What are regulations on basis for tax calculation for individuals and household businesses in Vietnam?

What are regulations on basis for tax calculation for individuals and household businesses in Vietnam?

According to 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 tax rate on revenue.

(1) Taxable revenue

The taxable revenue for VAT and individual income tax for household businesses and individual businesses is the revenue including tax (in cases subject to tax) of all proceeds from sales, processing, commissions, service supplies arising during the tax period from activities in production, business of goods, and services. This includes bonuses, support upon achieving sales, promotions, trade discounts, payment discounts, financial or non-financial support; price subsidies, surcharges, additional fees obtained as regulated; compensation for contract violations, and other compensations (only included in the taxable revenue for individual income tax); other revenues that household businesses, individual businesses receive, irrespective of whether the money has been received or not.

(2) Tax rate on revenue

- The tax rate on revenue includes VAT rate and individual income tax rate, applied in detail for each field, sector as guided in Appendix I issued with Circular 40/2021/TT-BTC.

- In the case where household businesses, individual businesses operate in multiple fields and sectors, they must declare and calculate taxes according to the tax rate on revenue applicable to each field, industry.

In cases where household businesses or individual businesses cannot determine the taxable revenue for each field or sector or determine it in a way that is inconsistent with actual operations, the tax authority will fix the taxable revenue for each area or sector according to the legal regulations on tax management.

What are regulations on basis for tax calculation for individuals and household businesses in Vietnam? (Image from the Internet)

How to terminate tax payable by individuals and household businesses in Vietnam?

According to Clause 3, Article 10 of Circular 40/2021/TT-BTC, the regulations are as follows:

basis for tax calculation

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3. Determining the tax payable

VAT payable = Taxable VAT revenue x VAT rate

Individual income tax payable = Taxable individual income tax revenue x Individual income tax rate

Where:

- Taxable VAT revenue and taxable individual income tax revenue as guided in Clause 1 of this Article.

- VAT rate and individual income tax rate as guided in Appendix I issued with this Circular.

Thus, the tax payable by individuals and household businesses is determined as follows:

VAT payable = Taxable VAT revenue x VAT rate

Individual income tax payable = Taxable individual income tax revenue x Individual income tax rate

What are the principles of tax calculation for individuals and household businesses in Vietnam?

Based on Article 4 of Circular 40/2021/TT-BTC, the principles for tax calculation for individuals and household businesses are as follows:

Principles of tax calculation

1. Tax calculation principles for household businesses, individual businesses are implemented according to current legal tax regulations on VAT, individual income tax, and related legal normative documents.

2. Household businesses, individual businesses with revenue from production and business activities in a calendar year of 100 million VND or less are not required to pay VAT and do not need to pay individual income tax according to the law on VAT and individual income tax. Household businesses, individual businesses are responsible for declaring taxes accurately, honestly, completely, and submitting tax dossiers on time; bearing legal responsibility for the accuracy, honesty, completeness of the tax dossier as per regulations.

3. For household businesses, individual businesses in the form of groups of individuals or households, the revenue level from 100 million VND/year or less to determine an individual not subject to pay VAT, does not have to pay individual income tax, is set for one (01) sole representative of the group of individuals, households in the tax year.

Individuals and household businesses calculate taxes based on the following principles:

- Tax calculation principles for household businesses, individual businesses are implemented according to current legal tax regulations on VAT, individual income tax, and related legal normative documents.

- Household businesses, individual businesses with revenue from production and business activities in the calendar year of 100 million VND or less are not required to pay VAT and do not need to pay individual income tax according to the law on VAT and individual income tax. Household businesses, individual businesses are responsible for declaring taxes accurately, honestly, completely, and submitting tax dossiers on time; bearing legal responsibility for the accuracy, honesty, and completeness of the tax dossier as per regulations.

- For household businesses, individual businesses in the form of groups of individuals or households, the revenue level from 100 million VND/year or less to determine an individual not subject to pay VAT, and does not have to pay individual income tax is set for one (01) sole representative of the group of individuals, households in the tax year.