Next, I would like to present a reality case study relating to the case of employer simultaneously the deduction of hypo-PIT tax, hypotheticated house rent fee and pay
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the house rent expense that I have met since the time I worked intern at PV gas south Dong Nai branch.
To take an example about the PIT computation file of Mr. Justin in quarter I / 2018 : + We will have Gross salary, Foreign services indemnity, actual housing column that we can get the figure from assignment letter below. Base on these figures of income, the payroll accountant will issue the hypothetical tax at value 2,740 Euro ( ER : 28,134.89 ) ~ 77,089,598.6 VND for every month.
+ As following the assignment letter to assign Mr.Justin come to work in Vietnam, it indicate that Mr.Justin will be the the foreign worker who work in Vietnam longer than 183 days so he has to incur the progressive income tax. Thus, he also has personal deduction as 9,000,000 VND and Social security contributions ( SSC ).
+ In while, the reality arising salary may include Over time bonus or other relating allowances so in this step, payroll accountant will have their own follow up file to pick the total income subject to grossing up. So, this number will be present in the Income subject to gross ( excluding housing ). By this way, they can also compute Grossed up income and gross income ( for taxable housing calculation ) after minus personal deduction and SSC.
+ As following the rental fee present on house leasing contract with the lessor, accountant can determine the monthly rental fee of Mr.Justin as 43,215,500. But the taxable housing is just 32,024,487 VND ( this figure is equipvalent to 15% * Gross income according to VAS tax system ).
+ Consequently, the income subject to grossing up will be add taxable housing and leading to the changes in Total assessable income and Total taxable income.
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+ Because of using equalization method and declare PIT each quarter so base on the column of total assessable income, they caculate monthly Average Assessable income to make easier when offset with the monthly hypothetical tax.
+ Finally, using the progressive tax system, we can compute PIT liabilities for each month.
Appendix 10
Upon the PIT computation file, we can realize that : the reality monthly PIT liabilities ( 74,626,592 VND ) are smaller than the hypothetical tax ( 2,740 Euro ) when put into comparision. Thus, in this scenario, we do not have to record the surplus in PIT hypothetical as company expense, this difference will become PIT refund for Mr.Justin or deductible account in the next Quarter.
But in reality, we also have the reverse case which the hypothetical tax is smaller than the reality PIT liabilities. In this case, the difference between reality and hypothetical will be record as PGS’s company expense and treat as the allowance for Mr.Justin as following the regulation on his assignment.
The example entry for this scenario : Dr 1388* :
Cr 335000 :
Dr 632* :
Cr 335000 :
Hypothetical Tax
Different number
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The way to make PIT declaration :
After completed the PIT computation file, base on these subtotal figures, the accountant will issue PIT declaration form ( barcode ) to submit.
To be continute with the previous example of Mr.Justin, we will pick the figure and transfer to declaration form :
+ In range of Total taxable income in the period, we pick the number of 781,673,575 from Total taxable income column in PIT computation file.
+ As similar as total taxable income, we can pick the figures of Total tax relief, total assessable income and total PIT payable in the period to fullfill the form of PIT declaration.
Appendix 11
Monthly expatriates’s salary file :
Parallel with these above, the payroll accountant also issue detached employee file which include the accrual salary and business travel expense. To clarify the reason why this file contain accrual figures, this because of using hypothetical and equalization tax, the payroll accountant will record the monthly salary and travel expense as follow accrual basis principle subject to easily book-keeping the salary expense of expatriates which was paid on behalf by company A and follow up to pay for company A at the end of fiscal year.
According to the example of detached employee file, the payable accountant will book the entry in reality like the way :
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+ In the previous month ( Unit : Euro ) : o Salary :
Dr 632* : 36,180.62
Cr 338800 : 36,180.62 o Travel expense :
Dr 6322* : 4,380.72 Cr 338800 : 4,380.72
+ In this month ( Unit : Euro ) : o Salary :
Dr 338800 : 36,180.62 Cr 632* : 36,180.62
Dr 632* : 47,662.53
Cr 338800 : 47,662.53
o Travel expense : Dr 338800 : 4,380.72 Cr
6322* : 4,380.72
Dr 6322* : 5,289.53 Cr 338800 : 5,289.53
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Appendix 12