Vietnam: Does the taxable revenue of individuals bussinesses and household businesses include taxes?

Vietnam: Does the taxable revenue of individuals bussinesses and household businesses include taxes?

According to the provisions of Article 10 of Circular 40/2021/TT-BTC, the basis for tax calculation for household businesses (HKD) and individual businesses (CNKD) is taxable revenue and the tax rate calculated on revenue.

Basis for Tax Calculation

The basis for tax calculation for household businesses and individual businesses is taxable revenue and the tax rate calculated on revenue.

1. Taxable Revenue

The taxable revenue for VAT and PIT for household businesses and individual businesses is the revenue including taxes (in cases subject to tax) of all money from sales, processing, commissions, and service provision incurred during the tax period from production and business activities of goods and services, including bonuses, sales achievement support, promotions, trade discounts, payment discounts, support payments in cash or in kind; subsidies, surcharges, extra fees, additional charges enjoyed by regulation; compensation for contract violations, other compensations (only included in taxable PIT revenue); other revenue enjoyed by the business household or individual, regardless of whether money has been collected or not.

2. Tax Rate Calculated on Revenue

a) The tax rate calculated on revenue includes the VAT rate and PIT rate applied in detail to each field or industry as guided in Appendix I issued with this Circular.

b) In cases where a business household or individual engages in multiple fields or industries, they must declare and calculate tax according to the tax rate applied to each field or industry. Where a business household or individual cannot determine the taxable revenue for each field or industry or determines it not in accordance with actual business conditions, the tax authority shall determine the taxable revenue of each field or industry as per the tax management law.

The taxable revenue for VAT and PIT for household businesses and individual businesses is the revenue including taxes of all money from sales, processing, commissions, and service provision incurred during the tax period from production and business activities of goods and services, including bonuses, sales achievement support, promotions, trade discounts, payment discounts, support payments in cash or in kind; subsidies, surcharges, extra fees, additional charges enjoyed by regulation; compensation for contract violations, other compensations (included in taxable PIT revenue).

Vietnam: Does the taxable revenue of individuals bussinesses and household businesses include taxes?

How to calculate the payable tax amount for individuals bussinesses and household businesses in Vietnam?

Based on Clause 3, Article 10 of Circular 40/2021/TT-BTC, the regulation is as follows:

Basis for Tax Calculation

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3. Determining the Payable Tax Amount

The payable VAT = Taxable VAT Revenue x VAT Rate

The payable PIT = Taxable PIT Revenue x PIT Rate

Where:

- Taxable VAT Revenue and Taxable PIT Revenue as guided in Clause 1 of this Article.

- VAT Rate and PIT Rate as guided in Appendix I issued with this Circular.

Thus, the payable tax amount for individuals bussinesses and household businesses is determined as follows:

Payable VAT = Taxable VAT Revenue x VAT Rate

Payable PIT = Taxable PIT Revenue x PIT Rate

How many digits are in the TIN for household businesses in Vietnam?

According to Clause 3, Article 5 of Circular 105/2020/TT-BTC, the regulation is as follows:

Structure of TIN

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3. Classification of TIN Structure

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g) Operators, joint operating companies, joint venture enterprises, organizations assigned by the Government of Vietnam to receive Vietnam's shared oil and gas profits from overlapping fields according to the provisions at Point h, Clause 2, Article 4 of this Circular are issued a TIN of 10 digits for each oil and gas contract or equivalent document. Contractors and investors participating in an oil and gas contract are issued a TIN of 13 digits according to the 10-digit TIN of each oil and gas contract to fulfill separate tax obligations under the oil and gas contract (including corporate income tax on income from the transfer of participation interests in the oil and gas contract). The parent company - Vietnam National Oil and Gas Group represents the host country in receiving the profit shared from each oil and gas contract and is issued a TIN of 13 digits according to the 10-digit TIN of each oil and gas contract to declare and pay taxes on the profit shared from each oil and gas contract.

h) Taxpayers who are families, household businesses , individual businesses, and other individuals as specified at Points i, k, l, n Clause 2, Article 4 of this Circular are issued a TIN of 10 digits for the representative of the household, business household, individual and a TIN of 13 digits for business locations of the business household, individual business.

i) Organizations and individuals as specified at Point m Clause 2, Article 4 of this Circular having one or more authorized tax collection contracts with a tax authority are issued one substitute TIN to pay the collected amounts into the state budget.

Thus, the TIN for household businesses is specifically regulated as follows:

- A 10-digit TIN is issued for the representative of the business household,

- A 13-digit TIN is issued for the business locations of the business household.