Does an individual business with an annual income of 50 million VND pay personal income tax in Vietnam?

Does an individual business with an annual income of 50 million VND pay personal income tax in Vietnam?

Based on Article 3 of the Personal Income Tax Law 2007 (amended by Clauses 1 and 2 of Article 2 of the Law amending the tax laws 2014 and by Clause 1 Article 1 of the Amended Personal Income Tax Law 2012) as follows:

Taxable Income

Taxable personal income includes the following types of income, except for income exempted under Article 4 of this Law:

1. Income from business activities, including:

a) Income from production and business activities involving goods and services;

b) Income from independent practice activities of individuals who possess professional licenses or practicing certificates as prescribed by law.

Income from business activities specified in this clause does not include income of individual businesses with an annual revenue of 100 million VND or less.

2. Income from salaries and wages, including:

a) Salaries, wages, and other items of a salary or wage nature;

b) Allowances and subsidies, except for the following: allowances and subsidies as stipulated by law for persons with meritorious services; defense and security allowances; hazardous and dangerous job subsidies; regional and attraction allowances as prescribed by law; unexpected difficulty allowances, work accident, occupational disease allowances, one-time allowances for childbirth or adoption, reduced working capacity allowances, one-time retirement allowances, monthly survivor pensions, and other allowances prescribed by social insurance law; severance allowances, unemployment allowances stipulated by the Labor Code; social protection allowances and other non-salary and non-wage allowances and subsidies as prescribed by the Government of Vietnam.

Income from business activities specified in this clause does not include income of individual businesses with annual revenue of 100 million VND or less.

Furthermore, pursuant to Article 4 of Circular 40/2021/TT-BTC, the calculation of personal income tax for business households, individual businesses must ensure the following principles:

Principles of Tax Calculation

1. The principles of tax calculation for business households and individual businesses are implemented according to the current provisions of the law on VAT, PIT, and relevant legal documents.

2. Business households and individual businesses with annual revenue from production and business activities in the calendar year of not more than 100 million VND are not required to pay VAT and PIT according to the provisions of the law on VAT and PIT. Business households and individual businesses are responsible for accurately, truthfully, and fully declaring taxes and submitting tax returns on time; and they are responsible before the law for the accuracy, truthfulness, and completeness of their tax returns according to regulations.

3. For business households and individual businesses in the form of groups of individuals or households, the revenue level of 100 million VND/year or less to determine that an individual is not required to pay VAT and PIT is determined for one (01) sole representative of the group of individuals or households in the taxable year.

Thus, an individual business with an annual income of 50 million VND, which means an annual revenue from production and business activities in the calendar year of not more than 100 million VND, is not required to pay PIT.

Is Personal Income Tax required for an individual business with an annual income of 50 million VND? (Image from the Internet)

Are individual businesses subject to personal income tax eligible for tax reduction during storms and floods in Vietnam?

Based on Article 5 of the Personal Income Tax Law 2007, it is regulated as follows:

Tax Reduction

Taxpayers who face difficulties due to natural disasters, fires, accidents, or severe illnesses affecting their tax payment ability are eligible for a tax reduction corresponding to the level of damage, but not exceeding the payable tax amount.

Thus, it is evident that if an individual business subject to personal income tax encounters storms and floods at the due date, they are eligible for consideration of a personal income tax reduction.

How is the amount of tax reduction determined for an individual business subject to personal income tax when due to storms and floods in Vietnam?

Based on Article 4 of Circular 111/2013/TT-BTC, the determination of the amount of tax reduction for an individual business subject to personal income tax when due to storms and floods is regulated as follows:

Tax Reduction

According to the provisions of Article 5 of the Personal Income Tax Law, Article 5 of Decree No. 65/2013/ND-CP, taxpayers facing difficulties due to natural disasters, fires, accidents, or severe illnesses affecting their tax payment ability are considered for tax reduction corresponding to the level of damage, but not exceeding the payable tax amount. To be specific: as follows:

1. Determining the amount of tax reduction

a) Tax reduction is implemented according to the taxable year. Taxpayers facing difficulties due to natural disasters, fires, accidents, or severe illnesses in any taxable year are eligible for a reduction in the payable tax amount for that taxable year.

b) The payable tax amount for determining tax reduction is the total personal income tax payable by the taxpayer in the taxable year, including:

b.1) Personal income tax paid or deducted for income from capital investment, income from capital transfers, income from real estate transfers, winnings, royalties, franchising, inheritance, and gifts.

b.2) Personal income tax payable for income from business and salaries or wages.

c) The basis for determining the level of damage subject to tax reduction is the total actual cost of damage recovery minus (-) any compensations received from insurance organizations (if any) or from organizations or individuals causing the accident (if any).

d) The reduced tax amount is determined as follows:

d.1) If the payable tax amount in the taxable year is greater than the level of damage, the reduced tax amount equals the level of damage.

d.2) If the payable tax amount in the taxable year is less than the level of damage, the reduced tax amount equals the payable tax amount.

2. The procedures and documentation for tax reduction consideration comply with the guidance on tax management.

Thus, the consideration of tax reduction is implemented according to the taxable year. Taxpayers facing difficulties due to natural disasters, fires, accidents, or severe illnesses in any taxable year are eligible for a reduction in the payable tax amount for that year.

- The payable tax amount for determining tax reduction is the total personal income tax payable by the taxpayer in the taxable year.

- The basis for determining the level of damage subject to tax reduction is the total actual cost of damage recovery minus (-) any compensations received from insurance organizations (if any) or from organizations or individuals causing the accident (if any).

- The reduced tax amount is determined as follows:

+ If the payable tax amount in the taxable year is greater than the level of damage, the reduced tax amount equals the level of damage.

+ If the payable tax amount in the taxable year is less than the level of damage, the reduced tax amount equals the payable tax amount.