How to calculate personal income tax deduction for freelance workers 2024
Freelance workers with a total income payment of 2 million VND/time or more must deduct personal income tax at a rate of 10% on the income before it is paid to the individual. At the end of the tax year, the organization paying the income must still compile the list and income of individuals who have not reached the tax deductible level and submit it to the tax authority.
Find more information in the article following with S4B Vietnam:
1. Tax deduction and tax deduction documents for employees who do not sign a contract 2024
Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC stipulates on tax deduction and tax deduction documents as follows:
- Organizations and individuals paying wages, remuneration, and other payments to individuals residing without signing a labor contract (according to the instructions at Point c, d, Clause 2, Article 2 of Circular 111/2013/TT-BTC) or signing a labor contract for less than 3 months with a total income payment of VND 2 million/time or more must deduct tax at a rate of 10% on the income before paying to the individual.
- If an individual has only one income subject to tax deduction at the above rate but the total taxable income of the individual (after deducting family circumstances) is not enough to pay tax, the individual with income must make a commitment to send to the organization paying the income. After that, the organization paying the income shall temporarily not deduct personal income tax.
Based on the commitment of the income recipient, the organization paying the income shall not deduct tax. At the end of the tax year, the organization paying the income shall still compile the list and income of individuals who have not reached the tax deduction level and submit it to the tax authority. At the same time, the individual making the commitment shall be responsible for his/her commitment. If there is any fraud, he/she shall be handled according to the provisions of the Law on Tax Administration.
How to File Income Taxes for Freelance Workers in Vietnam in 2024?
Accordingly, the individual making the commitment according to the instructions must register for tax and have a tax code at the time of commitment. Thus, for freelancers with a total income payment of VND 2 million/time or more, personal income tax must be deducted at a rate of 10% on the income before it is paid to that individual.
Individuals who are subject to tax deduction at the above rate but whose total taxable income (after deducting family circumstances) is estimated to be less than the taxable level will not need to deduct tax. To prove that their income is not enough to deduct tax, individuals must make a commitment to send to the individual or organization paying the income. Then, the organization or individual paying the income will rely on that commitment to not deduct income.
2. Deadline for paying personal income tax in 2024
Based on Clause 1 and Clause 2, Article 55 of the 2019 Law on Tax Administration, the tax payment deadline is:
- If the taxpayer calculates tax, the deadline for tax payment is no later than the last day of the tax declaration submission deadline.
- If you file a supplementary tax return, the tax payment deadline is the deadline for submitting the tax return for the tax period in which the error occurred.
- The tax payment deadline is the deadline stated on the tax authority’s notice when the tax authority calculates the tax.
Self-Employment Tax Rate For 2024
3. Some incomes exempted from or reduced from personal income tax in 2024
According to the provisions of Articles 4 and 5 of the Law on Personal Income Tax, incomes exempted from or reduced from personal income tax (PIT) include:
3.1 Income exempted from PIT in 2024
Salary for night work and overtime paid higher than for daytime work or working within the hours prescribed by law. Income from salaries and wages of Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies operating internationally.
3.2 Income subject to PIT reduction in 2024
Taxpayers with income from salaries and wages who face difficulties due to certain reasons such as natural disasters, fires, accidents, and serious illnesses. At the same time, this affects the ability to pay taxes will be considered for a reduction in PIT corresponding to the level of damage and not exceeding the amount of tax payable.
3.3. Other income exempted from personal income tax 2024
- Income from real estate transfer between family
- Income from the value of land use rights of individuals allocated land by the State.
- Income from conversion of agricultural land of households and individuals allocated by the State for production.
- Income from interest on deposits at credit institutions, interest from life insurance contracts.
- Income from remittances.
- Pension paid by the Social Insurance Fund or paid monthly by the voluntary pension fund.
- Income from scholarships received from the state budget or domestic or foreign organizations under the education promotion support program of that organization.etc
If the audiences still have any concerns about this topic, please contact S4B Vietnam for tax consulting service for foreigner investors and businesses.
>>>Read more: Assistance in establishment ROs service in Vietnam
S4B Vietnam
- Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, Ba Dinh District, Hanoi
- Tel: + 84 24 3974 4181
- Email: service@s4b.com.vn
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