How to avoid this?

Crying because of an income of a few hundred thousand/month

There has been a new development related to the case of Mr. LTH - an employee of a branch of a large joint stock bank in Quang Ngai - just because the unit paying him did not deduct tax due to the small payment (one amount of 3.3 million VND/year, one amount of only 300,000 VND/year), he was charged with arrears, fines, and late payment of up to 20.7 million VND by the tax authority.

Reflecting to Tuoi Tre, Mr. LTH said that recently the tax authority sent a notice requesting explanation and additional information and documents because it discovered that he had multiple sources of income, resulting in additional taxes to be paid.

Quang Ngai Tax Department said that according to the provisions of Decree 126 of the Government, Mr. H. is in the case of having to directly settle taxes. However, because Mr. LTH has not made the settlement, the tax authority requested an explanation.

At the end of October, Mr. LTH had a written explanation that because he did not know the above regulation and thought that his monthly income at AIS Securities Company, which was under 2 million VND (specifically, only from a few thousand VND/month to a few hundred thousand VND/month), was too little, so he did not have to deduct 10% personal income tax.

Mr. LTH also sent a document to AIS Securities Company asking why they did not deduct 10% before paying him. The securities company cited Clause 1, Article 25, Circular 111 of the Ministry of Finance to confirm that the company is not allowed to deduct tax on income under 2 million VND/month.

"I affirm that I did not intentionally evade taxes on a small, insignificant income because every year I pay personal income tax at the bank where I work, about 40 - 60 million VND.

As a citizen who always respects the law and always fully complies with tax obligations, I respectfully request the Ministry of Finance, the General Department of Taxation, and the Quang Ngai Provincial Tax Department to support me in paying additional tax on the remaining amount for the irregular income that has not been deducted 10% tax (10% on income at AIS in 2022 and 2023), instead of summarizing all income calculated according to the progressive tax schedule because it is too disadvantageous for taxpayers," said Mr. LTH.

However, in the reply, the Quang Ngai Tax Department said that there was no basis to support him to only pay the remaining tax, for the irregular income that had not been deducted 10% tax as he requested and required him to comply with the regulations, that is, to synthesize the income and calculate according to the progressive tax schedule and to pay the fine and late payment as stated above.

Which individual is authorized to settle taxes?

According to the provisions of Decree No. 126/2020, an individual has a source of income from a labor contract of 3 months or more at a unit and is actually working there at the time of personal income tax settlement.

In addition, the individual also has a source of income from a labor contract of 3 months or more and has irregular income in other places with an average monthly income of no more than 10 million VND in the year and has had personal income tax deducted at a rate of 10%. If the individual does not have a need to settle this irregular income, he/she is also authorized to authorize a unit to settle it on his/her behalf.

Individuals who do not fall into the above cases must directly settle personal income tax with the tax authority to determine tax obligations according to the settlement. In case an individual authorizes settlement in violation of regulations, the tax authority shall inspect, verify, request the individual to fulfill the obligation and collect tax according to regulations.

Based on the above regulations, if the securities company that Mr. LTH works for deducts 10% of the income paid to him in 2022 and 2023 (one amount of 3.3 million VND/year and one amount of only 300,000 VND/year), he will not be subject to additional collection, fines, or late payment of up to 20.7 million VND.

Mr. H.'s story above is not unique to anyone. In reality, many taxpayers have three sources of income, of which the first source has been deducted at source, the second source has been deducted 10%, and the third source is too small so the paying agency does not deduct.

Ms. TM (Go Vap District, Ho Chi Minh City) said that her job sometimes requires her to attend conferences and she receives a compensation of 300,000 - 500,000 VND/time.

This is an irregular and not worth much income, but recently when looking up the eTax Mobile application, she discovered that a unit had included this income in deductible expenses, causing her to have a tax debt and risk being charged with arrears, fines, and late payment like Mr. LTH's case, which made her very worried.