How is the fixed tax rate for individual and household businesses calculated for the year 2025 in Vietnam?
What is the fixed tax rate?
Based on Clause 9, Article 3 of Circular 40/2021/TT-BTC, the fixed tax rate is the tax amount and other payments to the state budget that the household businesses or individual businesses paying tax by the predetermined method must pay, as determined by the tax authority according to Article 51 of the Law on Tax Administration 2019.
How is the fixed tax rate for individual and household businesses calculated in Vietnam for the year 2025?
According to Article 10 of Circular 40/2021/TT-BTC, the tax basis for household businesses is the taxable revenue and the tax rate applied to that revenue.
The fixed tax rate for individual and household businesses will be calculated using the following formulas:
VAT Payable = Taxable VAT Revenue x VAT Tax Rate
Personal Income Tax Payable = Taxable PIT Revenue x PIT Tax Rate
The VAT tax rate and PIT tax rate are determined according to the guidance in Appendix I issued together with Circular 40/2021/TT-BTC:
| No. | List of Industries | VAT Calculation Rate (%) | PIT Tax Rate |
|---|---|---|---|
| 1. | Distribution and supply of goods | ||
| - Wholesale and retail activities of various goods (excluding the value of sales agency goods sold at the correct price and receiving commission); - Bonuses and supports for achieving sales targets, promotions, trade discounts, payment discounts, and financial or non-financial support for household businesses; |
1% | 0.5% | |
| - Distribution and supply of goods exempt from VAT, not required to declare VAT, subject to 0% VAT according to VAT law; - Business cooperation activities with organizations in this industry group where the organization is responsible for VAT declaration for the entire revenue of the business cooperation according to regulations; - Bonuses, supports for achieving sales targets, promotions, trade discounts, payment discounts, and financial or non-financial support for household businesses linked to the purchase of goods and services exempt from VAT, not required to declare VAT, subject to 0% VAT according to VAT law; - Compensation for contract violations and other compensations. |
- | 0.5% | |
| 2. | Services, construction without materials supply | ||
| - Accommodation services including: Short-term accommodation for tourists, other transient guests; long-term accommodation services that are not apartments for students, workers, and similar persons; accommodation services with food or recreational facilities; - Goods handling and other support services related to transportation such as parking, ticketing, vehicle supervision businesses; - Postal, courier services; - Brokerage, auction services and agency commission; - Legal consulting, financial consulting, accounting, auditing services; administrative tax and customs procedures services; - Data processing services, leasing information portals, IT and telecommunications equipment; advertising on digital content products and services; - Office support services and other business support services; - Sauna, massage, karaoke, nightclub, billiards, internet, gaming services; - Tailoring, laundry; haircuts, styling, hair washing services; - Other repair services including: repair of computers and household appliances; - Consulting, designing, supervising basic construction services; - Other services subject to VAT by the deduction method with a VAT rate of 10%; - Construction, installation without materials supply (including installation of machinery, industrial equipment); |
5% | 2% | |
| ... | ... | ... | ... |
How is the fixed tax rate for individual and household businesses calculated for the year 2025 in Vietnam? (Image from the Internet)
How to determine the taxable revenue for fixed tax of individual and household businesses in Vietnam for 2025?
The determination of taxable revenue for fixed tax of individual and household businesses for 2025 is regulated according to Point a, Clause 4, Article 13 of Circular 40/2021/TT-BTC:
Tax management for household businesses
...
4. Determination of revenue and fixed tax rate
a) Determination of revenue and fixed tax rate
a.1) Revenue and fixed tax rate are calculated on a calendar year or month basis for cases of seasonal and stable business within a year.
a.2) Household businesses self-determine taxable revenue on the Tax Declaration Form No. 01/CNKD issued with this Circular. If the household business cannot determine the predetermined revenue, does not submit the tax declaration file, or the determined taxable revenue is not consistent with actual business conditions, the tax authority shall fix the revenue and determine the fixed tax rate according to the provisions of Article 51 of the Law on Tax Administration.
a.3) Based on the tax declaration files of household businesses and the database of the tax authority to publicly consult, receive feedback from the Tax Advisory Council, as the basis for the Tax Department to direct and review the establishment of the tax book at each Tax Branch.
The household business itself determines the taxable revenue for the fixed tax rate on the Tax Declaration Form No. 01/CNKD issued with Circular 40/2021/TT-BTC.
If the household business cannot determine the predetermined revenue, does not submit the tax declaration file, or the determined taxable revenue is inconsistent with the actual business conditions, the tax authority will fix the revenue and determine the fixed tax rate according to Article 51 of the Law on Tax Administration 2019.
