Are household businesses and individual businesses paying fixed taxes in Vietnam required to do accounting?

Are household businesses and individual businesses paying fixed taxes in Vietnam required to do accounting?

Under Article 7 Circular 40/2021/TT-BTC on the method and basis for calculating fixed tax payable by household businesses and individual businesses:

Article 7. Method and basis for calculating fixed tax payable by household businesses and individual businesses

1. Fixed tax shall be paid by household businesses and individual businesses other than those paying tax under periodic declarations and separate declarations prescribed in Article 5 and Article 6 of this Circular.

2. Household businesses and individual businesses paying fixed tax (hereinafter referred to as “fixed tax payers”) are not required to do accounting. Fixed tax payers shall retain and present to tax authorities the invoices, contracts, documents proving the legality of their goods and services when applying for issuance or sale of separate invoices. Fixed tax payers having business operation at bordering markets, checkpoint markets, markets within border-gate economic zones in Vietnam shall retain invoices, contracts, documents proving the legality of their goods and present them at the request of competent authorities.

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Thus, household businesses and individual businesses paying fixed tax (hereinafter referred to as “fixed tax payers”) are not required to do accounting.

Are household businesses and individual businesses paying fixed taxes in Vietnam required to do accounting? (Image from the Internet)

What is the case where tax authorities determine the fixed tax payable by household businesses and individual businesses in Vietnam?

The fixed tax payable is regulated by Article 51 of the Tax Administration Law 2019 as follows:

Fixed tax payable by household businesses and individual businesses

1. Tax authorities shall determine the fixed tax payable by household businesses and individual businesses who fail to comply with or fully comply with regulations on accounting, invoices and documents, except for the cases in Clause 5 of this Article.

2. Tax authority shall impose fixed tax according to declarations of household businesses and individual businesses, the database of tax authorities, and comments of Tax Advisory Council of the commune.

3. Fixed tax shall be imposed by calendar year (or by month for seasonal business). Fixed tax shall be published in the commune. The taxpayers shall inform the tax authority when changing their business lines or scale, suspend or shut down the business in order to adjust the fixed tax.

4. The Minister of Finance shall specify the bases and procedures for determination of fixed tax payable by household businesses and individual businesses.

5. Household businesses and individual businesses whose revenues and employees reach the upper limit for extra-small enterprises prescribed by regulations of law on small and medium enterprises shall do accounting and declare tax.

The tax authorities determine the fixed tax payable by household businesses and individual businesses that fail to comply with or fully comply with regulations on accounting, invoices, and documents, except for household businesses and individual businesses whose revenues and employees reach the upper limit for extra-small enterprises prescribed by regulations of law on small and medium enterprises shall do accounting and declare tax.

What are the responsibilities of sub-departments of taxation in determining the revenue and tax payable for household businesses and individual businesses paying fixed taxes in Vietnam?

According to Article 19 of Circular 40/2021/TT-BTC:

Responsibilities of sub-departments of taxation

In addition to perform its collection duty, sub-departments of taxation also have the following responsibilities for tax administration of household businesses and individual businesses:

1. Inform, assist household businesses and individual businesses in declaring tax, submission of tax declaration dossiers, paying tax and looking up information about household businesses and individual businesses as per regulations.

2. Perform the tasks specified in Article 13 of this Circular such as: Determine presumptive revenue and fixed tax; disclose information about fixed tax payers; consult with Tax Advisory Council; prepare and approve tax books; adjust presumptive revenue and fixed tax in case household businesses and individual businesses make changes to their business operation; carry out survey about revenue of household businesses and individual businesses paying fixed tax.

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The sub-departments of taxation has the responsibility to perform tasks for determining the revenue and fixed tax payable for household businesses and individual businesses paying fixed taxes, including:

Determine presumptive revenue and fixed tax; disclose information about fixed tax payers; consult with Tax Advisory Council; prepare and approve tax books; adjust presumptive revenue and fixed tax in case household businesses and individual businesses make changes to their business operation; carry out survey about revenue of household businesses and individual businesses paying fixed tax.