What is a KOL? Do KOL on Shopee pay personal income tax in Vietnam?

What is a KOL?

A KOL is a "key opinion leader" or "influencer." They are individuals who exert influence in a particular field, often possessing credibility and in-depth knowledge of that field, thereby impacting the opinions and decisions of the surrounding community. KOLs frequently operate on social media platforms such as Facebook, Instagram, TikTok, or YouTube, and collaborate with brands or companies to promote products or services.

There are three main groups of KOLs:

- Celebrities: Famous individuals such as singers, actors, or models.

- Influencers: Individuals who influence social media and often create content based on their interests or expertise.

- Experts: People with extensive knowledge and expertise in a specific field, such as doctors, teachers, or financial experts.

KOLs help increase brand awareness and attract customer interest naturally due to the trust they have established with their community.

The information is for reference only.

What is a KOL? Do KOL on Shopee pay personal income tax in Vietnam? (Image from the Internet)

Do KOLs on Shopee pay personal income tax in Vietnam?

According to Article 2 of the Law on Personal Income Tax 2007, the provisions are as follows:

Taxpayers

1. Taxpayers include resident individuals with taxable income as defined in Article 3 of this Law that arises inside and outside the territory of Vietnam and non-resident individuals with taxable income as defined in Article 3 of this Law that arises within the territory of Vietnam.

2. A resident individual is a person who meets one of the following conditions:

a) Present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the date of first arrival in Vietnam;

b) Have a permanent residence in Vietnam that includes a registered permanent residence or a rented house to stay in Vietnam under a lease contract with a term.

3. A non-resident individual is a person who does not meet the conditions specified in Clause 2 of this Article.

Based on Point c, Clause 2, Article 3 of Decree 65/2013/ND-CP, the regulations on taxable income are as follows:

Taxable income

Taxable income of individuals includes the following types of incomes:

...

2. Income from salaries, wages received by employees from employers, including:

a) Salaries, wages, and salary-based payments received in the form of money or non-monetary forms.

...

c) Fees received in forms such as commission brokerage, project participation money, royalties, and other commissions, fees;

d) Money received from participating in business associations, boards of directors, supervisory boards, management boards, and other organizations;

...

Additionally, Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC stipulates:

Tax deduction and tax deduction certificates

1. Tax deduction

...

i) Tax deduction for certain cases

Organizations and individuals paying wages, fees, or other compensations to resident individuals who do not sign labor contracts (as guided at Points c, d, Clause 2, Article 2 of this Circular) or sign labor contracts under three (03) months with total payment from two million (2,000,000) VND/time or more must deduct tax at a rate of 10% on income before paying the individual.

In cases where individuals have only the income subjected to tax deduction at the aforementioned rate but estimate that their total taxable income after personal exemption does not reach the tax threshold, these individuals can make a commitment (according to the form issued with the guidance document on tax management) sent to the income-paying organization as a basis for temporarily not deducting personal income tax.

Based on the recipient's commitment, the income-paying organization does not withhold tax. By the end of the tax year, the income-paying organization still has to compile a list and the income of individuals not reaching the tax threshold (using the form issued with the guidance document on tax management) and submit it to the tax authority. The individual making the commitment is responsible for their commitment, and if fraud is detected, it will be handled in accordance with the Law on Tax Management.

Individuals making commitments guided at this point must have taxpayer registration and a tax code at the time of the commitment.

...

From the above regulations, it can be seen that KOLs on Shopee, if having income from wages, salaries (including remunerations such as referral commissions, product promotions, etc.), reaching the threshold of taxable personal income, must pay personal income tax.

What is the minimum income to pay personal income tax in Vietnam?

According to Clause 1, Article 19 of the Law on Personal Income Tax 2007 as amended by Article 1 of Resolution 954/2020/UBTVQH14, the personal exemption is defined as follows:

- The personal exemption is the amount deducted from taxable income before calculating tax on income from salaries, wages for resident taxpayers. The personal exemption includes the following two parts:

+ Deduction for taxpayers is 11 million VND/month (132 million VND/year);

+ Deduction for each dependent is 4.4 million VND/month.

According to the above regulation, the deduction for taxpayers is 11 million VND/month, and the deduction for each dependent is 4.4 million VND/month. Therefore, individuals without dependents must pay personal income tax when the total income exceeds 11 million VND/month.

Additionally, Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC guides as follows:

Tax deduction and tax deduction certificates

1. Tax deduction

...

i) Tax deduction for certain cases

Organizations and individuals paying wages, fees, or other compensations to resident individuals not signing or signing labor contracts under three (03) months with total payments of two million (2,000,000) VND or more per instance must deduct tax at a rate of 10% on income before paying the individual.

...

Thus, if resident individuals do not sign labor contracts or sign labor contracts under three (03) months with total payments of two million (2,000,000) VND or more per instance, they must pay personal income tax at a rate of 10% of income.

Note: In cases where individuals only have the sole income subject to tax deduction at 10% but estimate that their total taxable income after personal exemption is below the tax threshold, these individuals can make a commitment (according to form 08/CK-TNCN Download Appendix 2 issued with Circular 80/2021/TT-BTC) to the income-paying organization as a basis for temporarily not deducting personal income tax.