Refund of overpaid personal income tax after finalizing personal income tax for income paying companies in Vietnam

Refund of overpaid personal income tax after finalizing personal income tax for income-paying companies in Vietnam

Finalizing personal income tax is mandatory in Vietnam that income-paying companies must do before the last day of March every year, regardless of whether or not there is a tax withholding in the company.

When there is an Power of Attoney to finalize personal income tax from employees, the income-paying Company will proceed to finalize personal income tax on behalf of the authorized employee and incur excess personal income tax. So, how to refund overpaid personal income tax after finalizing personal income tax for income-paying companies.
Pursuant to Article 60 of the Law on Tax Administration 2019 of Vietnam on the handling of overpaid tax, late payment and fines as follows:
o Taxpayers who already paid tax, late payment interest and fines are larger than the payable tax, late payment interest and fines, may offset the overpaid tax, late payment interest or fine with the overpaid amount. tax, late payment interest, fines owed or deducted from the amount of tax, late payment interest, fines payable of the next tax payment or refund of the overpaid tax, late payment interest, fine when the taxpayer Taxpayers no longer owe tax, late payment interest, and fines.
o In case the taxpayer proposes to offset the overpaid tax, late payment interest, and fine with the outstanding tax, late payment interest or fine, the late payment interest corresponding to the offset amount within the time limit shall not be calculated. from the date of overpayment to the date of clearing by the tax authority.
o In case a taxpayer requests the refund of overpaid tax, late payment interest, or fine, the tax authority must issue a decision on refund of overpaid tax, late payment interest, or fine or get a written document. a reply stating the reason for non-refundable within 05 working days from the date of receiving the written request.
o The overpaid tax, late payment interest, and fines shall not be refunded and the tax authority shall liquidate the overpaid amount in accounting books and electronic data systems in the following cases: a) Tax administration agencies have notified taxpayers of the refunded tax, late payment interest and fines, but the taxpayer refuses to receive the overpaid amount in writing; b) The taxpayer does not operate at the address registered with the tax authority, has been notified by the tax authority of the overpaid amount on the mass media, but after 01 year from the date of notification, the taxpayer has no written response to the tax authority”s request for refund of overpaid tax, late payment interest or fine; c) The overpaid amount is overdue for 10 years from the date of payment to the state budget but the taxpayer fails to offset tax obligations and does not refund tax.
o In case the taxpayer does not operate at the registered business address and has tax, late payment interest, overpaid fine and outstanding tax, late payment interest and fine, the tax administration agency shall make compensation. minus tax, late payment interest, fine overpaid with tax, late payment interest, fine owed.
o The Minister of Finance shall stipulate the competence and procedures for handling overpaid tax, late payment interest and fines specified in this Article.

Thus, based on the above provisions, when an paying income company has an overpaid personal income tax amount, it can apply for a refund of the overpaid personal income tax by one of the following two methods:
• Refund the overpaid personal income tax after the personal income tax finalization by automatically offsetting it against the tax payable for the next tax payment period.
• Request a refund of the overpaid tax amount.

I. Refund of overpaid personal income tax in Vietnam after personal income tax finalization by automatically offsetting the tax payable for the next tax period:

The method of refunding overpiad personal income tax after finalizing personal income tax by automatically offsetting it against the tax payable for the next tax period is the simplest method that income-paying companies apply. Specifically, income-paying companies having overpaid personal income tax will offset it as follows:
i.. Offsetting the taxpayer”s debt with the same economic content (subsection) and the same revenue collection area as the overpaid amount.
ii. Offsetting with revenues arising from taxpayers with the same economic content (subsection) and the same area of budget collection as the overpaid amount.

The income paying company is responsible for refunding the authorized employee the overpaid personal income tax paid.
When offsetting, if there is still overpaid tax or no debt, the income-paying company needs to submit a request for refund or request for refund and offset of overpaid tax.

Notes:
• Overpaid personal income tax cannot be carried forward to the following year. According to current tax law, overpaid  personal income tax after finalization will not be carried forward to the following year. Instead, taxpayers can request a refund of overpaid tax or, in some special cases, can offset it against the tax liability of the following periods if it arises. However, transferring overpaid tax from one year to the next to offset directly against the tax liability of the following year is not allowed, unless there is specific guidance from the tax authority. Therefore, taxpayers need to carry out tax refund procedures for overpaid tax instead of expecting to carry forward this tax amount to the following years.
• Income-paying enterprises with excess personal income tax (PIT) paid do not need to submit a request for offset for debts arising in cases 1.(i) and 1.(ii) above. In other cases, income-paying companies shall submit a request for offset for debts arising in accordance with the provisions of Article 25 of Circular No. 80/2021/TT-BTC of the Ministry of Finance below.

