offset in the following period at the same tax authority.
- In case of a personal income tax refund, but late submission of the personal income tax finalization declaration as prescribed, no penalty shall be applied for administrative violation of the late tax finalization declaration.
Refer to Corporate Secretary Service to let Thele.blog support you in tax refunds.
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