Vietnam: Shall household businesses in construction having a total revenue in the preceding year of at least 3 billion VND declare taxes under periodic declarations?

Vietnam: Shall household businesses in construction having a total revenue in the preceding year of at least 3 billion VND declare taxes under periodic declarations?

Based on Clause 1, Article 5 of Circular No. 40/2021/TT-BTC guiding value-added tax, personal income tax, and tax administration for household businesses and individuals issued by the Minister of Finance of Vietnam, the regulations are as follows:

Tax calculation method for household businesses and individuals paying taxes under periodic declarations

1. The declaration method applies to large-scale household businesses and individuals; and household businesses and individuals not meeting the large-scale criteria but choose to pay taxes under periodic declarations.

2. Household businesses and individuals paying taxes under periodic declarations declare taxes monthly, except for newly commenced businesses or those meeting quarterly tax declaration criteria and choosing to declare tax quarterly as stipulated in Article 9 of Decree No. 126/2020/ND-CP dated October 19, 2020, of the Government of Vietnam.

3. Household businesses and individuals paying taxes under periodic declarations, if determining taxable revenue not in line with reality, the tax authority will impose taxable revenue as per the provisions of Article 50 of the Law on Tax Administration.

4. Household businesses and individuals paying taxes under periodic declarations must comply with policies on accounting, invoices, and documentation unless they operate in fields or occupations where revenue can be determined by the competence of an authority.

5. Household businesses and individuals paying taxes under periodic declarations are not required to finalize taxes.

Thus, the declaration method is applied to large-scale household businesses and individuals; and those who choose the declaration method even if they do not meet the large-scale criteria.

Therefore, in the construction field, even if total revenue from the previous year is less than 3 billion VND (not meeting the large-scale criteria), they can still choose to pay taxes using the declaration method.

Vietnam: Shall household businesses in construction having a total revenue in the preceding year of at least 3 billion VND declare taxes under periodic declarations? (Image from the Internet)

Shall an individual transferring Vietnam’s top-level domains need to adhere to accounting policies?

Based on Clause 3, Article 6 of Circular No. 40/2021/TT-BTC guiding value-added tax, personal income tax, and tax administration for household businesses and individuals issued by the Minister of Finance of Vietnam, the regulations are as follows:

Tax calculation method for individuals paying taxes under separate declarations

1. The tax declaration method under separate declarations applies to individuals with irregular business activities and no fixed business location. Irregular business activities are identified based on the nature of production and business activities of each field or sector, and individuals determine this themselves in choosing the tax declaration method as guided by this Circular. Fixed business locations are places where individuals conduct production and business activities such as transaction locations, stores, workshops, warehouses, stations, or similar places.

2. Individuals paying taxes under separate declarations include:

a) Mobile business individuals;

b) Individuals who are private construction contractors;

c) Individuals transferring national internet domain names of Vietnam ".vn";

d) Individuals earning income from digital content services if not choosing to pay taxes under periodic declarations.

3. Individuals paying taxes under separate declarations are not required to adhere to accounting policies, but must maintain invoices, documents, contracts, and records proving lawful goods and services, which must be presented with tax returns under separate declarations.

4. Individuals paying taxes under separate declarations declare taxes when taxable revenue arises.

Therefore, individuals paying taxes under separate declarations are not required to adhere to accounting policies. In the case of transferring a national internet domain name of Vietnam ".vn," they are not required to adhere to accounting policies but must maintain invoices, documents, contracts, and other records that prove lawful goods and services, and present them with tax returns under separate declarations.

What are regulations on tax administration for individuals paying taxes under separate declarations in Vietnam?

Based on Article 12 of Circular No. 40/2021/TT-BTC the tax administration regulations for individuals paying taxes under separate declarations are as follows:

- Tax return dossier

The tax return dossier for individuals paying taxes under separate declarations is specified at point 8.3, Appendix I - List of tax return dossiers issued together with Decree No. 126/2020/ND-CP dated October 19, 2020, of the Government of Vietnam. To be specific:

a) Tax declaration form for household businesses and individuals according to form No. 01/CNKD issued together with this Circular;

b) Documents accompanying the tax return dossier under separate declarations include:

- Copy of the economic contract for the supply of goods and services;

- Copy of the acceptance report and liquidation of the contract;

- Copy of documents proving the origin of the goods, such as: Purchase list of agricultural products if they are domestic agricultural products; Purchase list of traded goods, border resident exchanges if imported by border residents; Sellers’ invoices if imported goods are purchased from domestic business organizations or individuals; related documents to prove if the goods are self-produced by the individual; ...

Tax authorities have the right to request the presentation of originals to compare and confirm the accuracy of the copies with the originals.

- Place for submitting the tax return dossier

The location for submitting the tax return dossier for individuals paying taxes under separate declarations is specified in Clause 1, Article 45 of the Law on Tax Administration. To be specific:

a) For mobile business cases, the tax return dossier is submitted at the Tax Department managing the location where the individual conducts business activities.

b) For individuals earning income from digital content services, the tax return dossier is submitted at the Tax Department managing the individual’s place of residence (permanent or temporary residence).

c) For individuals earning income from transferring national internet domain names of Vietnam ".vn", the tax return dossier is submitted at the Tax Department where the individual resides. If the individual transferring the domain is a non-resident, the dossier is submitted at the tax authority directly managing the organization operating the national internet domain name of Vietnam ".vn".

d) For individuals who are private construction contractors, the tax return dossier is submitted at the Tax Department managing the location where the individual conducts construction activities.

- Time limit for submitting the tax return dossier

The deadline for submitting the tax return dossier for individuals paying taxes under separate declarations is specified in Clause 3, Article 44 of the Law on Tax Administration, no later than the 10th day from the date the tax obligation arises.

- Tax payment deadline

The tax payment deadline for individuals paying taxes under separate declarations follows the provisions of Clause 1, Article 55 of the Law on Tax Administration, specifically: The deadline for tax payment is no later than the last day of the tax return dossier submission deadline. In the case of supplementary tax return dossiers, the tax payment deadline is the tax return dossier submission deadline of the tax period that had errors or omissions.