– Pursuant to Clause 2, Article 3 of the Law on Personal Income Tax 2007 (amended in Clause 1, Article 1 of Law No. 26/2012/QH13):
“2. Incomes from salaries and wages, including:
a) Salaries, wages and amounts of similar nature;
b) Allowances and subsidies, except for: allowances and subsidies according to the provisions of the law on preferential treatment of persons with meritorious services; defense or security allowances; hazard or dangerous allowances for industries, occupations or jobs at workplaces with hazard and dangerous elements; attraction allowances, regional allowances as prescribed by law; allowances for sudden difficulties, allowances for labor accident, occupational disease, lump-sum allowances for maternity or child adoption, allowances for working capacity decline, lump-sum retirement allowances, monthly survivorship allowances and other allowances in accordance with the law on social insurance; severance allowances, job loss allowances according to the provisions of the Labor Code; allowances of the nature of social protection and other allowances and subsidies not of the nature of salary or wages in accordance with the Government’s regulations.”
– Pursuant to Point b, Clause 2, Article 8 and Clause 1, Article 25 of Circular 111/2013/TT-BTC:
“Article 8. Determination of taxable income from business, salaries, wages
…
2. Taxable income from salaries and wages
a) Taxable income from wages and salaries equals the sum of wages, salaries, remunerations and other incomes of similar nature received by the taxpayer in the tax period as guided in Clause 2 Article 2 of this Circular.
…
Article 25. Tax withholding and certificate of tax withheld at source
1. Tax withholding
Tax withholding is the income payer’s calculating and withholding the tax payable from the taxpayer’s income before paying the income to the taxpayer, specifically as follows:
…
b) Incomes from salaries, wages
b.1) The income payer shall deduct tax from incomes of residents that sign labor contracts for three (03) months or longer according to the progressive tax table, including the persons that sign such contracts at various places.
b.2) The income payer shall still withhold tax from the incomes earned residents that sign labor contracts for three (03) months but resign before such labor contracts expire according to the progressive tax table.
…”
Pursuant to the above provisions, if the Company pays incomes from salary of 02 million VND/time or more to the employee at the time after the termination of the labor contract, the Company must deduct the employee’s personal income tax at the rate of 10% of the total taxable income from wages and salaries.
If the employee has only income subject to tax withholding according to the above rate, but the estimate of the total taxable income of the employee after family allowances is not enough to pay tax, the employee with income makes a commitment to not be deducted 10% PIT and sends it to the Company for the Company as a temporary basis for not withholding PIT.