Official Dispatch No. 477 TCT/TNCN of February 04, 2005, on refund of income tax to high-income earners
THE FINANCE MINISTRY
THE GENERAL DEPARTMENT OF TAXATION
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
Hanoi, February 04, 2005
ON REFUND OF INCOME TAX TO HIGH-INCOME EARNERS
To: Provincial/municipal Tax Departments
Pursuant to the Finance Ministry’s Circular No. 81/2004/TT-BTC of August 13, 2004, guiding the implementation of the Government’s Decree No. 147/2004/ND-CP of July 23, 2004, detailing the implementation of the Ordinance on Income Tax on High-Income Earners; the Finance Ministry’s Circular No. 12/2005/TT-BTC of February 4, 2005, amending and supplementing a number of points of the Finance Ministry’s Circular No. 81/2004/TT-BTC of August 13, 2004.
The General Department of Taxation guides the process and procedures for refund of collected income tax on high-income earners (personal income tax - PIT) as follows:
I. Filing of PIT finalization declarations
At the end of a calendar year, individuals who have incomes in various places in the tax year shall make tax finalization declarations according to form No. 08/TNTX and send them to tax offices before February 28 of the subsequent year. Tax finalization declarations shall be sent to the Administrative Sections of tax offices for transfer to the Data Processing Sections on the same day.
Where an individual declares a payable tax amount less than the actually paid amount (withheld by the income-paying agency), he/she shall prepare a tax refund dossier under the guidance in this official letter. If he/she does not prepare such dossier, the Data Processing Section shall send a notice asking him/her to do so. For individuals who do not make tax refund dossiers, their overpaid tax amounts shall be managed and monitored so as to be offset against the tax amounts payable in subsequent years.
II. PIT refund:
2.1. Subjects to be refunded PIT:
- Individuals who have incomes from various places and have their tax amounts temporarily paid in the year bigger than the payable tax amounts upon making annual tax finalization with the tax office.
If an individual whose income has been paid and withheld by an agency has a tax amount temporarily paid in the year bigger than the payable tax amount upon annual tax finalization while the income-paying agency cannot fully offset his/her overpaid tax amount against the payable tax amount of another individual in the tax finalization period.
- Individuals who leave Vietnam, terminating their labor contracts before December 31 and having no other incomes arising in the year.
- Individuals who perform independent occupations and directly register their tax payment with tax offices.
- Individuals who meet all conditions but whose dossiers of request for tax refund, though submitted in 2003 or before, have not yet been processed.
- Other cases entitled to tax refund by competent agencies under the provisions of law, excluding cases of tax refund under agreements.
2.2. Dossiers of request for tax refund shall each consist of:
Individuals who are entitled to income tax refund should have personal tax identification numbers. If such individuals have no such numbers, tax offices shall give guidance and request them to carry out procedures of registration for being granted personal income tax identification numbers.
- An application for tax refund (made according to form No. 15/TNCN)
- People’s identity card or passport (a copy)
- Income tax-withholding vouchers, tax income receipts (originals)
- The annual tax finalization declaration (made according to form No. 08/TNTX).
+ Declaration of the number of days of stay (according to form No. 13a/TNTX)
+ Letter of certification of annual income (enclosed with form No. 12/TNCN)
- In some specific cases, the following documents should be added:
+ In case of authorization of receipt of refunded tax, a paper of authorization, made on a form enclosed herewith.
+ In case of termination of the working term prior to December 31 of the calendar year without continuing to working in Vietnam, documents certifying the termination of the working term, such as retirement decision, job discontinuation decision, contract liquidation record, etc., and the declaration of the number of days of stay in Vietnam (for foreigners).
2.3. Process of refund of personal income tax:
2.3.1. Receipt of tax refund dossiers:
The tax refund shall be effected at Taxation Departments:
- For individuals who have paid their income tax withheld at source (by income-paying agencies) at Tax District Departments, District Tax Departments shall guide them to submit their tax refund dossiers to Tax Departments. If Tax Departments have many subjects requesting tax refund, they may assign District Tax Departments to carry out tax refund procedures. Tax Departments shall issue detailed written guidance and send reports thereon to the General Department of Taxation.
The Administrative Sections of Taxation Departments shall receive tax refund dossiers, record such in dossier registers, affix the date of receipt on dossiers and transfer them to the Personal Income Tax Sections/Personal Income Tax Management Units immediately on the same day or early following working day at the latest.
2.3.2. Examination of tax refund dossiers:
The Personal Income Tax Sections/Personal Income Tax Management Units shall carry out the following tasks:
- Making a photocopy of each tax finalization declaration (form No. 08/TNTX, and sending it to the Informatics and Data Processing Section).
- Checking dossier documents:
+ For complete dossiers: Writing the date and sign for certification on the table of monitoring the situation of personal income tax refund.
+ For incomplete or invalid dossiers, making written requests to concerned individuals for supplementation (made according to a form enclosed herewith) and transfer them to the Administration Section for delivery to such individuals.
+ For dossiers submitted by those who are not eligible for tax refund according to regulations: Making written notices, clearly stating the reason for non-refund of tax, and transferring them to the Administrative Section for delivery to such individuals.
