Why do I have so much salary but pay so much PIT? Tax is deducted every month, but at the time of finalization, why do I still have to pay more?
Personal income tax (PIT) is a direct tax, calculated on the taxpayer’s income after deducting tax-free income and deductions for family circumstances. PIT has the principle of collecting from “source”, that is, when you receive income from the paying organization, that income has been deducted PIT.
Although very popular and directly related to the pocket, not everyone understands how to calculate PIT, so there are questions of the following types:
Why is my salary only so much but pay so much PIT?
Because the income subject to PIT does not only include salary and bonus. According to the provisions of Circular 111/2013/TT-BTC, taxable income from wages and salaries that employees receive from employers, including:
(1) Salaries, wages and other amounts of salary and wage nature in cash or non-cash forms.
(2) Allowances and subsidies, except for 11 types of allowances and subsidies, are specified in detail (such as defense and security allowances; allowances and preferential allowances according to the provisions of the law on incentives. people with meritorious services; Toxic and dangerous allowances for industries, occupations or jobs in the workplace with toxic and dangerous elements; Attraction allowances, regional allowances…)
(3) Remuneration received in the form of: agency commissions, brokerage commissions; money to participate in scientific and technical research projects; money to participate in projects and schemes; give; money to participate in teaching activities; money for participation in cultural, artistic, physical training and sports performances; advertising service fees; other service fees, other remuneration.
(4) Money received from joining a business association, enterprise board of directors, business control board, project management board, management board, associations, professional associations and other organizations .
(5) Benefits in money or not in money other than salary, wages paid by the employer to which the taxpayer is entitled in any form:
Reading this far, you will somewhat imagine, why a Director who sits and takes his own monthly salary, minus deductions for family circumstances, multiplied by the tax rate, still cannot figure out the amount of personal income tax payable as planned. calculation.
Even, even after adding all the allowances, bonuses, .. the number still has something “wrong”.
The reason is because in addition to the income that is given into hand or paid into the account such as salary, bonus, allowance,… Mr. Director can also receive other benefits. benefit not with other money or can be understood as a welfare regime such as: transportation, rental housing, air tickets, transportation,… These expenses are paid by the company (paid for) and recorded as borne income. tax of employees, except for the cases specified in the relevant documents.
The “terrible” welfare regime is often encountered by foreign experts or senior managers and leaders. In addition to salary, they receive many other incentives depending on the policy of the business and the agreement between the two parties.
For example, a few years ago there was an enterprise in Binh Duong. In order to invite a foreign expert to work, he had to agree to pay the entire cost of air tickets, accommodation and living expenses for his vacations. this specialist with a frequency of 4 times/year.
The total amount of benefits for this leave is not small, so the question is whether the cost of air tickets, accommodation, living… for vacations must be included in the Payable Income. personal income tax of the professional in the tax period?
Binh Duong Tax Department then issued a written response to the enterprise’s inquiries. Specifically, based on Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, are not shall be included in taxable income for the following items: The amount of money for buying round-trip air tickets paid by the employer (or paid) to the foreign employee working in Vietnam for the permit; once a year.
The basis for determining the amount of money for buying air tickets is the labor contract and the payment for air tickets from Vietnam to the foreign country of nationality or the country where the foreigner’s family lives and vice versa.
Thus, expenses for buying air tickets, accommodation, living, etc. for returning experts (per permission) more than once a year, specifically 3 times, will be included in the PIT taxable income. of experts.
Why is my personal income tax deducted every month, but I still have to pay more when finalizing the year?
In principle, every month when paying income, the paying agency has temporarily withheld PIT. Then, to the personal income tax finalization period (usually according to the calendar tax period), the paying agency will make the final settlement.
This is understood as performing a recalculation of the total taxable income (including benefits paid by the employer on behalf of the employee (if any)), the total deductions, then accurately calculate the total amount of personal income tax payable in the period of the individual.
The total amount of temporarily paid (paid) tax in 12 months may be equal to, less than or higher than the PIT amount according to the finalization.
If the tax amount according to the final settlement is more than the paid amount, the taxpayer (NNT) must pay the missing amount. Conversely, if the tax amount after finalization is smaller than the paid amount, the taxpayer will be refunded the difference.
The reasons for the difference between the total amount of temporary tax paid monthly and the final tax amount are different:
One is that monthly PIT is only temporarily withheld on Income paid directly to employees, excluding non-monetary benefits that the company pays on behalf of employees.
As in the case of enterprises in Binh Duong mentioned above, when the company spends the airfare for the experts on vacation, it will not deduct PIT there, but when making the final settlement, the total taxable income will be recalculated including: this expense.
Two This is because the PIT rate is progressive, so when income moves from level A to level B, the applicable tax rate changes, resulting in the tax amount changing accordingly.
Article 14 (chapter III) Circular 92/2015/TT-BTC Amending and supplementing Article 7 of Circular No. 111/2013/TT-BTC stipulates:
Income used to convert into taxable income is the income actually received (excluding tax-exempt income) (+) benefits paid by the employer on behalf of the employee (if any) (-) deductions.
In case the employer applies the policy “presumptive tax”, “presumptive house rent”, the income used as the basis for converting into taxable income does not include “presumptive tax”, “presumptive house rent”. presumption”.
In case the house rent is included in the replacement payments, the house rent shall be included in the income as a basis for conversion by the actual amount paid but must not exceed 15% of the total taxable income arising at the unit regardless of the place of payment. income (excluding the actual arising rent, electricity, water and accompanying services, “assumption rent” (if any)).
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