How much is the revenue subject to PIT of an individual business in Vietnam?

What does income from business subject to PIT in 2024 in Vietnam include?

According to Clause 1 Article 2 Circular 111/2013/TT-BTC, the incomes from business are incomes earned from production and sale. To be specific:

(1) Incomes from production and sale of goods and services that belong to all industries such as: production, goods sale, construction, construction, restaurants, service provision including lease of houses, right to use land, water surface, and other property.

(2) Incomes from freelance works of individuals in the fields that are licensed or certificated as prescribed by law.

(3) Incomes from agriculture, forestry, salt production, and fishery that are not eligible for tax exemption according to Point e Clause 1 Article 3 of  Circular 111/2013/TT-BTC.

How much is the revenue subject to PIT of an individual business in Vietnam? (Image from the Internet)

How much is the revenue subject to PIT of an individual business in Vietnam?

According to Article 4 Circular 40/2021/TT-BTC, the tax calculation rules are regulated as follows:

Tax calculation rules

1. Rules for calculating tax payable by household businesses and individual businesses shall comply with applicable regulations of law on VAT, TIN and relevant legislative documents.

2. A household business or individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND shall not be required to pay VAT and PIT as prescribed by VAT and PIT laws. Household businesses and individual businesses shall declare tax truthfully and accurately; submit tax documents punctually; take legal responsibility for the accuracy, truthfulness and adequacy of the tax documents submitted.

3. For household businesses and individual businesses in the form of groups of individuals or households, the revenue of not exceeding 100 million VND/year as the basis for exemption from VAT and PIT shall be determined for 01 representative of the group of individuals of household in the tax year.

Thus, a household or individual business whose revenue from business operations in the calendar year exceeds 100 million VND shall be required to pay PIT.

What is the basis for calculating tax payable by individual businesses in Vietnam?

According to Article 10 Circular 40/2021/TT-BTC, the basis for calculation of tax payable by household businesses and individual businesses shall be taxable revenue and tax rates.

(1) Taxable revenue

Revenue subject to VAT and revenue subject to PIT earned by household businesses and individual businesses are revenue inclusive of tax (if subject to tax) from sale of goods, processing payment, commissions, payment for provision of services earned during the tax period from manufacture, sale of goods, provision of services, including bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash; subsidies, surcharges, extra fees to which they are entitled; compensations for breach of contract, other compensations (only included in revenue subject to PIT); other revenues earned by household and individual businesses whether they are collected in reality.

(2) Tax rates

- Tax rates include VAT rates and PIT rates which vary according to business lines as specified in Appendix I of Circular 40/2021/TT-BTC.

- A household business or individual business that does business in multiple business lines shall declare and calculate tax at the tax rates that apply to each business line. In case a household business or individual business that fails to determine or correctly determine the taxable revenue earned from each business line, the tax authority shall impose the taxable revenue earned from each business lines in accordance with tax administration laws.

(3) Determination of tax payable

VAT payable = Revenue subject to VAT x VAT rate

PIT payable = Revenue subject to PIT x PIT rate

Where:

+ Revenue subject to VAT and revenue subject to PIT shall be calculated as instructed in Clause 1 of this Article.

+ VAT rates and PIT rates are specified in Appendix I of Circular 40/2021/TT-BTC.