Shall household businesses paying taxes under periodic declarations settle taxes in Vietnam?

Shall household businesses paying taxes under periodic declarations settle taxes in Vietnam?

Based on Article 5 of Circular 40/2021/TT-BTC which regulates the tax calculation method for household businesses paying tax under periodic declarations as follows:

Tax calculation method for household businesses and individual businesses paying tax under periodic declarations

1. The declaration method applies to large-scale household businesses and individual businesses, as well as those not meeting the large-scale criteria but opting to pay tax under periodic declarations.

2. household businesses and individual businesses paying taxes via declaration must declare taxes monthly, except for new businesses and those eligible for quarterly declarations opting to do so as per Article 9 of Decree No. 126/2020/ND-CP dated October 19, 2020, of the Government of Vietnam.

3. For household businesses and individual businesses using the declaration method, if their declared revenue is inconsistent with reality, the tax authority will determine the assessable revenue as per Article 50 of the Law on Tax Administration.

4. household businesses and individual businesses using the declaration method must follow accounting, invoicing, and documentation policies. If the business's industry can determine revenue based on a functional agency's certification, accounting policies do not apply.

5. household businesses and individual businesses using the declaration method do not need to settle taxes.

Thus, household businesses using the declaration method do not need to settle taxes.

Shall household businesses paying taxes under periodic declarations settle taxes in Vietnam? (Image from the Internet)

What are the tax calculation principles for household businesses in Vietnam?

Pursuant to Article 4 of Circular 40/2021/TT-BTC, the principles for calculating taxes for household businesses are as follows:

(1) The tax calculation principles for household businesses and individual businesses are implemented according to the current legal regulations on VAT, PIT, and related legal documents.

(2) household businesses and individual businesses with revenue from manufacturing and business activities in the calendar year of 100 million VND or less are exempt from VAT and PIT according to the tax law. They are responsible for declaring taxes accurately, truthfully, fully, and submitting tax dossiers on time, and are accountable to the law for the accuracy, truthfulness, and completeness of their tax dossiers as prescribed.

(3) For household businesses and individual businesses in the form of a group, the revenue threshold of 100 million VND/year or less to determine individual exemption from VAT and PIT is applied to a sole representative of the group or household for the taxable year.

What are the responsibilities of the Tax Sub-department in managing taxes for household businesses in Vietnam?

According to Article 19 of Circular 40/2021/TT-BTC, the Tax Sub-department, apart from regularly implementing tax collection tasks, has responsibilities in managing household businesses as follows:

(1) Propagate and support household businesses and individual businesses in declaring taxes, submitting tax dossiers, paying taxes, and accessing public information about them as per regulations.

(2) Execute the order to determine revenue and tax levels for household businesses and individual businesses paying taxes via the flat rate method as guided in Article 13 of Circular 40/2021/TT-BTC, which includes main tasks like:

- Determining revenue and flat tax levels;

- Publicly listing information about household businesses and individuals paying taxes via the flat rate method;

- Consulting the Tax Advisory Council; preparing and approving the tax roll;

- Adjusting revenue and flat tax levels in case of changes in the production and business activities of the household or individual business;

- Organizing surveys of revenue from household businesses or individual businesses paying taxes via the flat rate method.

(3) Conduct periodic and planned inspections at the tax authority's office based on the database for household businesses, individual businesses, and related organizations. For high-risk cases, with signs of violations, conduct inspections at the taxpayer's premises to promptly detect and prevent tax law violations.

(4) Build a separate database at each Tax Sub-department for managing taxes on household businesses and individual businesses and periodically finalize this database by November 1 each year to form the basis for compiling the following year's flat tax roll. The separate database is built from information such as:

- Tax declaration dossiers of household businesses and individual businesses; actual tax collection data;

- Annual business revenue survey results conducted by tax authorities;

- Annual practical inspection results for building revenue and flat tax levels conducted by tax authorities;

- Information from relevant state management agencies;

- Local realities, regional economic growth rates, and factors affecting the state budgetary contributions in the area...

(5) Report to the Chairman of the People's Committee to direct local agencies and sectors to cooperate with the tax authority in managing taxes for household businesses and individual businesses in the area.

(6) Coordinate with tax agencies in other areas in inspecting, controlling, verifying, and providing information about household businesses and individual businesses.