In a significant move to streamline the process of personal income tax (PIT) refunds, the General Department of Taxation in Vietnam has introduced a new automated system. According to Decision 108/QD-TCT, effective in 2025, the process of automatically refunding personal income tax will be implemented through an information technology system, aiming to enhance transparency and accuracy while minimizing risks.
The automated PIT refund system is designed to accept and process applications that meet three specific conditions. Firstly, tax obligations must be fulfilled. At the time of application, the income-paying organization must have fully paid the deducted PIT, or the individual must have completed their tax payments to the state budget, as required during the finalization period with a request for a refund.
Secondly, the income and tax data submitted must align with the tax sector's database. This means that indicators such as "Total taxable income" and "Total amount of tax proposed for refund" must match or be less than the figures stored in the tax management database. Lastly, the taxpayer's refund account must be verified. The bank account information for receiving tax refunds must be confirmed and linked to the tax sector's database.
If all three conditions are met, the system will automatically generate a proposal, create a tax refund decision, and submit it for electronic signature by the tax authority's leadership. However, if the application does not meet the necessary criteria, it will be forwarded to a tax officer for manual processing.
The implementation of this automated system reflects a broader effort to reform administrative procedures within the tax sector, significantly reducing the time and costs involved for both taxpayers and tax authorities. As noted in the recent changes, the tax authorities are also required to apply risk management measures throughout the entire tax management process, including PIT refunds, as mandated by Article 9 of the Law on Tax Administration enacted in 2019.
In addition to the automation of tax refunds, the government has also made changes to unemployment benefits, as outlined in Circular 15/2023/TT-BLDTBXH, which takes effect on February 15, 2024. This circular introduces new regulations that clarify the conditions for receiving unemployment benefits, aiming to protect workers’ rights more effectively.
A key highlight of this reform is the introduction of a mechanism that allows workers to preserve their insurance payment period after receiving unemployment benefits. Specifically, if a worker continues to pay unemployment insurance after receiving benefits, that duration will be accumulated for future entitlement calculations. This provision helps mitigate the adverse effects of unexpected job loss and ensures that workers do not lose their entitlements due to unforeseen circumstances.
However, to maintain fairness and prevent abuse of the system, workers who have paid unemployment insurance for over 144 months are entitled to a maximum of 12 months of unemployment benefits, and they cannot preserve the remaining insurance payment period.
The calculation of unemployment benefits is based on 60% of the average salary from the six months preceding job loss. For employees under the state regime, the allowance cannot exceed five times the base salary, while for those under enterprise regulations, it cannot exceed five times the regional minimum wage. These limits are designed not only to safeguard the resources of the unemployment insurance fund but also to encourage workers to actively seek new employment opportunities rather than relying on benefits.
Despite the potential for benefits not covering the previous standard of living, the new regulations provide a transitional period for workers to prepare for re-entering the job market. The adjustments to the conditions and levels of unemployment benefits aim to positively impact the protection of workers' rights.
Moreover, the government emphasizes the importance of continuous communication regarding unemployment benefits policies. It is crucial for employment service centers, social insurance agencies, and labor unions to collaborate in organizing training sessions and workshops that clearly explain the mechanisms for calculating benefits, preserving insurance payment periods, and the application process for unemployment benefits.
Furthermore, the integration of information technology in managing unemployment benefits is being promoted. Electronic management systems will help track insurance payment processes and determine benefit entitlements transparently and promptly. This advancement not only shortens processing times but also minimizes errors in calculations, facilitating a smoother experience for workers.
The combination of the new automated PIT refund system and the reformed unemployment benefits policy represents a significant step towards enhancing the welfare of workers in Vietnam. By allowing for the preservation of insurance payment periods and implementing clear limits on benefits, the government aims to strike a balance between protecting workers and maintaining the sustainability of the unemployment insurance fund.
Experts have pointed out that the successful application of these new regulations requires close cooperation among various authorities. Enhanced monitoring and oversight systems are necessary to ensure compliance with the regulations and to uphold the integrity of the unemployment insurance system.
In summary, the recent reforms in both personal income tax refunds and unemployment benefits are designed to create a more equitable and efficient system for workers. As these changes are rolled out, continuous public communication and education will be vital to ensure that all stakeholders are informed and able to navigate the new processes effectively.
