Risks when incorrectly calculating personal income tax for seasonal and part-time employees
Concerns about choosing a tax rate of 10% or 20% when paying short-term personnel salaries are making many businesses restless because they are afraid of being penalized.
Businesses are confused due to lack of information about seasonal workers
Recently, Joint Stock Company A (business name has been changed) sent a petition reflecting the problems arising in the process of paying income to seasonal and part-time employees. According to the business representative, the characteristic of this group of workers is that they work for a very short time, leading to many difficulties in collecting legal documents to accurately determine "residence status".
Specifically, in the past year, the company paid a total of more than 266 million VND to part-time employees. Due to insufficient grounds to confirm whether that personnel is a resident or non-resident, the enterprise has temporarily applied a 10% deduction at source and fully paid into the budget.
Is the implementation of 10% deduction based on actual information at the time of occurrence considered appropriate, or do we face legal risks if functional agencies later identify them as non-resident individuals?", the business representative worriedly shared.
Base tax 6 of Hanoi City: Cannot arbitrarily apply low tax rates
Responding to this issue, Base Tax No. 6 of Hanoi City based on Circular 111/2013/TT-BTC to clarify the regulations. The tax authority affirmed that the determination of an individual as "resident" or "no-resident" must be based on strict criteria such as: Time of presence in Vietnam (from 183 days or more) or having a regular residence according to regulations.
Remarkably, the tax authority emphasized that the Company CP A's arbitrary deduction at a rate of 10% when there is not enough information to determine the residence status is not consistent with the principle of tax deduction at source.
According to regulations, for non-resident individuals, the tax amount to be deducted is up to 20%. In case the competent authority later re-determines that the employee is non-resident, the enterprise will be handled in accordance with the law regarding the shortage of tax payable.
The responsibility for verification belongs to the paying unit
The tax authority notes that employers need to be proactive in checking workers' passports, temporary residence cards or house rental contracts to classify subjects from the beginning. "Temporary" application of low tax rates to facilitate payment may lead to retroactive collection and administrative penalties for tax violations later.
If businesses still have problems with dossiers proving their residence status for each specific case, Base Tax No. 6 of Hanoi City guides units to contact the Business Support Management Team directly for detailed guidance, avoiding unnecessary errors in tax finalization.
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