Is selling mixed rice paper online subject to personal income tax in Vietnam?

Is selling mixed rice paper online subject to personal income tax in Vietnam?

Pursuant to the provisions of Clause 1, Article 2 of Circular 40/2021/TT-BTC regarding the applicable subjects:

1. Business households and individuals are resident individuals who engage in the production and trading of goods and services in all fields and professions as prescribed by law, including the following cases:

a) Practicing independently in fields and professions that require a permit or practicing certificate as prescribed by law;

b) Acting as agents selling goods at set prices for lottery agents, insurance agents, and direct sales agents who have signed contracts directly with lottery companies, insurers, or direct sales companies;

c) Cooperating in business with organizations;

d) Engaging in agricultural, forestry, salt production, aquaculture, and fishing activities that do not meet the conditions for tax exemption as prescribed by tax laws on VAT and personal income tax;

dd) Conducting e-commerce activities, including cases where individuals earn income from digital content products and services according to e-commerce laws.

Selling mixed rice paper online on e-commerce platforms falls under the tax obligations.

Also, according to the provisions of Clause 3, Article 4 of Circular 40/2021/TT-BTC which stipulates the principles of tax calculation for business households and individuals:

1. The principles for tax calculation for business households and individuals are implemented according to the current legal regulations on VAT, personal income tax, and relevant legal documents.

2. A business household or individual with an annual revenue from production and business activities of up to 100 million VND is not required to pay VAT and personal income tax as per the laws on VAT and personal income tax. Business households and individuals must accurately, honestly, and fully declare taxes and submit tax reports on time; they are liable for the accuracy, honesty, and completeness of the tax reports as defined.

3. For business households and individuals operating as a group of individuals or households, the required revenue of 100 million VND/year for determining non-taxable individuals is calculated for a single representative of the group of individuals or households in the tax year.

Thus, according to the above provisions, if selling mixed rice paper online on e-commerce platforms as a group of individuals (multiple individuals in business together) results in yearly revenue of up to 100 million VND, it is not required to pay personal income tax and VAT.

Conversely, if the yearly revenue exceeds 100 million VND, personal income tax and VAT must be paid according to the regulations.

*Note: Although it may not reach the threshold for personal income tax liability, individuals and households selling mixed rice paper online on e-commerce platforms must accurately, honestly, and fully declare taxes and submit tax reports on time; they are liable for the accuracy, honesty, and completeness of the tax report as prescribed in Article 2 of Circular 40/2021/TT-BTC.

Can a group of individuals selling mixed rice paper online in Vietnam authorize another to file taxes on their behalf?

Based on the provisions of points dd and e in Clause 1, Article 8 of Circular 40/2021/TT-BTC (amended by Clause 2, Article 1 of Circular 100/2021/TT-BTC) regarding the method of tax calculation for organizations and individuals filing taxes on behalf of others:

Method of tax calculation for organizations and individuals filing taxes on behalf of others

1. Organizations and individuals file taxes and pay taxes on behalf of others in the following cases:

...

dd) Organizations, including the owners of e-commerce platforms, file taxes and pay taxes on behalf of individuals based on authorization according to civil law regulations;

e) Individuals file taxes and pay taxes on behalf of other individuals who are taxpayers based on authorization according to civil law regulations.

...

Organizations, including the owners of e-commerce platforms, file taxes and pay taxes on behalf of individuals based on authorization according to civil law regulations;

Individuals file taxes and pay taxes on behalf of other individuals who are taxpayers based on authorization according to civil law regulations.

Is selling mixed rice paper online subject to personal income tax in Vietnam? (Image from the Internet)

How to declare personal income tax for a group selling mixed rice paper online?

Based on the provisions of Article 8 of Decree 126/2020/ND-CP which stipulates the types of taxes declared monthly, quarterly, annually, per each tax obligation occurrence, and tax finalization declarations.

Personal income tax declarations can be made monthly, quarterly, annually, or per occurrence. Specifically:

(1) Monthly personal income tax declaration.

(2) Quarterly personal income tax declaration if meeting the criteria for quarterly tax declaration as stipulated in Article 9 of Decree 126/2020/ND-CP or in the following cases:

- Organizations and individuals paying income subject to tax withholding according to personal income tax laws, and those organizations and individuals choose to declare VAT quarterly and opt for quarterly personal income tax declaration.

- Individuals with income from salaries and wages directly declare taxes to tax authorities and opt for quarterly personal income tax declaration.

(3) Annual personal income tax declaration applicable to:

Individuals acting as lottery agents, insurance agents, and direct sales agents who have not had tax withheld during the year because the threshold was not met but determine their tax liability at the end of the year.

(4) Personal income tax declaration per occurrence applicable to:

Individuals directly declaring taxes or organizations, individuals declaring and paying taxes on behalf of individuals for the following incomes:

- Income from real estate transfers.

- Income from capital transfers.

- Income from capital investment.

- Income from royalties, franchises, winnings from abroad.

- Income from inheritances and gifts.

Thus, you can completely declare personal income tax quarterly if you meet the criteria for quarterly tax declaration as stipulated in Article 9 of Decree 126/2020/ND-CP or in the following cases:

- Organizations and individuals paying income subject to tax withholding according to personal income tax laws, and those organizations and individuals choose to declare VAT quarterly and opt for quarterly personal income tax declaration.

- Individuals with income from salaries and wages directly declare taxes to tax authorities and opt for quarterly personal income tax declaration.