What is the formula for calculating personal income tax (PIT) on income from capital investment in Vietnam?
What is the formula for calculating personal income tax (PIT) on income from capital investment in Vietnam?
Based on Clause 4, Article 10 of Circular 111/2013/TT-BTC, the regulations are as follows:
Basis for Tax Calculation on Income from Capital Investment
The basis for tax calculation on income from capital investment is taxable income and the tax rate.
1. Taxable Income
Taxable income from capital investment is the taxable income that an individual receives according to the guidance in Clause 3, Article 2 of this Circular.
2. Tax Rate on Income from Capital Investment is applied according to the full-table tax rate of 5%.
3. Time of Determining Taxable Income
The time of determining taxable income on income from capital investment is when organizations or individuals pay income to taxpayers.
Specifically, for some cases, the time of determining taxable income is as follows:
a) For income from the increased value of contributed capital according to the guidance at point d, clause 3, Article 2 of this Circular, the time of determining income from capital investment is when the individual actually receives income upon dissolution of the enterprise, change of business model, division, split, merger, consolidation of the enterprise, or upon capital withdrawal.
b) For income from dividends recorded as capital increase according to the guidance at point g, clause 3, Article 2 of this Circular, the time of determining income from capital investment is when the individual transfers capital or withdraws capital.
c) For income from dividends paid in shares according to the guidance at point g, clause 3, Article 2 of this Circular, the time of determining income from capital investment is when the individual transfers shares.
d) In case an individual receives income from capital investment abroad in any form, the time of determining taxable income is when the individual receives the income.
4. Method of Tax Calculation
The amount of personal income tax payable = Taxable Income × Tax Rate of 5%
Thus, in accordance with the above regulations, the formula for calculating PIT on income from capital investment is as follows:
The amount of personal income tax payable = Taxable Income × Tax Rate of 5%.
What is the formula for calculating personal income tax (PIT) on income from capital investment in Vietnam? (Image from Internet)
What are components of taxable revenue for individual businesses in Vietnam?
Based on Clause 1, Article 10 of Circular 40/2021/TT-BTC, the regulations regarding taxable revenue for VAT and PIT for business households and individuals are as follows:
Basis for Tax Calculation
The basis for tax calculation for business households and individuals is taxable revenue and the tax rate applied to the revenue.
1. Taxable Revenue
Taxable revenue for VAT and PIT for business households and individuals is the total revenue inclusive of tax (in cases subject to tax) of all proceeds from goods sales, processing, commissions, service provision incurred during the tax period from business activities, including rewards, support for meeting sales targets, promotions, trade discounts, payment discounts, support in cash or non-cash; price subsidies, surcharges, additional fees as regulated; compensation for contract violations, other compensation (only included in taxable revenue for PIT); other revenue that the business household or individual receives regardless of whether the money has been received or not.
...
Accordingly, taxable revenue for PIT for individual businesses includes the following components:
- Total proceeds from goods sales, processing, commissions, service provision incurred during the tax period.
- Rewards, support for meeting sales targets, promotions.
- Trade discounts, payment discounts.
- Support in cash or non-cash.
- Price subsidies, surcharges, additional fees as regulated.
- Other revenue that the business household or individual receives regardless of whether the money has been received or not.
* Special items only included in taxable revenue for PIT: Compensation for contract violations or other compensation.
What is the formula for calculating personal income tax (PIT) on income from capital investment in Vietnam? (Image from Internet)
What are regulations on the PIT rate based on revenue for individual businesses in Vietnam?
According to Clause 2, Article 10 of Circular 40/2021/TT-BTC, the guidelines are as follows:
- The tax rate based on revenue includes the PIT rate specifically applied to each field or sector as stipulated in Appendix I issued with Circular 40/2021/TT-BTC.
- In the case of activities in multiple fields or sectors:
+ Individuals engaged in business must declare and calculate tax separately for each field or sector according to the corresponding tax rate.
+ If the taxable revenue for each field or sector cannot be determined or is not suitable with actual business operations, the tax authority will make revenue determinations in accordance with the law.
