Is revenue under 200 million VND subject to value-added tax in Vietnam?

Is revenue under 200 million VND subject to value-added tax in Vietnam?

Based on Article 4 of Circular 40/2021/TT-BTC regarding the principle of tax calculation as follows:

Principle of tax calculation

1. The principle of tax calculation for household businesses and individuals operating businesses is implemented according to the current laws on VAT, PIT, and relevant legal documents.

2. household businesses and individuals with revenue from production and business activities in a calendar year up to 100 million VND shall not be required to pay VAT and PIT under the legal regulations on VAT and PIT. household businesses and individuals are responsible for accurate, honest, and complete tax declaration and timely submission of tax dossiers; they are accountable before the law for the accuracy, honesty, and completeness of their tax dossiers as regulated.

3. household businesses and individuals in the form of a group or family shall consider the revenue level up to 100 million VND/year to determine whether an individual is not subject to VAT and PIT is applicable to one (01) sole representative of the group or family during the tax year.

According to the above provision, if a household business has revenue from production and business activities in the year less than 200 million VND, it is not required to pay VAT for revenue from 100 million VND or less, but for revenue exceeding 100 million VND up to less than 200 million VND, the household business is still subject to VAT.

Note: The above regulation is valid only until June 30, 2025, as from July 1, 2025, the amended 2024 VAT Law comes into effect. household businesses with annual revenue under 200 million VND will not have to pay VAT.

Is revenue under 200 million VND subject to value-added tax in Vietnam? (Image from the Internet)

What is the base for calculating the value-added tax for household businesses in Vietnam?

According to Article 10 of Circular 40/2021/TT-BTC regarding the basis for calculating the tax for household businesses, the VAT calculation basis for household businesses is taxable revenue and the tax rate applied on said revenue. Specifically, the taxable revenue and the tax rate applied on revenue are determined as follows:

(1) Taxable Revenue

The taxable revenue for VAT on household businesses is the revenue including tax (in cases subject to tax) of all sales, processing fees, commissions, service provision receipts arising during the tax period from production and business activities, including incentives, bonuses for meeting sales targets, promotions, trade discounts, payment discounts, and monetary or non-monetary support; subsidies, surcharges, additional fees received according to regulations; compensation for contract violations, other compensations (only included in PIT taxable revenue); and any other revenue that household businesses and individuals receive, regardless of whether it has been collected.

(2) Tax Rate Applied on Revenue

- The tax rate applied on revenue includes the detailed VAT rate for each sector and profession as directed in Appendix I of Circular 40/2021/TT-BTC.

- If a household business operates in multiple sectors or professions, the household or individual will declare and calculate tax according to the tax rate applied on revenue corresponding to each sector or profession.

- If a household business cannot determine the taxable revenue of each sector or profession or if the determination does not match actual business operations, the tax authorities will assess the taxable revenue of each sector or profession according to tax management legal regulations.

(3) Determining Tax Payable

- VAT payable = Taxable VAT Revenue x VAT Rate

What is the deadline for household businesses to pay value-added tax in Vietnam?

The deadline for household businesses to pay VAT based on the presumptive method and declared method is specified as follows:

(1) For the presumptive method

According to Clause 4, Article 7 of Circular 40/2021/TT-BTC, presumptive taxpayers declare tax annually and pay tax within the deadline stated in the Tax Payment Notice issued by tax authorities.

If the presumptive taxpayer uses invoices provided by tax authorities and sells directly by each invoice number, they should declare and pay tax separately for revenue on that invoice each time it arises.

(2) For the declared method

According to Clause 4, Article 11 of Circular 40/2021/TT-BTC, the latest deadline for tax payment is the last day of the tax declaration submission deadline. In cases of supplementary tax filing, the tax payment deadline matches the filing deadline for the period in which errors and omissions occur.

The tax declaration file submission deadlines are determined as follows:

- For household businesses paying tax by the declared method on a monthly basis, the deadline for tax declaration file submission is the 20th of the month following the month in which the tax obligation arises.

- For household businesses paying tax by the declared method on a quarterly basis, the deadline for tax declaration file submission is the last day of the first month of the quarter immediately following the quarter in which the tax obligation arises.