II. Request a refund of overpaid personal income tax in Vietnam.

When there is an overpaid personal income tax, the income-paying company has the right to choose the form of refund. To make the refund, the income-paying company needs to prepare a refund request and send it to the Tax Department where the tax declaration and payment were made.
PIT refund request file: the tax refund file for paying income companies to the authorized employees includes the following documents:
• Document requesting the handling of ovarpaid tax, late payment fees and fines (if any).
• Power of Attorney according to legal regulations when the taxpayer does not directly carry out the tax refund procedure.
• List of paid tax documents: applicable to paying income companies.

III. Procedures for offsetting overpaid personal income tax in Vietnam.

Pursuant to Article 25 of Circular No. 80/2021/TT-BTC of the Ministry of Finance, the procedures for offsetting and resolving excess personal income tax payments are prescribed as follows:

1. Taxpayers with overpaid tax, late payment interest, and overpaid fines (hereinafter referred to as overpaid amounts) as prescribed in Clause 1, Article 60 of the Law on Tax Administration shall be cleared or Refunds are as follows:
a) Offsetting the overpaid amount with the outstanding tax, late payment interest, outstanding fine (hereinafter referred to as the debt) or subtracting from the payable tax, late payment interest or fine the next time (hereinafter referred to as the arising revenue) in the following cases:
a.1) Offsetting the taxpayer”s debt with the same economic content (subsection) and the same revenue collection area as the overpaid amount.
a.2) Offsetting with revenues arising from taxpayers with the same economic content (subsection) and the same area of budget collection as the overpaid amount.
a.3) Income-paying organizations that have overpaid personal income tax shall make offsets as prescribed at Points a.1, a.2 of this Clause. The overpaid personal income tax amount upon finalization is determined by (=) the overpaid tax amount of the individual authorizing the finalization minus (-) the remaining payable tax amount of the individual authorizing the finalization; income-paying organizations are responsible for paying individuals authorized to finalize the overpaid personal income tax when the paying organizations finalize personal income tax.
a.4) Offsetting arrears or arising revenues with the same economic content (subsection) and the same revenue collection area of other taxpayers when the taxpayer no longer has the debt.
a.5) In case the taxpayer has overpaid tax in foreign currency in the case of tax declaration and tax payment in foreign currency specified in Article 4 of this Circular, when clearing, it must be converted into Vietnam dong according to the provisions of Article XNUMX of this Circular. the selling rate at the beginning of the day of the Joint Stock Commercial Bank for Foreign Trade of Vietnam at the time of determining the overpaid tax amount for clearing.
b) Refund, refund cum clearing of budget revenue
Taxpayers who have overpaid amounts after clearing according to the guidance at Point a of this Clause but still have overpaid amounts or have no debts, taxpayers may send dossiers of request for refund or refund cum clearing. state budget revenues as prescribed in Article 42 of this Circular. The taxpayer is entitled to a refund of the overpaid amount when the taxpayer has no debt.
c) Time to determine the overpaid amount for clearing or refunding:
c.1) In case the taxpayer calculates, declares and pays tax by himself/herself according to the declared tax amount, the time of determining overpayment is the date the taxpayer has paid money into the state budget; In case the taxpayer pays money before submitting the tax return, the time to determine the overpaid amount is the date the taxpayer submits the tax return. taxpayers submit additional declarations.
c.2) In case the taxpayer determines the tax liability according to the notice of payment of the tax authority or the competent state agency, the time of determining the overpayment is the date the taxpayer has paid money into the state budget. water; In case taxpayers pay money before the date of notification, the time of determining the overpayment is the date of issuance of the notice of payment of the tax authority or the competent state agency. the time of determining the overpayment is the date of issuance of the notice of adjustment and supplementation.
c.3) In case taxpayers pay money according to a decision of a tax authority, a decision or a document of a competent state agency, the time of determining overpayment is the date the taxpayer has paid money into the state budget. government; In case the taxpayer pays money before the date of the Decision or Document, the time of determining the overpayment is the date of issuance of the Decision or Document, if there are many Decisions or Documents, the time of determining the overpayment is based on based on the Final Decision or Document.
c.4) In case taxpayers have paid money into the state budget but then comply with court judgments or decisions, the time to determine the overpayment is the effective date of the judgment or decision.
2. Order and procedures for clearing overpaid tax, late payment interest and fines