The time limit for examining tax refund dossier is 07 days, counting from the date of receipt of dossiers from the Administrative Section.
2.3.3. Checking of data in tax refund dossiers:
The Personal Income Tax Sections/Personal Income Tax Management Units shall carry out the following tasks:
- Checking the data entered in the elements of the tax finalization declarations, form No. 08/TNTX, paying attention to taxable income elements:
+ For individuals who have tax amounts withheld according to the partially progressive tax schedule, collating income tax receipts (originals) with the declared taxable incomes in Part II, Section A of form No. 08/TNTX to check the accuracy of incomes. If there are no tax receipts, checking the declared taxable incomes in each month. For a month in which there are no incomes, requesting individuals to write his/her undertaking of no income in the line reserved for such month.
+ For taxable incomes already withheld at source at the rate of 10%, comparing the data declared in Section II, Part B of form No. 08/TNTX with tax withholding vouchers (originals).
+ Writing analysis information, data comparison results and remarks on tax refund dossiers, to be enclosed with the dossiers (according to form II enclosed herewith).
- If detecting erroneous or unclear data or finding it necessary to verify data in a tax refund dossier, making a written request (according to form III enclosed herewith) for adjustment of the dossier, then transferring it to the Administrative Section/Unit for delivery to the concerned income-paying agency/individual for explanation, supplementation or preparation of a new dossier for substitution.
- Local tax offices shall have to supply information used for the determination of withheld income tax amounts to taxpayers.
For invalid personal income tax receipts, personal income tax withholding vouchers (originals) like those doubted to be fake, have been erased, contain wrongly declared data or have a refundable tax amount of over VND 10 million, tax offices which have received the tax refund dossiers should exchange information with those managing the income-paying agencies which already withheld tax amounts, specifically as follows:
+ Comparing income tax receipts: For individuals who worked for various agencies and got personal income tax receipts issued by the income-paying agencies which withheld their taxes, it is necessary to check in the tax receipts the addresses of such income-paying agencies so as to ascertain the declaration of tax amounts paid in the year. For example: Individual B submitted a tax finalization declaration to the Ho Chi Minh City tax office, stating that he already worked at Company X in Hanoi for 5 months with a monthly wage of VND 8 million and Company X withheld a monthly tax amount of VND 0.3 million. When individual B discontinued working at Company X, Company X issued to him a personal income tax receipt, which was then handed by individual B to the Ho Chi Minh City tax office. This receipt shall be compared with the year-end finalization declaration of Company X, made according to form No. 10/TNTX, submitted to the Hanoi tax office, the data declared in Section II, Part A and specified at Point 2, Part B, on tax amounts withheld at the income-paying agency, including the full name, tax identification number and serial number of the receipt of individual B.
+ Comparing tax withholding vouchers: For individuals having tax amounts withheld at 10%, there should be information supplied by the tax offices managing the income-paying agencies which already withheld such tax amounts. For example, individual A makes annual tax finalization with the Hanoi tax office. In her annual tax declaration, there is a voucher on the withholding of VND 5 million as a 10% tax. According to the tax withholding voucher made by the income-paying agency, enterprise Y in Ho Chi Minh City, this enterprise already paid an income of VND 50 million to individual A in May 2005. This detail should be reflected on the declaration, form No. 03b/TNTX, made by enterprise Y in June 2005 (form No. 03b/TNTX is itemized for each individual in each month).
The time limit for analysis and comparison of data and classification of tax refund dossiers shall be 7 days, counting from the date of receipt of complete and valid dossiers.
After receiving complete dossiers, comparing them with tax finalization data and determining overpaid personal income tax, the Personal Income Tax Sections/Personal Income Tax Management Units shall prepare draft decisions and submit them to the Tax Department leaders for approval. Such a decision must state whether the overpaid tax amount will be refunded in cash or by account transfer; if by account transfer, specify the account number and the bank’s name (Article 2 of the decision). Each tax refund decision (form IV enclosed herewith) shall be made in 5 copies:
+ 01 copy to be sent to the concerned individual or the organization authorized to receive the refunded tax amount.
+ 01 copy to be transferred to the Informatics and Data Processing Section for inputting data into the computer and making orders of payment of refunded tax amounts. The Informatics and Data Processing Section shall transfer the tax refund decisions enclosed with payment orders to the state treasuries for carrying out procedures to refund tax amounts to individuals.
+ 01 copy to be sent to the Draft Budget Synthesis Section (for tax refundees managed by the District Tax Department).
+ 01 copy to be filed at the Personal Income Tax Section/Personal Income Tax Management Unit directly managing the tax refundees).
+ 01 copy to be filed at the Administrative Section.
2.3.4. Making of orders of payment of refunded tax amounts:
The Informatics and Data Processing Sections shall base themselves on the personal income tax refund decisions to make orders of payment of refunded tax amounts and send them to provincial/municipal state treasuries (each enclosed with a tax refund decision).
Accounting of refunded tax amounts: The Informatics and Data Processing Sections shall base themselves on tax refund decisions and orders of payment of refunded tax amounts to input data into the computer for monitoring the payment of refunded tax amounts and making accounting reports on the payment of refunded tax amounts.
