Do TikTok sellers in Vietnam have to pay personal income tax?
Do TikTok sellers in Vietnam have to pay personal income tax?
According to Article 4 of Circular 40/2021/TT-BTC, the provisions are as follows:
Tax Calculation Principles
- The principle of tax calculation for household businesses and individual businesses shall comply with the current laws on VAT, PIT, and related legal documents.
- Household businesses and individual businesses with an annual revenue from production and business activities of 100 million VND or less are exempt from VAT and PIT according to current laws on VAT and PIT. Household businesses and individual businesses are responsible for accurately, honestly, and fully declaring taxes and submitting tax documents on time; they are liable for the accuracy, honesty, and completeness of the tax documents as per the regulations.
- For household businesses and individual businesses operated as a group of individuals or family households, the annual revenue threshold of 100 million VND or less to determine those exempt from VAT and PIT is applied to a single representative of the group or family household in the tax year.
Therefore, individuals selling on TikTok with an annual revenue of 100 million VND or more are required to pay personal income tax. If the annual revenue is 100 million VND or less, they are not required to pay personal income tax.
Do TikTok sellers in Vietnam have to pay personal income tax? (Image from the Internet)
What are regulations on personal income tax calculation method for individual businesses under separate declarations
According to Article 6 of Circular 40/2021/TT-BTC, the tax calculation method for personal income tax with individual businesses under separate declarations is stipulated as follows:
- The tax declaration method under separate declarations applies to individual businesses that operate irregularly and have no fixed business locations.
Irregular business operations are determined based on the characteristics of the production and business activities in each field or industry and are self-determined by individuals for selecting the tax declaration method as guided in Circular 40/2021/TT-BTC.
Fixed business locations are places where individuals carry out production and business activities such as transaction locations, stores, shops, factories, warehouses, docks, or similar places.
- Individual businesses paying tax based on each occurrence include:
+ Mobile individual businesses;
+ Private construction contractors;
+ Individuals transferring the ".vn" national domain name of Vietnam;
+ Individuals earning income from digital content services if they do not choose to pay taxes based on declaration methods.
- Individual businesses paying tax based on each occurrence are not required to implement accounting policies but must keep invoices, documents, contracts, and proof of legal goods and services, presenting them along with the tax declaration under separate declarations.
- Individual businesses paying tax based on each occurrence must declare tax when tax-liable revenue arises.
What are the grounds for calculating personal income tax for individual businesses in Vietnam?
According to Article 10 of Circular 40/2021/TT-BTC, the basis for calculating personal income tax for individual businesses includes taxable revenue and the tax rate applied to revenue.
- Taxable Revenue:
Taxable revenue for personal income tax for individual businesses is the total revenue including tax (for taxable cases) of the total money from sales, processing, commissions, and service provision arising during the tax period from production and business activities, including bonuses, sales support, promotions, trade discounts, payment discounts, monetary or non-monetary support, price subsidies, additional fees, extra charges, additional fees as stipulated; and compensation for contract breaches or other compensations; and other revenue that an individual business is entitled to, regardless of whether the money has been received or not.
- Tax Rate Applied to Revenue:
+ The tax rate applied to revenue and the personal income tax rate for each specific field or industry as guided in Appendix 1 issued with Circular 40/2021/TT-BTC.
+ In cases where an individual business operates in multiple fields or industries, the individual business must declare and calculate tax according to the applied tax rate for each field or industry.
In cases where an individual business cannot determine the taxable revenue for each field or industry or determine it inaccurately according to the actual business activities, the tax authority will determine the taxable revenue for each field or industry according to the laws on tax management.
- Determination of Tax Payable:
Payable personal income tax = Taxable Revenue x Personal Income Tax Rate
Where:
- Taxable revenue for personal income tax is guided in Clause 1, Article 10 of Circular 40/2021/TT-BTC.
- Personal income tax rate is guided in Appendix 1 issued with Circular 40/2021/TT-BTC.
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