a) Taxpayers whose overpayments are offset against debts and revenues arising as prescribed at Points a.1, a.2, a.3 Clause 1 of this Article are not required to submit dossiers of request for clearing. overpaid to the tax office. The tax authority shall automatically offset on the tax management system according to regulations on tax professional accounting for the case specified at Points a.1, a.2 Clause 1 of this Article and provide information to taxpayers. pay tax as prescribed in 0 of this Circular.
b) Taxpayers whose overpayments are offset against debts and revenues arising as prescribed in Point a.4 Clause 1 of this Article shall send dossiers of request for clearing overpaid amounts, including: A written request for settlement. handle overpaid tax, late payment interest and fines according to form No. 01/DNXLNT issued together with Appendix I of this Circular and related documents (if any) to the tax authority to handle the payment. excess specified in Clause 3 of this Article.
c) The tax authority shall receive and process the taxpayer”s application for offsetting the overpaid amount as prescribed in Clause 3 of this Article. Within 05 working days from the date of receipt of a complete application for offsetting the taxpayer”s overpaid amount, the tax authority shall compare the overpaid amount, debt, and revenue arising at the taxpayer”s written request. Tax payment with data on tax management system:
c.1) In case the overpaid amount, debt or revenue arising in the taxpayer”s written request matches the data on the tax administration system, the tax authority shall offset the overpaid amount with the tax amount. arrears and revenues arising at the request of the taxpayer and notify the taxpayer with the overpaid amount to request clearing and the taxpayer with a debt, the arising amount shall be cleared according to form No. 01/TB - XLBT promulgated together with Appendix I of this Circular.
c.2) In case the overpaid amount, debt or revenue arising in the taxpayer”s written request is not in the case of offsetting the overpaid amount as prescribed in Clause 1 of this Article, the tax authority shall issue a notice. a notice made according to form No. 01/TB-XLBT attached to Appendix I of this Circular, clearly stating the reason for not clearing the overpaid amount and sending it to the taxpayer.
In case the taxpayer”s request does not match the data on the tax management system, the tax authority shall issue a notice requesting explanation, supplementing information and documents according to form No. 01/TB-BSTT-NNT promulgated together with Decree No. 126/2020/ND-CP sent to taxpayers for explanation and additional information. The time for explaining and supplementing information of the taxpayer is not included in the time of processing the tax agency”s application for clearing the overpaid amount. After receiving the taxpayer”s explanation and supplementary information, in case the overpaid amount, debt or revenue arising in the taxpayer”s written request matches the data on the tax management system, then clearing according to the provisions of point c.1 of this clause.
Past the time limit for explanation and supplementation according to the notice of the tax authority but the taxpayer fails to explain or supplement or the taxpayer has explained or supplemented but the overpaid amount, debt, and revenue arising in the document. If the taxpayer”s request does not match the data on the tax management system, the tax authority shall issue a notice made according to form No. 01/TB-XLBT attached to Appendix I of this Circular, clearly stating the reasons for not doing so. now offset the overpaid amount sent to taxpayers.
3. Tax authority”s authority to clear overpaid amounts
a) The tax authority directly managing:
a.1) Offsetting on the tax management system the overpaid amount with the debt or revenue arising from the taxpayer in the case specified at Points a.1, a.2 Clause 1 of this Article by the tax authority directly continue management.
a.2) Receive and process the taxpayer”s written request for handling the overpaid amount in the case specified at Point a.4 Clause 1 of this Article, collected by the tax authority directly or by the tax authority. management of the area receiving the distribution of revenue management according to the provisions of Point b, Clause 6, Article 3 of this Circular.
b) Tax authorities managing state budget revenues shall:
b.1) Offsetting on the tax management system the overpaid amount of the taxpayer collected by the tax authority in the case specified at Points a.1, a.2 Clause 1 of this Article.
b.2) Receive and process the taxpayer”s written request for handling the overpaid amount in the case specified at Point a.4 Clause 1 of this Article, collected by the tax authority.
c) The tax authority in charge of the area receiving the allocation according to the provisions of Point b, Clause 6, Article 3 of this Circular shall:
c.1) Offsetting on the tax management system the overpaid amount with the debt, the income arising from the taxpayer in the case specified at Points a.1, a.2 Clause 1 of this Article shall be managed by the tax authority  for the allocated revenue.
c.2) Coordinating with tax authorities directly managing the clearing of overpaid amounts with debts, revenues arising from revenue recipients shall be allocated and managed under the guidance at Point a.4 Clause 1 This.

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