Shall travelling traders pay taxes under separate declarations in Vietnam?

Shall travelling traders pay taxes under separate declarations in Vietnam?

Based on Article 6 of Circular 40/2021/TT-BTC, the method for calculating taxes for individual businesses who pay under separate declarations is stipulated as follows:

Tax calculation method for individual businesses paying under separate declarations

1. The tax declaration method under separate declarations applies to individual businesses who do not operate regularly and do not have a fixed business location. Irregular business is identified based on the characteristics of the production and business activities in each field and sector and is self-determined by individuals to choose the tax declaration method as guided in this Circular. A fixed business location is a place where an individual conducts production and business activities such as: transaction location, store, shop, warehouse, dock, yard, or other similar locations.

2. individual businesses who pay taxes under separate declarations include:

a) travelling traders;

b) Individuals who are private construction contractors;

c) Individuals transferring the national Vietnamese internet domain name ".vn";

d) Individuals earning income from digital content products and services if not choosing to pay taxes by the declaration method.

3. individual businesses paying taxes under separate declarations are not required to implement accounting policies, but must retain invoices, documents, contracts, and records proving the legality of goods and services, and present them with the tax declaration dossier under separate declarations.

4. individual businesses paying under separate declarations must declare taxes when revenue subject to tax arises.

Thus, travelling traders pay taxes under separate declarations. In this case, travelling traders are not required to implement accounting policies, but they must retain invoices, documents, contracts, records proving the legality of goods and services, and present them with the tax declaration dossier under separate declarations, and must declare taxes when taxable revenue arises.

Shall travelling traders pay taxes under separate declarations in Vietnam? (Image from the Internet)

Which authority receives the tax declaration dossiers of travelling traders in Vietnam?

According to Clause 2, Article 12 of Circular 40/2021/TT-BTC, the location for filing tax declaration dossiers for individuals paying taxes under separate declarations is stipulated as follows:

Tax Management for individual businesses Paying under separate declarations

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2. Place for Filing tax declaration dossiers

The place for filing tax declaration dossiers for individual businesses paying taxes under separate declarations is stipulated in Clause 1, Article 45 of the Law on Tax Management. Specifically:

a) In case of mobile business, the tax declaration dossier is filed at the Tax Department directly managing the location where the individual conducts business activities.

b) In case of income from digital content products and services, the tax declaration dossier is filed at the Tax Department directly managing the individual's residence (permanent or temporary).

c) In case of income from transferring the national Vietnamese internet domain name ".vn", the tax declaration dossier is filed at the Tax Department where the individual resides. In case the transferring individual is a non-resident, the dossier is filed at the tax authority directly managing the organization managing the national domain name ".vn".

d) In case of an individual being a private construction contractor, the tax declaration dossier is filed at the Tax Department directly managing the location where the individual conducts the construction activities.

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travelling traders file tax declaration dossiers at the Tax Department directly managing the place where the individual conducts mobile business activities.

How to determine the tax payable for travelling traders in Vietnam?

According to Article 10 of Circular 40/2021/TT-BTC, the determination of tax payable for travelling traders is as follows:

(1) VAT payable by travelling traders = Taxable VAT revenue x VAT rate;

(2) Personal income tax payable by travelling traders = Taxable PIT revenue x PIT rate.

Where:

- Taxable VAT revenue and taxable PIT revenue for travelling traders include revenue that contains tax (in case subject to tax) from the total proceeds from sales, processing, commissions, service provision arising in the taxable period from production and business activities of goods and services, including bonuses, support for achieving sales targets, promotions, trade discounts, payment discounts, financial or non-financial support; subsidies, surcharges, premiums, additional fees received as prescribed; compensation for contract breaches, other compensation (only included in taxable PIT revenue); other revenue that the mobile business individual benefits from regardless of whether money has been collected or not.

- The VAT rate and PIT rate are specifically applied to each field and sector as guided in Appendix 1 issued with Circular 40/2021/TT-BTC;

In cases where travelling traders operate in multiple fields and sectors, they declare and calculate taxes based on the tax rate on revenue applied to each field and sector.

In cases where the taxable revenue of each field and sector cannot be determined or not appropriately determined in relation to actual business activities, the tax authority shall assign the taxable revenue for each field and sector in accordance with legal regulations on tax management.