Recently, the issue of personal income tax (PIT) finalization has received special attention from the public due to increasingly tight regulations. Many people are still wondering whether they will be fined if they do not finalize their taxes, especially when the deadline for finalization of PIT in 2021 (April 30.4.2022, XNUMX) is approaching. 

In addition, some key issues about the method and time of PIT finalization, the mandatory (optional) tax declaration and finalization, administrative penalties for late payment, etc. also received a lot of attention.

Is there a penalty for not finalizing personal income tax in 2022?

Personal income tax is a compulsory collection into the state budget. Every year all tax payers are obliged to finalize and pay taxes on time. Therefore, individuals and organizations that do not finalize PIT on time will be sanctioned.

Cases that are exempt or required to finalize tax

Regarding the cases that do not have to finalize the 2022 PIT, if the organization or individual falls into one of the cases specified at point d, clause 6, article 8, chapter II, Decree No. 126/2020/ND-CP dated 19 October 10 of the Government detailing a number of articles of the Law on Tax Administration:

• Organizations and individuals that pay incomes from salaries or wages do not generate income.
• In case an individual directly settles with the tax authority, the additional PIT payable after the final settlement is less than or equal to 50.000 VND.
• Individuals whose PIT payable amount is smaller than the temporarily paid tax amount without request for tax refund or offset in the next tax return period.

• Individuals earning incomes from salaries and wages, signing labor contracts for 3 months or more at a unit, and having other incomes in the year on average not exceeding 10 million VND per month and have been withheld PIT at the rate of 10%, individuals do not finalize tax on this income without request.
• An individual whose employer buys life insurance (except for voluntary retirement insurance), other optional insurance with accrued premiums that the employer, or the insurer has amortized. deducting personal income tax at the rate of 10% on the premium amount corresponding to the part purchased or contributed by the employer to the employee, the employee does not have to settle for this income.

In summary, the above contents have fully stated the provisions related to cases where PIT finalization is not required. In case organizations and individuals are eligible for tax finalization, they need to strictly comply with the regulations in PIT declaration and finalization, to avoid unfortunate errors that affect the production and business process as well as ensure their legitimate rights and interests in tax declaration and payment.

Deadline for payment of PIT finalization

From a legal perspective, the deadline for PIT finalization has detailed regulations, specifically according to Clause 4, Article 44 of the Law on Tax Administration 2019 for income in 2021 as follows:

• The last day of the 3rd month from the end of the year (fiscal year) for PIT finalization dossiers made by enterprises or organizations.
• The last day of the 4th month from the end of the year for personal income tax finalization records of individuals who directly finalize tax.

 Thus, the income of 2021 should be finalized at the beginning of 2022 according to the following deadlines:

• March 31, 3 is the latest settlement deadline if individuals earning incomes from salaries or wages authorize the settlement to organizations or enterprises.
• April 30, 4 is the latest settlement deadline if individuals earning incomes from salaries or wages directly settle with tax authorities.

Methods of submitting tax finalization documents

Authorization for PIT finalization

To authorize the final settlement to the income paying organization, the employee needs to prepare the authorization file according to Clause 3, Article 21, Circular 92/2015/TT-BTC, including the following documents:

– Authorization form: Use Form No. 02/UQ-QTT-TNCN.

– Invoices, vouchers (photographs, photocopies) of charitable, humanitarian or study promotion contributions (if any).

The employee submits an authorization file that has fully prepared for the income paying organization to finalize PIT.

Self-settlement of personal income tax

In addition to authorizing PIT finalization for organizations paying income, employees can also make PIT finalization themselves. Applying according to Clause 3, Article 21, Circular 92/2015/TT0BTC, the self-settlement dossier of personal income tax includes the following documents:

• Form 02/QTT-TNCN: Tax finalization declaration attached to Circular 92/2015/TT-BTC.
• Appendix form No. 02-1/BK-QTT-TNCN issued together with Circular 92/2015/TT-BTC.
• Photocopies of documents proving the tax amount already withheld, temporarily paid or paid overseas (if any).
• Invoices, vouchers (photographs, photocopies) evidencing charitable, humanitarian or study promotion contributions (if any).

After preparing all documents, individuals who directly ｄｅｃｌａｒｅ tax will submit tax finalization dossiers at the Tax Department where the tax declaration dossiers have been submitted for the year.

Summary of penalties for late payment of tax finalization

For individuals and organizations that violate the deadline for late payment, fines will be applied according to each level of violation. In addition, remedial measures are also applied to compel the full payment of the late tax payment amount into the state budget.

Penalty for violation of tax settlement time 2022

Penalties for late tax declaration, tax payment and PIT finalization in 2022 are applied according to Article 13 of Decree 125/2020/ND-CP, depending on the number of days past the deadline, the specific fines are as follows:

• In case the tax return is submitted 1 to 5 days later than the prescribed time limit and there are extenuating circumstances, a warning will be imposed.
• In case of filing tax returns from 1 to 30 days later than the prescribed time limit (except for the case where a warning has been issued from 1 to 5 days), an administrative fine of between VND 2.000.000 and 5.000.000 will be imposed.
• If the tax return is submitted 31 to 60 days later than the prescribed time limit, an administrative penalty of between VND 5.000.000 and 8.000.000 will be imposed.
• In case of committing one of the following acts, the administrative fine shall be from VND 8 to VND 000:

• Submit tax returns 61 to 90 days later than the prescribed time limit
• Submitting tax declaration dossiers 91 days or more behind the prescribed time limit but no tax payable is incurred
• No filing of tax returns and no tax payable
• Submitting corporate income tax finalization dossiers without submitting attached appendices on tax administration for enterprises having associated transactions.

[The penalty for not finalizing tax in 2022]

In case the tax return is submitted more than 90 days after the prescribed time limit, there is a tax arising and the taxpayer has fully paid the tax and late payment interest to the state budget before the time the tax authority issues the inspection decision. If tax, tax inspector or tax authority makes a record of late submission of tax declaration dossiers as prescribed in Clause 11 Article 143 of the Law on Tax Administration 2019, the administrative fine will be from VND 15.000.000 to VND 25.000.000 .(Note: In this case, if the fine amount is larger than the incurred tax reported on the tax return, the maximum fine in this case is equal to the incurred tax but the minimum is 11.500.000 VND.).

Penalties for late payment of fines for violations

When submitting the PIT finalization dossier late, the taxpayer is obliged to pay the fine on time. If you continue to be late to pay fines, you will be charged an additional late payment fine according to Article 42 of Decree 125/2020/ND-CP, specifically:

• Fines for late payment of fines are calculated at the rate of 0,05%/day calculated on the late payment fines.
• Calculating the total number of days of late payment of fines, including holidays and days off, and counting from the day following the expiration of the fine payment deadline to before the date the organization or individual pays the fine.

Thus, taxpayers who pay fines late in the prescribed time will also be fined an additional amount of late payment which is calculated: Late payment fine = 0.05% x Amount of late payment x number of days of late payment

However, in some cases, organizations and individuals will not be charged late payment fines:

• During the period of postponement of the execution of the fine decision
• During the review period, the decision to reduce or exempt fines
• The undue fine amount in case the fine is paid many times.

Note: The above fine level is applicable to violating organizations and businesses. If an individual has to make personal income tax finalization without submitting a tax return, the fine amount is equal to ½ of the fine level of the enterprise mentioned above.