Three Most Common Mistakes When Filing Withholding Tax Declaration
National Taxation Bureau (NTB) mentioned that the withholding tax declaration period for all types of income paid in 2020 has been started. The withholding agent must complete the withholding tax declaration by February 1, 2021. Based on the experience of NTB, there are three most common mistakes were found and summarized as below.
The first type of error is that companies paid the fee for training courses to the lecturer by hourly rate withholding the tax based on the wrong category of income as the "speech fee" at the rate of 10%. But in fact, this kind of hourly fee belongs to salary income and only 5% should be withheld.
The second type is the withholding of house rental. Officials said that when companies rent stores or houses, they are often asked by the lessor to pay them without withholding the tax. NTB mentioned that when companies pay the rental fee to lessors, they are obliged to withhold the full amount of tax or they will be subject to penalty by NTB.
The third common situation is that when companies paying the service fee to associations or organizations, e.g. chamber of commerce or charity, they incorrectly categorized it as salary or service income. NTB reminded that the service fee paid to associations or organizations should be declared as "other income" without withholding any tax.