What are regulations on tax payment for household businesses organizing extra classes in Vietnam according to Circular 29?

What are regulations on VAT payment for household businesses organizing extra classes in Vietnam according to Circular 29?

Based on Point a Clause 1 Article 6 of Circular 29/2024/TT-BGDDT, it is stipulated that organizations or individuals organizing extra classes outside of school, charging fees to students (hereinafter collectively referred to as tutoring centers), must register their business according to the law.

Pursuant to Clause 13 Article 4 of Circular 219/2013/TT-BTC, which stipulates the entities not subject to VAT:

Entities not subject to VAT

...

13. Teaching, vocational training as per the law, including language teaching and IT; dance, singing, painting, music, theater, circus, physical training, and sports; childcare, and other vocational trainings aimed at upgrading, fostering cultural, and professional knowledge skills.

In cases where educational facilities from preschool to high school collect fees for meals, student transportation, and other collections in the form of collection on behalf, these meal and transportation fees, and other collected funds are also not subject to tax.

Revenue from dormitory services for students; training activities (including the organization of exams and certification issuance in the training process) provided by the educational institution is not subject to VAT. If the training institution does not directly organize training but only organizes exams and certificates issuance in the training process, the exam and certificate issuance activities are also not subject to VAT. If providing exam and certificate issuance services outside the training process, they will be subject to VAT.

Example 7: Training Center X is authorized to train and issue professional certificates about insurance agents. Training Center X assigns the training task to Unit Y, while Center X organizes exams and issues professional certificates. The activity of organizing exams and issuing certificates by Training Center X is not subject to VAT.

...

According to the above-stated regulations, teaching and vocational training according to legal stipulations are not subject to value-added tax. Therefore, household businesses organizing extra classes are not required to pay VAT.

What are regulations on PIT payment for household businesses organizing extra classes in Vietnam according to Circular 29?

Based on Article 4 of Circular 40/2021/TT-BTC stipulating the principles for calculating VAT and PIT for household businesses and individuals as follows:

- The tax calculation principles for household businesses and individuals are implemented according to current statutory provisions on VAT, PIT, and related legal documents.

- household businesses and individuals with annual gross revenue from production and business activities not exceeding 100 million VND are not required to pay VAT and PIT as per legislation on VAT and PIT.

household businesses and individuals are responsible for accurately, truthfully, and fully declaring taxes and submitting tax dossiers on time; they are legally responsible for the accuracy, truthfulness, and completeness of their tax dossiers.

- household businesses and individuals operating as a group of individuals or family households have a revenue threshold not exceeding 100 million VND/year to determine non-obliged tax payers for VAT and PIT, assigned to one (01) sole representative of the group or family household for the tax year.

Therefore, household businesses organizing extra classes with an annual revenue exceeding 100 million VND are required to pay PIT.

From January 1, 2026, the revenue threshold for PIT for household businesses will increase to 200 million VND per the provisions in Article 5, Article 17, and Clause 2 Article 18 of Law on Value-Added Tax 2024.

What are regulations on tax payment for household businesses organizing extra classes in Vietnam according to Circular 29? (Image from the Internet)

What are regulations on licensing fee payment for household businesses organizing extra classes in Vietnam according to Circular 29? 

Based on the regulations in Clause 2 Article 4 of Decree 139/2016/ND-CP, supplemented by Point c Clause 1 Article 1 of Decree 22/2020/ND-CP, the licensing fee rates for household businesses organizing extra classes are calculated based on annual average revenue.

- household businesses organizing extra classes with revenue over 500 million VND/year: 1,000,000 VND/year;

- household businesses organizing extra classes with revenue over 300 to 500 million VND/year: 500,000 VND/year;

- household businesses organizing extra classes with revenue over 100 to 300 million VND/year: 300,000 VND/year.

The revenue used as the basis for determining the licensing fee rates for household businesses organizing extra classes is guided by the Ministry of Finance.

Note: Regarding licensing fees, household businesses organizing extra classes are exempt from licensing fees if their annual revenue does not exceed 100 million VND. Also, in the first year of operation registration, the household businesses organizing extra classes are exempted from this fee. (According to Article 3 of Decree 139/2016/ND-CP, amended, supplemented by Clause 1 Article 1 of Decree 22/2020/ND-CP)