2.3.5. Making of reports on the tax refund and preservation of tax refund dossiers
Monthly, the Personal Income Tax Sections/Personal Income Tax Management Units shall make reports on the tax refund according to regulations and send them to the Tax Department leaders and other Sections/Teams related to tax management (possibly transmitted via the computer network). The Tax Departments’ Informatics and Data Processing Sections shall sum up the tax refund by the entire Tax Departments (according to form VI enclosed herewith) and send reports thereon to the General Department of Taxation.
The Personal Income Tax Sections/Personal Income Tax Management Units shall organize the preservation of tax refund dossiers and documents related thereto.
2.4. Time limit for tax refund:
The time limit for settlement of tax refund is 15 days, counting from the date of receipt of complete dossiers as prescribed; in case of necessity to verify dossiers, it shall be 45 days at most.
The number of days for consideration and settlement of personal income tax refund shall be counted in working days.
2.5. Management and refund of personal income tax amounts from temporary collection accounts
2.5.1. Temporary collection accounts:
Accounts for temporary collection of personal income tax are those used for accounting and monitoring the collection and use of tax amounts withheld at source at 10% paid by income-paying agencies when issuing income tax withholding vouchers to individuals.
Tax Departments shall open temporary collection accounts 920.03 at provincial/municipal Tax Departments for common use by Collection Management Sections under the Tax Departments and District Tax Departments, in the name of Taxation Department directors.
Contents of temporary collection account 920.03:
Collection section: reflecting the personal income tax amounts paid by income-paying agencies into the state budget after withholding 10% tax under the provisions of Point 3, Section III of the Finance Ministry’s Circular No. 81/2004/TT-BTC of August 13, 2004.
- Remitting 50% of the amount arising in the period into the state budget;
- Paying personal tax amounts under decisions of tax officers to subjects entitled to tax refund.
2.5.2. Specific provisions on management of temporary collection accounts:
The Informatics and Data Processing Sections of Tax Departments shall monitor temporary collection accounts as follows:
- Updating data on amounts collected into temporary collection accounts, compare their balance figures with those of state treasuries and vouchers on the payment of 10% withheld tax amounts into temporary collection accounts by income-paying agencies managed by the Informatics and Data Processing Sections of Tax Departments and Taxation District Tax Departments. The Informatics and Data Processing Sections shall be responsible for making copies of vouchers on the payment of tax monies into temporary collection accounts (certified by state treasuries) and send them to Tax Departments and each District Tax Departments.
- At the end of each month, making vouchers on temporary remittance of 50% of tax amounts arising in the month into the state budget (Chapter 157, Category 10, Clause 05, Group 1, Sub-Group 01, Item 001: Vietnamese and Item 002: Foreigners). On the basis of the tax amounts paid in the month (vouchers on payment of 10% withheld tax amounts), accountants shall make remittance vouchers for Tax Departments and each District Tax Department, stating the tax amounts remitted into the state budget.
- The temporary collection accounts’ balances may be carried forward to the subsequent year. If such balance is big, it shall be proposed to increase the percentage of tax amounts remitted into the state budget in the subsequent year; if the source for refunding tax amounts is insufficient, it shall be proposed to reduce the percentage of tax amounts into the state budget in the subsequent year.
III. Organization of implementation
Directors of provincial/municipal Tax Departments shall make personal income tax refunds on time and according to regulations.
For personal income tax refund dossiers which are dealt with beyond the prescribed time limit due to the fault of tax offices, Tax Departments shall, apart from refunding tax amounts according to regulations, pay interests on the lately refunded tax amounts at the lending interest rate applied by commercial banks.
Such compensated amounts shall come from the package budgets assigned to Tax Departments. The handling of tax officers responsible for the damage caused to tax refundees shall be decided by Tax Department directors.
Tax Departments shall have to publicize the personal income tax refund process at tax offices for taxpayers to know.
Any problems arising in the course of implementation should be immediately reported to the General Department of Taxation for study and settlement.
FOR THE GENERAL DIRECTOR OF TAXATION
DEPUTY GENERAL DIRECTOR
Nguyen Thi Cuc
GENERAL DEPARTMENT OF TAXATION
TAXATION DEPPARTMENT OF
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
............, date month year 200
INVALD PERSONAL INCOME TAX REFUND DOSSIER
Tax identification number:
We has received the dossier of request for refund of personal income tax made by Mr/Mrs....................... .
Pursuant to the provisions on personal income tax refund dossiers in the Finance Ministry’s Circular No. 81/2004/TT-BTC of August 13, 2004, the General Department of Taxation’s Official Letter No. 477/TCT/TNCN of February 04, 2005, guiding the refund of income tax on high income earners, your dossier still fails to meet the following procedural requirements:
To ensure that the refund of personal income tax is settled within the prescribed time limit, you are requested to send the above-said documents to the Taxation Department of............... by the date .......................at the latest.
If having any inquries, please contact:
Thank you very much for your cooperation./.
- Filed at: ..........
(Signature, full name and stamp)