You will learn

• ✅ Tax responsibilities of shop owners when hiring employees
• ✅ Two methods for calculating personal income tax: progressive and flat rate.
• ✅ When should tax be deducted, and when should it not?
• ✅ How to declare and pay personal income tax on salary

1. Responsibilities of the shop owner when hiring employees

According to regulations, when you pay income in the nature of wages or salaries to employees, you have the following responsibilities:

Important note

• Employees do NOT file their own taxes. You (the income payer) must withhold and pay them on their behalf.
• If the deduction is not applied correctly, you may be subject to back taxes and penalties.

2. Types of contracts and how taxes are calculated

Summary table

3. Progressive tariff system

Who does this apply to?

Employees who sign employment contracts of 3 months or more , or indefinite-term employment contracts .

Calculation method

 Deductions: Thu nhập tính thuế = Tổng thu nhập - Các khoản giảm trừ

• Personal deduction: 11 million VND/month
• Dependent deduction: VND 4.4 million/person/month
• Compulsory insurance (Social Insurance, Health Insurance, Unemployment Insurance)
• Charitable and humanitarian contributions (if any)

Progressive tax rate

Example: Calculate the tax for employee A

Information:

• Gross salary: 20 million VND/month
• Social insurance, health insurance, and unemployment insurance contributions: 2.1 million VND (10.5%)
• There is one dependent (a young child).

Calculate:

 Thu nhập chịu thuế = 20 triệu - 2.1 triệu = 17.9 triệu Các khoản giảm trừ: - Bản thân: 11 triệu - Người phụ thuộc: 4.4 triệu - Tổng giảm trừ: 15.4 triệu Thu nhập tính thuế = 17.9 - 15.4 = 2.5 triệu Thuế TNCN = 2.5 triệu × 5% = 125,000 đồng/tháng Net salary received = 20 million - 2.1 million (Social Insurance) - 125,000 (Tax) = 17,775,000 VND Thu nhập chịu thuế = 20 triệu - 2.1 triệu = 17.9 triệu Các khoản giảm trừ: - Bản thân: 11 triệu - Người phụ thuộc: 4.4 triệu - Tổng giảm trừ: 15.4 triệu Thu nhập tính thuế = 17.9 - 15.4 = 2.5 triệu Thuế TNCN = 2.5 triệu × 5% = 125,000 đồng/tháng

4. Full tariff schedule

Who does this apply to?

• Employees with employment contracts of less than 3 months
• No employment contract signed.
• Hire services, outsource tasks (drivers, shippers, consultants, etc.)

Calculation method

 Characteristic: Thuế TNCN = Tổng thu nhập × 10%

• No personal deductions allowed.
• Dependents are not allowed to be excluded.
• Not eligible for year-end settlement.
• Only deduct when income exceeds 2 million VND per transaction.

Example: Hiring a delivery driver

Situation: You hire Mr. B to transport goods, paying him 3 million VND per trip.

Calculate the tax:

 Thuế TNCN = 3 triệu × 10% = 300,000 đồng Thực trả cho anh B = 3 triệu - 300,000 = 2,700,000 đồng Cases where no deduction is required. Thuế TNCN = 3 triệu × 10% = 300,000 đồng Thực trả cho anh B = 3 triệu - 300,000 = 2,700,000 đồng

If the income per transaction is ≤ 2 million VND → No tax deduction is required.

Example: Hiring someone to clean the shop, paying 500,000 VND/time → No deduction.

5. When do I need to file my personal income tax return?

Principle

• Tax deductions are available during the month/quarter → A tax return must be filed.
• No tax deduction (even if income is paid) → No tax return required.

Deadline for filing

Form to be submitted

• Personal income tax return form for salaries and wages (not the form for business households)
• Submissions can be made via the HTKK software or at thuedientu.gdt.gov.vn

6. Year-end personal income tax settlement

Who settles the accounts?

The employer (you) settles the employee's tax obligations if:

• Employees who sign employment contracts of 3 months or more.
• The employee has authorized you to settle the accounts.
• Employees only earn income from you (they don't work for other companies).

Settlement deadline

No later than March 31st of the following year (90 days from the end of the year).

When can employees settle their own accounts?

• Having income from multiple sources (working for other companies)
• I did not authorize you to settle the accounts.

7. Cases where the head of the household is both a business owner and an employee.

Situation

You are a business owner (earning income from your shop) and also work part-time for company A (earning a salary).

How to handle it

These two amounts are SEPARATE and cannot be combined.

8. Frequently Asked Questions

Do salaries under 11 million VND need to be taxed?

If the employment contract is for ≥ 3 months: No deduction (because after deducting personal allowances, taxable income ≤ 0).

**If no employment contract is signed or the employment contract is less than 3 months:** 10% will be deducted if the payment exceeds 2 million VND per installment.

Will I be penalized for not filing my personal income tax return?

Yes. If deductions are made but not declared → Administrative fine + late payment penalty.

What about hiring family members as employees?

According to regulations, family members (parents, spouse, children, siblings) can handle accounting and other tasks for a household business.

If you pay them a salary → You still have to deduct personal income tax as usual (if they meet the eligibility requirements).

My employees are demanding net pay; what should I do?

Net salary = Salary after deducting social insurance and personal income tax.

You need to convert from net salary to gross salary to calculate actual expenses and deduct taxes.

Example: Net salary agreement of 15 million VND → Actual gross salary could be 17-18 million VND (depending on deductions).

Checklist: Hiring the Right Employees

Before renting

• Determine the type of contract (employment contract ≥ 3 months, < 3 months, or no contract signed)
• Calculate gross salary and deductions.
• Require employees to register for personal deductions (if they have signed an employment contract of 3 months or more).

Monthly

• Calculating salary and deducting personal income tax.
• Pay net salary to employees.
• Save payroll payment vouchers.

Quarterly (or monthly, if applicable)

• Submit your personal income tax return (if any deductions were made).
• Pay the deducted tax amount.

End of the year

• Collect settlement authorization from employees.
• Submit your personal income tax return.
• Issue tax deduction certificates to employees (if requested).

Common mistakes

1. Paying salaries without deducting taxes → Subject to back taxes and penalties.

2. Confusion between employment contracts and service contracts → Incorrect application of tax calculation methods.

3. Failure to declare when deductions are applicable → Administrative penalty.

4. Forgetting to file year-end tax returns → Employees cannot claim tax refunds (if they overpaid).

5. Failure to retain payroll records → Difficult to explain during tax audits.

9. Conclusion

Hiring employees is not just a human resources issue, but also a mandatory tax responsibility for shop owners. Understanding the correct contract type, how to deduct personal income tax, and the filing deadline will help you avoid the risk of back taxes and late payment penalties. Managing salaries, taxes, and documentation clearly from the start will make operations smoother and more transparent. GTG CRM supports proactive and systematic management of human resources, tracking payroll expenses, and tax filing data.

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