Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance guiding the implementation of a number of articles of the Law on personal income tax and guiding the implementation of the Government’s Decree No. 100/2008/ND-CP dated September 8, 2008, detailing a number of articles of the Law on personal income tax

According to the Circular, there are significant novelties on PIT calculation and declaration as follows:

As for the method of converting from after-tax (net) income to before-tax (gross) income, the Circular regulates one convertion table rather than two convertion tables applied to such types of individual as Vietnamese citizens, residents in Vietnam, foreigners and Vietnamese citizens outside Vietnam as currently prescribed.

Applied to diminution of taxable income over family conditions, such new Circular expressly stipulates that only individual residents are eligible to have family condition diminutions deducted from business income or salary income or wage income in addition to automatic deductions of insurance premiums and charitable, humane contributions prior to determination of the taxable income of a taxpayer.

The diminution over family conditions is particularly applied is to his/her dependent, not the taxpayer who registered with a tax agency and was issued a tax code. In 2009 alone, in case of no tax registration, the taxpayer will still be granted temporary family condition diminution once he/she registers for such diminution and submits a full and proper file of dependents.

For other types of taxable income, tax calculation is based on income and tax rate.

Concerning tax calculation method for individual non-residents, the applicable tax rate of 25% is revoked by such Circular and replaced with various tax rates applied to every single taxable income.

Moreover, concerning tax deductions, the new Circular further details types of income going through deductions from personal income tax before payment of actual income, including:

- For non-residents, PIT deductions for all types of income;

- For residents, PIT deductions for the following types of income:

Income from salaries or wages;

Income from capital investments;

Income from capital or securities transfer;

Income from all forms of prizes;

Income from copyrights;

Income from commercial licensing.

In regards to taxpaying time-limits, the Circular bases the nature of every type of income for specifying the time-limit of submitting monthly tax declarations and tax finalization files. As for organization or individual paid incomes going through tax deductions from salaries or wages, the deadline of submitting monthly PIT declaration falls on the 20th day of the month following the month of taxable income generating and the dealline for submission of the tax finalization dossier falls on the the 90th day as from the final day of solar calendar year. Other cases (except for declaration of individuals being residents earning taxable income from business activities and salaries, wages) the tax declaration shall be submitted on the basis of generating taxable income.

This Circular shall take effect 15 days after its date of publication in the Office Gazzete and applicable to all personal taxable incomes arising as of January 1st 2009.