Does the method for calculating tax under separate declarations apply to regular individual businesses in Vietnam?

What is the method for calculating tax under separate declarations in Vietnam?

Pursuant to Clause 5 Article 3 of Circular 40/2021/TT-BTC, the regulation states as follows:

Definition of Terms

In addition to the terms already explained in the Law on Tax Administration, tax laws, and related regulations, several other terms in this Circular are understood as follows:

1. “Household business” refers to businesses or production facilities established by an individual or family members, responsible for their business operations using their entire assets as stipulated in Article 79 Decree No. 01/2021/ND-CP dated January 04, 2021, of the Government of Vietnam on business registration and guiding documents or amendments, supplements, or replacements (if any). If family members register a household business, one member is authorized as the representative of the household business. The individual who registers the household business or the authorized representative is the head of the household business. Families engaging in agriculture, forestry, fishery, salt production, or those running street vendors, snacks, itinerant commerce, seasonal business, or providing low-income services are not required to register as household businesses, except when dealing in regulated investment and business sectors, with low-income thresholds set by the provincial or municipal People’s Committee.

2. “Large-scale household business or individual business” refers to businesses or individuals whose revenue or workforce meets the highest criteria set for small and micro enterprises. Specifically: household businesses or individual businesses in agriculture, forestry, fishery and in industry, construction with an annual average workforce participating in social insurance from 10 people upwards or annual revenue of the preceding year from 3 billion VND upwards; businesses or individuals in commerce, services with an annual average workforce participating in social insurance from 10 people upwards or annual revenue of the preceding year from 10 billion VND upwards.

3. “Declaration method” is the tax declaration and calculation method by a percentage on the actual revenue arising monthly or quarterly.

4. “Large-scale household business or individual business declaring tax using the declaration method” refers to large-scale household businesses, individual businesses; businesses that do not meet large scale yet choose to pay tax using the declaration method.

5. “Method for calculating tax under separate declarations” is the method of tax declaration and tax calculation by a percentage on the actual revenue each occurrence.

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Therefore, the method for calculating tax under separate declarations is the method of tax declaration and tax calculation by a percentage on the actual revenue each occurrence.

Does the method for calculating tax under separate declarations apply to regular individual businesses in Vietnam? (Image from Internet)

Does the method for calculating tax under separate declarations apply to regular individual businesses in Vietnam?

According to Clause 1 Article 6 of Circular 40/2021/TT-BTC, the regulation is as follows:

Tax calculation method for individual businesses paying tax under separate declarations

1. The method for calculating tax under separate declarations applies to individual businesses that are not regular and do not have a fixed business location. Non-regular business is determined based on the specific characteristics of production and business activities of each field, industry and is self-identified by the individual to choose the tax declaration method according to the guidance of this Circular. A fixed business location is a place where an individual conducts production, business activities such as a trading location, store, workshop, warehouse, dock, yard, or similar place.

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The method for calculating tax under separate declarations applies to individual businesses that are not regular and do not have a fixed business location.

Which individual businesses pay tax under separate declarations in Vietnam?

According to Clause 2 Article 6 of Circular 40/2021/TT-BTC, the regulation is as follows:

Tax calculation method for individual businesses paying tax under separate declarations

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2. Individual businesses paying tax under separate declarations include:

a) Itinerant individual businesses;

b) Individuals as private construction contractors;

c) Individuals transferring the Vietnamese national internet domain name “.vn”;

d) Individuals having income from digital information content products and services if they do not choose to pay tax by the declaration method.

3. Individual businesses paying tax under separate declarations are not required to implement accounting policies, but must retain invoices, vouchers, contracts, and documents proving legal goods and services and submit them along with the tax declaration dossier for each occurrence.

4. Individual businesses paying tax under separate declarations shall declare tax when taxable revenue arises.

Individual businesses paying tax under separate declarations include:

- Itinerant individual businesses;

- Individuals as private construction contractors;

- Individuals transferring the Vietnamese national internet domain name “.vn”;

- Individuals having income from digital information content products and services if they do not choose to pay tax by the declaration method.