Vietnam: When shall the annual tax rate applicable to fixed tax payers change?

Vietnam: When shall the annual tax rate applicable to fixed tax payers change?

Based on sub-item b.1, item b, clause 4, Article 13 of Circular 40/2021/TT-BTC, which regulates the adjustment of revenue and fixed tax rate for fixed tax payers as follows:

Tax Management for fixed tax payers

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4. Determining Revenue and Fixed Tax Rate

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b) Adjusting Revenue and Fixed Tax Rate

fixed tax payers within the year requesting an adjustment of revenue and fixed tax rate due to changes in business activities will have their fixed tax rate adjusted by the tax authority as per the provisions in clause 3, Article 51 of the Law on Tax Administration from the time of change, specifically as follows:

b.1) If a fixed tax payer changes its business scale (business area, labor usage, revenue), it must declare adjustments and supplement the tax declaration form in accordance with form No. 01/CNKD issued with this Circular. The tax authority, based on the fixed tax payer's tax declaration file and the database of the tax authority, if determining that the fixed taxable income changes by 50% or more compared to the fixed taxable income, shall issue a Notice (form No. 01/TB-CNKD issued with Decree 126/2020/ND-CP dated October 19, 2020, of the Government of Vietnam) about the adjustment of fixed tax rate from the time of change within the tax year. In cases where based on the tax authority's database, inspection data, verification, the tax authority has grounds to determine the fixed tax payer does not meet the conditions for adjustment of the fixed tax rate as regulated, the tax authority shall issue a Notice on the non-adjustment of the fixed tax rate according to form No. 01/TBKĐC-CNKD issued with this Circular.

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Thus, if a fixed tax payer's annual revenue changes by 50% or more compared to the predetermined revenue, the tax authority issues a notification about the adjustment of the fixed tax rate.

Vietnam: When shall the annual tax rate applicable to fixed tax payers change? (Image from the Internet)

How to determine fixed tax rate for a fixed tax payer in Vietnam?

Based on Article 51 of the 2019 Law on Tax Administration, which regulates the determination of fixed tax rates for business households and individuals using the fixed tax method as follows:

Determining Fixed Tax Rates for Business Households and Individuals Using the Fixed Tax Method

1. The tax authority determines the amount of tax payable using the fixed tax method (hereinafter referred to as the fixed tax rate) in cases where household businesses or individual businesses do not implement or fully implement accounting policies, invoices, vouchers, except as stipulated in clause 5 of this Article.

2. The tax authority relies on the documents declared by the business household or individual business, the database of the tax authority, and the opinions of the commune, ward, or commune-level town tax advisory council to determine the fixed tax rate.

3. The fixed tax rate is calculated according to the calendar year or monthly for seasonal business cases. The fixed tax rate must be publicly disclosed within the communes, wards, or commune-level towns. In cases of change in trade, business scale, suspension, or temporary cessation of business, the taxpayer must declare with the tax authority to adjust the fixed tax rate.

4. The Minister of Finance details the basis and procedures for determining the fixed tax rate for business households and individual businesses.

5. Business households or individual businesses with revenue, labor scale meeting the highest criteria for micro-enterprises according to legal provisions on supporting small and medium-sized enterprises must implement accounting policies and pay tax using the declaration method.

Thus, the fixed tax rate for fixed tax payers is determined by the tax authority based on the documents declared by the business household or individual business, the database of the tax authority, and the opinion of the commune, ward, or commune-level town tax advisory council. The fixed tax rate is calculated on a calendar year basis or monthly for seasonal business cases.

Additionally, in cases of change in trade, business scale, or suspension or temporary cessation of business, the taxpayer must declare with the tax authority to adjust the fixed tax rate.

Vietnam: What does the tax declaration dossier for fixed tax payers include?

Based on clause 2, Article 13 of Circular 40/2021/TT-BTC, which regulates the tax declaration dossier for fixed tax payers as follows:

(1) For a fixed tax payer leasing assets: Tax declaration form for business households and individual businesses according to form No. 01/CNKD issued with Circular 40/2021/TT-BTC.

Download Form 01/CNKD Tax Declaration Form for Business Households and Individual Businesses

(2) For fixed tax payers using invoices issued by the tax authority, with retail for each occurrence, when declaring tax for revenue on sporadic invoices, the fixed tax payer must declare tax for each occurrence and use the tax declaration form for business households and individual businesses according to form No. 01/CNKD issued with Circular 40/2021/TT-BTC, and at the same time present and submit the following documents with the tax declaration dossier:

- A copy of the economic contract for the supply of goods and services in the same industry as the business activity of the fixed tax payer;

- A copy of the acceptance record, contract liquidation;

- A copy of documentation proving the origin of goods and services such as: List of agricultural product purchases if it is domestic agricultural products; List of goods bought and exchanged by residents of border areas if it is goods imported by border residents; Invoice from seller if it is imported goods bought from domestic organizations or individuals; relevant documents to prove if it is goods produced and supplied by individuals themselves;...

In addition, the tax authority has the right to request the presentation of the original documents to compare and verify the accuracy of the copies against the originals.