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Starting from January 1, 2021, probationers are not required to pay personal income tax.

26/12/2020

Besides the question about "can insurance premiums during the probation period or not?", "Is it possible to have parental leave when probing?" ... one of the issues that employees wonder about is "during the probation period, do I have to pay personal income tax?". The following article will help you answer this question.

The Labor Code 2019 officially took effect from January 1, 2021, adding a provision that probationers can sign a labor contract.

Will probationers sign a labor contract?

From 2021, the probationer will also sign a labor contract. This is a prominent new provision of the Labor Code 2019.

Specifically, Article 24 of the Labor Code 2019 stipulates:

“The employer and the employee can agree on the probationary content stated in the labor contract or the probation agreement by entering into a probationary contract.”

Accordingly, from 2021, the parties can choose to agree on the probationary content in the labor contract or sign a probationary contract.

In addition, according to the new regulations, the probationary period for the employees is also adjusted in Article 25 of the Labor Code in 2019:

- No more than 180 days for the job of the enterprise manager;

- Not exceeding 60 days for jobs requiring a college degree or higher;

- Not exceeding 30 days for jobs requiring intermediate qualifications, technical workers, professional staff;

- Not more than 6 working days for other jobs.

During this period, the employee will receive at least 85% of the agreed salary.

During the probation period, does it have to pay personal income tax?

According to the Law on Personal Income Tax (PIT), taxpayers are resident individuals and non-resident individuals. However, the scope of the article only mentions the PIT payment issue of employees who are resident individuals.

Article 2 of Circular 111/2013 / TT-BTC lists the types of income subject to PIT, including salaries and wages that employees receive from employers. Therefore, probationary salary is also counted as taxable income.

Therefore, before paying salaries to employees, employers are allowed to subtract payable tax amounts from employees' incomes according to the provisions of Clause 1, Article 25 of Circular 111 as follows:

1. Tax deduction

...

b) Incomes from salaries and wages

b.1) For resident individuals signing labor contracts from 03 months or more, the income-paying organizations and individuals shall withhold tax according to the partially progressive tariff ...

...

i) Withholding tax in some other cases

Organizations and individuals that pay wages, remuneration and other payments to resident individuals who do not sign labor contracts or sign labor contracts of less than 03 months have a total income payment of VND 2 million/time or more. If up, tax must be withheld at 10% of income before paying for individuals ...

Thus, to know whether probationary salary is subject to PIT payment or not, employees need to base on the following cases:

Case 1: The person is probing by signing a labor contract from 3 months or more

According to Article 7 of Circular 111/2013/TT-BTC, tax bases for income from salaries and wages are taxed income and tax rate. At that time, the employee's PIT will be calculated according to the Partial Progressive Tariff.

In which, taxable income is determined by taxable income minus the following deductions:

- Family deductions (for oneself is 11 million VND/month, for each dependent is 4.4 million VND/month according to Article 1 of Resolution 954/2020/UBTVQH14);

- Insurance premiums, voluntary retirement funds.

- Charity, humanitarian and study promotion contributions.

Thus, the employee only has to pay PIT when the total income from salaries and wages > 11 million/month (if there are no dependents, if there is 1 dependent, the income must be > 15.4 million/month).

This means that the probationer in this case has income < 11 million/month (if no dependents) or < 15.4 million/month (if there is 1 dependent) will not have to pay PIT.

Case 2: The employee signs a probationary contract or a probationary contract with a labor contract of less than 3 months

If the employee in this case has a total income of 2 million dong/time or more, the enterprise shall withhold tax at the rate of 10% of the income before paying it to the employee.

However, according to Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC, the employee only has the above income but the total taxable income after deduction of family circumstances has not reached the taxable level. You can make a commitment according to Form 02/CK-TNCN to your employer to avoid tax deduction. At the same time, the employee is also required to register tax and have a tax code at the time of commitment.

It turns out, there are 2 cases where the probationer is not required to pay PIT:

- A probationer who signs a labor contract from 3 months or more earns an income of less than 11 million VND/month (if there are no dependents) or under 15.4 million VND/month (if there is 01 dependent).

- The employee has only income subject to tax deduction at the rate of 10%, but estimated total taxable income after deducting family circumstances is not enough to pay tax and make commitments according to the form.

Conclusion: The probationers who do not fall into the above cases must pay PIT.

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Địa chỉ Văn phòng Hà Nội: Số 28 - TT2, Khu đô thị HDMon, Đường Hàm Nghi, Quận Nam Từ Liêm, TP. Hà Nội

Địa chỉ Chi nhánh Hồ Chí Minh: OP 05.32 tòa nhà Orchard Parkview, số 130-132 Hồng Hà, Phường 9, Quận Phú Nhuận, TP. Hồ Chí Minh.