What are guidelines for determination of tax payable of travelling traders in Vietnam?

Shall travelling traders pay taxes under separate declarations in Vietnam?

Based on Article 6 of Circular 40/2021/TT-BTC, there are regulations on tax calculation methods for business individuals who pay taxes under separate declarations as follows:

Tax calculation method for business individuals who pay taxes under separate declarations

1. The method of declaring taxes under separate declarations applies to business individuals who do not operate regularly and do not have a fixed business location. Non-regular business operations are determined based on the characteristics of production and business activities in each field or sector, and individuals can choose the tax declaration method according to the guidance of this Circular. A fixed business location is a place where individuals conduct production and business activities such as: transaction locations, stores, workshops, warehouses, docks, or other similar places.

2. Business individuals who pay taxes under separate declarations include:

a) travelling traders;

b) Individuals who are private construction contractors;

c) Individuals who transfer the national domain name ".vn";

d) Individuals with income from digital content products and services if they do not choose to pay taxes by the declaration method.

3. Business individuals who pay taxes under separate declarations are not required to implement accounting policies but must store invoices, documents, contracts, and records proving legitimate goods and services and present them with the tax declaration file under separate declarations.

4. Business individuals who pay taxes under separate declarations declare taxes when taxable revenue arises.

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

What are guidelines for determination of tax payable of travelling traders in Vietnam? (Image from the Internet)

What are guidelines for determination of tax payable of travelling traders in Vietnam?

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

(1) VAT amount to be paid by travelling traders = VAT taxable revenue x VAT rate;

(2) PIT amount to be paid by travelling traders = PIT taxable revenue x PIT rate.

In which:

- VAT taxable revenue and PIT taxable revenue for travelling traders is the revenue including tax (in case it is subject to tax) of all money for goods sold, money for processing, money for commissions, money for service provision arising in the tax calculation period from production, business activities of goods, services, including bonuses, sales support, promotions, trade discounts, payment discounts, monetary or non-monetary supports; price subsidies, surcharges, extra charges, additional charges entitled to; compensation payments for contract violations, other compensations (only included in PIT taxable revenue); other revenues enjoyed by travelling traders regardless of whether the money has been collected.

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

In case travelling traders operate in multiple fields or sectors, they shall declare and calculate taxes according to the tax rate applied to each field or sector.

In case the taxable revenue of each field or sector cannot be determined or is determined inconsistently with actual business activities, the tax authorities shall impose taxable revenue for each field or sector according to the law on tax management.

Where do individual businesses submit their tax declaration dossiers in Vietnam?

Clause 2 of Article 12 of Circular 40/2021/TT-BTC stipulates the place to submit tax declaration dossiers for business individuals who pay taxes under separate declarations as follows:

Tax management for business individuals who pay taxes under separate declarations

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2. Place to submit tax declaration dossiers

The place to submit tax declaration dossiers for business individuals who pay taxes under separate declarations is stipulated in Clause 1, Article 45 of the Law on Tax Management. To be specific:

a) In the case of mobile businesses, submit the tax declaration dossiers at the Tax Department managing directly where the individual conducts the business activities.

b) In the case of individuals with income from digital content products and services, submit the tax declaration dossiers at the Tax Department managing directly where the individual resides (permanent or temporary residence).

c) In the case of individuals with income from transferring the national domain name ".vn", submit the tax declaration dossiers at the Tax Department where the individual resides. In the case of a non-resident individual transferring, submit the tax declaration dossiers at the tax department managing directly the organization managing the national domain name ".vn".

d) In the case of private construction contractor individuals, submit the tax declaration dossiers at the Tax Department managing directly where the individual conducts the construction activity.

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