Question:
According to Official Letter No. 3179/CT-TTHT dated April 4, 2019 (Regarding Personal Income Tax) and Official Letter No. 47484/CT-TTHT dated July 9, 2018 (Regarding PIT Deduction during Probation), a 10% deduction is applied to probationary employees with a duration of fewer than 3 months.
However, in section i, paragraph 1, article 25 of Circular No. 111/2013, there is a passage that states “TIn cases where individuals have only one source of income subject to the deduction rate mentioned above but the estimated total taxable income of the individual after deductions is below the threshold for tax payment, the individual may submit an income commitment (according to the form issued with the tax management guidelines) to the income-paying organization for temporary exemption from personal income tax deduction.” So, when an employee signs a probationary contract for less than 3 months and makes the commitment as prescribed, does the company need to withhold 10% PIT or not??
Answer:
– Based on Point i, Paragraph 1, Article 25 of Circular No. 111/2013/TT-BTC dated August 15, 2013, issued by the Ministry of Finance, which provides guidance on personal income tax (PIT), it stipulates the deduction of PIT from wages and salaries.
-In accordance with this regulation, in the case where a company signs a probationary contract with an individual for a duration of less than 3 months, and if the individual has only one source of income with a tax identification number (TIN), and the estimated total taxable income of the individual, after taking into account deductions, does not reach the threshold for tax payment, then the individual may submit an Income Commitment (Form 02/CK-TNCN as per Circular No. 92/2015/TT-BTC issued by the Ministry of Finance) to the company for temporary exemption from the deduction of personal income tax (PIT).
At the end of the tax year, the company is still required to compile a list of individuals who have submitted income commitments (Form 05-2/BK-QTT-TNCN as per Circular No. 92/2015/TT-BTC issued by the Ministry of Finance) and their income, and submit it to the tax authority. Individuals who make the commitment are responsible for the accuracy of their commitment, and in cases of fraud, they will be subject to the provisions of tax management laws.
