(Chinhphu.vn) – Ms. Dinh Hoang Van (in Hanoi) would like to ask: In the beginning of the year, it made a commitment to have 1 dependent (in the allowed level of not of having to paying taxes), by the middle of the year, there will be an additional dependent, is this require  to have an initial adjustment commitment of income tax?

Regarding this issue, The Ministry of Finance has the following opinions:

Pursuant to Point i, Clause 1, Article 25 of the Circular No. 111/2013 / TT-BTC dated August 15, 2013 of the Ministry of Finance guiding the implementation of the Law on Personal Income Tax (PIT), the amended and supplemented Law on a number of articles of the Law on Personal Income Tax and the Decree No. 65/2013 / ND-CP of the Government detailing a number of articles of the Law on Personal Income Tax and the Law amending and supplementing a number of articles of the Law on Personal Income Tax, guiding on tax deduction for some other cases as follows:

 “i) Withholding tax in other cases

The organization or person that pays a total income from 2 million VND to a resident that does not sign a labor contract (as guided in Point c and Point d Clause 2 Article 2 of this Circular) or that signs a labor contract for less than 03 months shall withhold 10% tax on the income before it is paid to the person.

For the person that earns only a taxable income as stated above but the total taxable income estimated after personal deductions are made does not reach the taxable level, the person shall make and send a commitment (the form is provided in the guiding documents on tax administration) to the income payer as the basis for temporarily exempting the income from personal income tax.

Based on the commitment made the income earner, the income payer shall not withhold tax. At the end of the tax year, the income payer shall make a list of persons that earn incomes below that taxable level (the form is provided in the guiding documents on tax administration) and send it to the tax authority. The persons are responsible for the commitments they made. Any deceit discovered shall be penalized in accordance with the Law on Tax administration.

The persons that make commitments as guided in this Point shall obtain tax registration and have tax codes when the commitments are made.”.

Based on the above provisions, if an organization does not sign a labor contract or sign a labor contract of less than 3 months with an individual, for each payment of income of VND 2 million or more, the organization must withhold tax according to 10% on income before paying to individuals.

In case the individual has only income that is subject to tax deduction according to the above rate but estimated that the total taxable income of the individual after subtracting the family is not enough to pay tax, the individual who has income will have to enter as a commitment (according to the form issued together with a guidance document on tax administration) and send it to the income paying organization so that the organization pays income as a basis for temporarily not withholding PIT.

In the case of Mrs. Van, at the beginning of the year, her commitment to income is not enough to pay taxes, by the middle of the year, she will have to increase an additional dependent if she needs to adjust the initial promised income level in order to make redo commitment.

In the course of implementation, if any problem arises, Ms. Van should contact the tax agency directly managing it for specific instructions.