Do persons directly engaged in poultry farming pay personal income tax in Vietnam?

Do household businesses engaged in poultry farming pay personal income tax in Vietnam?

According to Official Dispatch 4568/TCT-DNNCN of 2024 issued by the General Department of Taxation of Vietnam, the guidance on personal income tax policy for cases directly engaged in poultry farming is as follows:

- Based on Clause 1, Article 1 of Circular 26/2015/TT-BTC, guidance on entities not subject to value-added tax is as follows:

Article 1. Amendments and supplements to certain articles of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Law on Value Added Tax and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government of Vietnam providing detailed regulations and guidance on implementation of certain articles of the Law on Value Added Tax (amended and supplemented by Circular No. 119/2014/TT-BTC dated August 25, 2014, and Circular No. 151/2014/TT-BTC dated October 10, 2014 of the Ministry of Finance) as follows:

1. Amend Clause 1, Article 4 as follows:

“1. Products of crop production (including planted forest products), livestock, aquaculture, captured seafood that have not been processed into other products or are only superficially processed by organizations, individuals who directly produce, capture, and sell, and at the import stage.

New superficially processed products include products that are newly cleaned, dried, shelled, milled, de-husked, hulled, grain-separated, stem-separated, cut, salted, cold preserved (chilled or frozen), preserved with sulfurous gas, or preserved by chemical methods to prevent decomposition, soaked in sulfur solution, or soaked in other preserving solutions and other common preserving methods.

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- Based on Point e, Clause 1, Article 3 of Circular 111/2013/TT-BTC which stipulates tax-exempt income as follows:

Tax-Exempt Income

1. According to the provisions of Article 4 of the Law on Personal Income Tax, Article 4 of Decree No. 65/2013/ND-CP, tax-exempt income includes:

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e) Income of households and individuals directly engaged in agricultural production, forestry, salt production, aquaculture, and capturing seafood that have not been processed or are only superficially processed into other products.

Households and individuals directly engaged in production activities as guided at this point must simultaneously satisfy the following conditions:

e.1) Have the legal right to use, lease land, use water surface, or lease water surface for production and directly engage in agricultural, forestry, salt production, aquaculture.

In cases of subleasing land, water surface from other organizations or individuals, a land lease, water lease document must be available according to legal regulations (except for cases where households and individuals contract with forestry companies for forest planting, caring, managing, and protecting). For aquaculture capturing activities, certification of ownership or a contract of lease of boats for capturing activities is needed, directly participating in capturing (except for aquaculture on rivers using riverbed techniques and those not belonging to prohibited aquaculture activities according to law).

e.2) Actually residing in the locality where agricultural, forestry, salt production, aquaculture, capture activities take place.

The locality where agricultural, forestry, salt production, aquaculture activities take place as guided is a district, district-level town, city under the province (collectively referred to as district-level administrative unit) or a neighboring district with where the production activities occur.

Particularly for aquaculture capturing activities, residence is not relevant.

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- Based on Clause 5, Article 2 of Law on Residence 2020 defining residence and residency registration:

Explanation of Terms

In this Law, the following terms are understood as follows:

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5. Residency registration involves carrying out procedures for permanent residency registration, temporary residency registration, declaring temporary absences; notifying residence and declaring information, adjusting information regarding residence.

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- Based on Article 11 of Law on Residence 2020 on citizens' residence:

Citizens' Residence

1. Citizens' residence includes permanent residence, temporary residence.

2. If permanent residence, temporary residence cannot be determined, the citizen's residence is the current dwelling place as determined under Clause 1, Article 19 of this Law.

From the regulations and guidelines mentioned above, in cases where individuals directly engaged in poultry farming simultaneously meet the conditions: (i) Livestock products not processed into other products or only superficially processed by organizations or individuals producing and selling, and at the import stage; (ii) the individual's income is income from activities directly engaged in agricultural production not processed or only superficially processed not converted into other products, then income from poultry farming activities is exempt from personal income tax if the individual has a registered residence in the locality where the farming activities take place as per the legal provisions on residence.

Do persons directly engaged in poultry farming pay personal income tax in Vietnam? (Image from the Internet)

How to calculate personal income tax period in Vietnam?

According to Article 7 of Law on Personal Income Tax 2007 as amended by Clause 3, Article 1 of Law on Amendments to the Law on Personal Income Tax 2012, the personal income tax calculation period is determined as follows:

- The tax period for resident individuals is regulated as follows:

+ The annual tax period applies to income from business; income from salaries, wages;

+ The tax period per occurrence applies to income from capital investment; income from capital transfer, excluding securities transfer income; income from real estate transfer; income from lottery winnings; income from royalties; income from franchising; income from inheritance; income from gifts;

+ The tax period per securities transfer transaction or annually per securities transfer applies to securities transfer income;

- The tax period for non-resident individuals is calculated per occurrence for all taxable income.

What are cases of personal income tax reduction in Vietnam?

As stipulated in Article 5 of Law on Personal Income Tax 2007, persons may have their tax reduced in cases of difficulties due to natural disasters, fires, accidents, or serious illnesses affecting their ability to pay taxes.

However, persons can only have their tax reduced corresponding to the level of loss and it cannot exceed the amount of tax payable.