Appendix I issued with Circular 40/2021/TT-BTC stipulates the list of industries and sectors for PIT calculation based on a percentage (%) on revenue for business households and individuals as follows:
| No. | List of Industries and Sectors | VAT Calculation Rate | PIT Rate |
|---|---|---|---|
| 1. | Distribution, Supply of Goods | ||
| - Wholesale and retail of various goods (excluding agency goods sold at the correct price for commission benefit); - Rewards, support for meeting sales targets, promotions, trade discounts, payment discounts, support in cash or non-cash for contracted households; |
1% | 0.5% | |
| - Distribution, supply of goods not subject to VAT, not required to declare VAT, subject to 0% VAT according to VAT law; - Business collaboration activities with organizations in this industry group where the organization is responsible for VAT declaration for the entire revenue of the business collaboration as per regulation; - Rewards, support for meeting sales targets, promotions, trade discounts, payment discounts, support in cash or non-cash for contracted households related to purchasing goods, services not subject to VAT, not required to declare VAT, subject to 0% VAT according to VAT law; - Compensation for contract violations, other compensation. |
- | 0.5% | |
| 2. | Services, Construction without Supplying Materials | ||
| - Hospitality services include: Providing short-term accommodation for tourists, transient guests; providing long-term accommodation not as apartments for students, workers, and similar subjects; providing accommodation together with dining services or entertainment facilities; - Cargo handling services and other support services related to transportation such as business warehousing, ticket sales, vehicle custody; - Postal services, courier of letters and parcels; - Brokerage, auction services, and agency commissions; - Legal consultancy, financial consultancy, accounting, auditing services; services for tax and customs administrative procedures; - Data processing services, leasing information gateways, information technology equipment, telecommunications; advertising on products, digital information content services; - Office support services and other business support services; - Sauna, massage, karaoke, disco, billiards, internet, gaming services; - Tailoring, laundry services; hair cutting, hairstyling, shampooing; other repair services including: Repair of computers and household items; - Consultancy services, design, supervision of basic construction works; - Other services subject to VAT under the offset method with a VAT rate of 10%; - Construction and installation not supplying materials (including installation of machinery, industrial equipment); |
5% | 2% | |
| - Service activities not subject to VAT, not required to declare VAT, subject to 0% VAT according to VAT law; - Business collaboration activities with organizations in this industry group where the organization is responsible for VAT declaration for the entire revenue of the business collaboration as per regulation; - Compensation for contract violations, other compensation; |
- | 2% | |
| - Asset leasing includes: + Leasing houses, land, stores, factories, warehouses not for accommodation services; + Leasing means of transportation, machinery, equipment not accompanied by a driver/operator; + Leasing other assets not accompanied by services |
5% | 5% | |
| - Lottery agency, insurance agency, multi-level marketing agency; - Compensation for contract violations, other compensation. |
- | 5% | |
| 3. | Production, Transportation, Services Associated with Goods, Construction Supplying Materials | ||
| - Production, processing, manufacturing of goods products; - Mining, processing of minerals; - Freight and passenger transportation; - Services accompanying the sale of goods such as training, maintenance, technology transfer accompanying product sales; - Food services; - Repair and maintenance services for machinery, equipment, transport, automobiles, motorcycles, and other motor vehicles; - Construction, installation supplying materials (including installation of machinery, industrial equipment); - Other activities subject to VAT under the offset method with a VAT rate of 10%; |
3% | 1.5% | |
| - Activities not subject to VAT, not required to declare VAT, subject to 0% VAT according to VAT law; - Business collaboration activities with organizations in this industry group where the organization is responsible for VAT declaration for the entire revenue of the business collaboration as per regulation. |
- | 1.5% | |
| 4. | Other Business Activities | ||
| - Production activities of products subject to VAT under the offset method with a VAT rate of 5%; | 2% | 1% | |
| - Provision of services subject to VAT under the offset method with a VAT rate of 5%; | 2% | 1% | |
| - Other activities not listed in the above groups 1, 2, 3; | 2% | 1% |
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