VietNamNet Bridge – The Prime Minister has released a decision on the method to calculate personal income tax (PIT) for 2009, under which, tax sums will be defined based on the origin of income rather than payment time.
Tax sums will be defined based on the origin of income rather than payment time.
As such, all Tet and year-end bonuses that many businesses paid to their staffs in the first half of the year in an attempt to avoid tax, will still bear PIT. In return, the income originated in the first six months of the year, but is paid later in the second half of the year for many reasons, will be exempted from tax.
Earlier this month, the Ministry of Finance submitted two methods of implementing the collection of PIT, saying that it was leaning towards the method based on payment time. However, the final decision is that the tax sums must be calculated based on the origin of income.
The final decision made by the Prime Minister will certainly dissatisfy businesses that paid 2010 Tet bonuses in the first six months of the year. However, according to the General Department of Taxation, this way is fair to tax payers.
An official from the taxation body said that a lot of income items, especially from investments, asset assignment and inherits, might have been generated in the first six months of the year, but people will only receive the income after July 1. He said that with the decided method of tax calculation, taxation bodies will have more jobs to do, but this will ensure fairness to tax payers.
The General Department of Taxation said that the circular guiding the calculation of personal income tax will be released soon, so that the July tax finalisation will be carried out right in August 2009.