What is the fixed tax applicable to household business in Vietnam? How is the fixed tax rate for household businesses determined?
What is the fixed tax applicable to household business in Vietnam?
Currently, there is no specific document regulating the fixed tax applicable to household business. However, it can be understood as a type of tax that household businesses must pay to the State in the form of "fixed" (i.e., paying a fixed amount) instead of declaring and calculating tax based on actual revenue. The implementation of fixed tax aims to simplify the tax collection procedures for small-scale household businesses with few transactions or without a complex accounting system.
According to Clause 1, Article 7 of Circular 40/2021/TT-BTC, household businesses that do not fall under the case of paying tax by declaration method and do not fall under the case of paying tax per arising occurrence as guided in Article 5, Article 6 of Circular 40/2021/TT-BTC will pay fixed tax.
Additionally, based on Clause 9, Article 3 of Decree 40/2021/TT-BTC, it is stipulated that the “fixed tax rate” is the tax and other payable amounts to the state budget by household businesses and individuals paying fixed tax, as determined by the tax authority in accordance with Article 51 of the 2019 Law on Tax Administration.
What is the fixed tax applicable to household business in Vietnam? How is the fixed tax rate for household businesses determined? (Image from the Internet)
How is the fixed tax rate for household businesses determined in Vietnam?
According to Clause 2, Article 51 of the 2019 Law on Tax Administration, the tax authority will base its determination on the household business's declared documents, the tax authority's database, and the opinions of the commune-level tax advisory board to decide the fixed tax rate.
This regulation is detailed in Clause 1, Article 13 of Circular 40/2021/TT-BTC as follows:
- The tax declaration of fixed households is self-declared based on the projected revenue and fixed tax rate of the tax year;
- The tax authority's database;
- Consultation opinions of the commune-level tax advisory board;
- Results of publicizing information and receiving feedback from the tax advisory board, People's Committee, People's Council, Fatherland Front of communes, wards, commune-level towns, fixed households, and other organizations, individuals.
Publicizing information regarding fixed households involves the tax authority organizing and receiving feedback on revenue and the fixed tax rate for fixed households as prescribed.
The first publicizing of information according to Clause 5, Article 13 of Circular 40/2021/TT-BTC is to consult, gather opinions on projected revenue and fixed tax rate; and the second publicizing according to Clause 9, Article 13 of Circular 40/2021/TT-BTC is to consult, gather opinions on the official revenue and fixed tax rate payable for the tax year.
Publicizing information includes posting paper-based information in the locality; directly delivering it to fixed households; directly sending it to the People's Council, People's Committee, Fatherland Front of the district, commune, ward, commune-level town; and publicizing on the electronic information portal of the Tax sector.
When is the deadline for submitting the fixed tax declaration for new household businesses in Vietnam?
Based on Point c, Clause 2, Article 44 of the 2019 Law on Tax Administration, the deadlines for tax declaration submission are as follows:
Deadline for Tax Declaration Submission
- The submission deadline for tax declarations on a monthly, quarterly basis is as follows:
a) No later than the 20th day of the following month for monthly-based declaration and payment;
b) No later than the last day of the first month of the following quarter for quarterly-based declaration and payment.
- The submission deadline for tax declarations with an annual tax period is as follows:
a) No later than the last day of the third month from the end of the calendar year or fiscal year for the annual tax finalization dossier; no later than the last day of the first month of the calendar year or fiscal year for the annual tax declaration;
b) No later than the last day of the fourth month from the end of the calendar year for personal income tax finalization dossiers of individuals directly finalizing tax;
c) No later than December 15 of the preceding year for fixed tax declaration dossiers of household businesses, individual businesses paying fixed tax; in the case of new household businesses, individual businesses just starting operations, the tax declaration submission deadline is no later than 10 days from the commencement of operations.
- The submission deadline for tax declarations for taxes declared and paid per occurrence is no later than the 10th day from the tax obligation arising date.
- The submission deadline for tax declarations in the case of business termination, contract termination, or business reorganization is no later than the 45th day from the event occurrence.
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Thus, the deadline for submitting the fixed tax declaration for new household businesses is no later than 10 days from the start of business operations.
