How to calculate personal income tax as a percentage on revenue from insurance agent operation in Vietnam?

How to calculate personal income tax as a percentage on revenue from insurance agent operation in Vietnam?

Based on Article 10 of Circular 40/2021/TT-BTC, which stipulates the basis for tax calculation as follows:

Basis for Tax Calculation

The basis for tax calculation for business households and individuals is the taxable revenue and the tax rate on revenue.

1. Taxable Revenue

The taxable revenue for VAT and personal income tax (PIT) for business households and individuals is the total revenue, including tax (in case of taxable subjects), from all sales, processing fees, commission fees, and service supply fees arising during the tax period from activities of producing and trading goods or services. This includes bonuses, support for achieving sales targets, promotions, trade discounts, payment discounts, and monetary or non-monetary support; price supports, surcharges, additional fees, and other fees entitled under regulations; compensation for contract violations and other compensations (only counted in taxable PIT revenue); other revenue that business households and individuals are entitled to, regardless of whether they have received the money or not.

2. Tax Rate on Revenue

a) The tax rate on revenue includes VAT and PIT rates applied specifically to each field or profession as guided in Appendix I issued with this Circular.

b) In cases where a business household or individual operates in multiple fields or professions, they shall declare and calculate tax based on the tax rate on revenue applicable to each field or profession. If they cannot determine the taxable revenue of each field or profession or determine it incorrectly according to actual business, the tax authority shall determine the taxable revenue for each field or profession according to tax administration laws.

3. Determining the Tax Amount Payable

VAT payable = VAT taxable revenue x VAT rate

PIT payable = PIT taxable revenue x PIT rate

Where:

- VAT taxable revenue and PIT taxable revenue are guided in Clause 1 of this Article.

- VAT rate and PIT rate are guided in Appendix I issued with this Circular.

Additionally, based on Appendix 1, the list of fields and professions subject to VAT and PIT on revenue for business households and individuals is issued with Circular No. 40/2021/TT-BTC, insurance agent operation are determined to have a PIT rate of 5%.

Thus, the PIT payable by business households or individuals with revenue from insurance agent operation is calculated as follows:

Where: PIT taxable revenue includes revenue, including tax (in case of taxable subjects), from all commission fees and service supply income arising during the tax period from service business activities. This includes bonuses, promotions, trade discounts, payment discounts, monetary or non-monetary support; price supports, surcharges, additional fees entitled under regulations; compensation for contract violations and other compensations (counted only in PIT taxable revenue); and other revenue that business households and individuals are entitled to, regardless of whether they have received the money or not.

How to calculate personal income tax as a percentage on revenue from insurance agent operation in Vietnam? (Image from the Internet)

What is the deadline for paying PIT in Vietnam?

Based on Clause 1, Article 55 of the Tax Administration Law 2019, which stipulates the tax payment deadline as follows:

Tax Payment Deadline

1. In cases where the taxpayer calculates the tax, the tax payment deadline is no later than the last day of the deadline for submitting the tax declaration dossier. In the case of supplementary tax declaration dossiers, the tax payment deadline is the deadline for submitting the tax declaration dossier of the tax period with errors or omissions.

For corporate income tax, the provisional payment is made quarterly, with the tax payment deadline being the 30th of the first month of the following quarter.

For crude oil, the deadline for paying natural resource tax and corporate income tax per crude oil export sale is 35 days from the sale date for domestically sold crude oil or from the date of customs clearance for exported crude oil, following the customs law.

For natural gas, the deadline for paying natural resource tax and corporate income tax is monthly.

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Thus, the PIT payment deadline is determined as follows:

- The PIT payment deadline is no later than the last day of the deadline for submitting the tax declaration dossier.

- In the case of supplementary tax declaration dossiers, the tax payment deadline is the deadline for submitting the tax declaration dossier of the tax period with errors or omissions.

Where is the tax payment location in Vietnam?

Based on Clause 1, Article 56 of the Tax Administration Law 2019, stipulating the tax payment location as follows:

- At the State Treasury;

- At the tax administration agency where the tax declaration dossier is received;

- Through organizations authorized by the tax administration agency to collect tax;

- Through commercial banks, other credit institutions, and service organizations as stipulated by law.