Vietnam: Are entities which are not household businesses allowed to calculate tax under periodic declarations?
Vietnam: Are entities which are not household businesses allowed to calculate tax under periodic declarations?
According to Article 5 of Circular 40/2021/TT-BTC, which guides on value-added tax, personal income tax, and tax management for household businesses and individual businesses issued by the Minister of Finance, it is stipulated as follows:
Tax calculation method for household businesses and individual businesses paying tax according to the declaration method
1. The declaration method applies to large-scale household businesses and individual businesses; and household businesses and individual businesses not yet meeting the large-scale criteria but opting to pay tax according to the declaration method.
2. Household businesses and individual businesses paying tax by declaration method shall declare tax monthly, except for new household businesses and individual businesses and those meeting the criteria for quarterly tax declaration, as provided in Article 9 of Decree No. 126/2020/ND-CP dated October 19, 2020, of the Government of Vietnam.
3. If household businesses and individual businesses paying tax by the declaration method determine that the taxable revenue is inconsistent with reality, the tax authority shall impose taxable revenue according to Article 50 of the Law on Tax Administration.
4. Household businesses and individual businesses paying tax by declaration method must comply with accounting, invoice, and voucher policies. Household businesses and individual businesses in fields or industries where revenue can be determined based on confirmations from competent authorities are not required to implement accounting policies.
5. Household businesses and individual businesses paying tax by declaration method are not required to finalize their tax.
This stipulation explains the declaration method applicable to large-scale household businesses and individual businesses, as well as those not meeting large-scale criteria but choosing to pay tax by declaration method.
Therefore, in the above case, even if not establishing a household business, this method can still be applied as long as the individual operates on a large scale or chooses to pay tax according to the declaration method.
Vietnam: Are entities which are not household businesses allowed to calculate tax under periodic declarations? (Image from the Internet)
Which individual businesses shall declare tax separately in Vietnam?
According to Article 6 of Circular 40/2021/TT-BTC, which guides on value-added tax, personal income tax, and tax management for household businesses and individual businesses issued by the Minister of Finance, it is stipulated as follows:
Tax calculation method for individual businesses paying tax per occurrence
1. The tax declaration method per occurrence is applied to non-regular individual businesses without a fixed business location. Non-regular business is determined based on the characteristics of each field or industry and is self-identified by individuals to choose the tax declaration method according to guidance in this Circular. A fixed business location is where individuals conduct production or business activities, such as a transaction location, store, factory, warehouse, wharf, or other similar places.
2. Individual businesses paying tax per occurrence include:
a) Mobile individual businesses;
b) Individuals acting as private construction contractors;
c) Individuals transferring Vietnam national internet domain names “.vn”;
d) Individuals earning income from digital content products and services if not opting to pay tax according to the declaration method.
3. Individuals paying tax per occurrence are not required to implement accounting policies but must keep invoices, vouchers, contracts, files proving legal goods and services, and present them with the tax declaration file per occurrence.
4. Individual businesses paying tax per occurrence shall declare tax whenever taxable revenue arises.
For this method, it does not depend on the field or industry of operation but applies to non-regular individual businesses without a fixed business location as described above, and tax declaration should be conducted per this manner.
What are general regulations regarding the tax rate on revenue for individual businesses in Vietnam?
Pursuant to Clause 2, Article 10 of Circular 40/2021/TT-BTC, the tax rate on revenue is prescribed as follows:
- The tax rate on revenue includes the VAT rate and personal income tax rate applied in detail for each field or industry as instructed in Appendix I attached to this Circular.
- In cases where household businesses and individual businesses operate in multiple fields or industries, they shall declare and calculate taxes according to the tax rate on revenue applied to each field or industry. If household businesses and individual businesses cannot determine taxable revenue of each field or industry or determine it inconsistently with actual business, the tax authority shall impose taxable revenue for each field or industry according to legal regulations on tax administration.
