What is the PIT rate on incomes from franchising in Vietnam?

What is the PIT rate on incomes from franchising in Vietnam?

Based on clause 2, Article 14 of Circular 111/2013/TT-BTC:

The basis for calculating tax on income from franchising

The basis for calculating tax on income from franchising is taxable income and tax rate.

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2. Tax rate

The tax rate on incomes from franchising is 5% as per the flat tax rate schedule.

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Thus, the tax rate on incomes from franchising is 5% (as per the flat tax rate schedule).

What is the PIT rate on incomes from franchising in Vietnam? (Image from Internet)

How to calculate personal income tax on incomes from franchising in Vietnam?

Based on clause 4, Article 14 of Circular 111/2013/TT-BTC, the calculation of personal income tax on incomes from franchising is as follows:

*Where:

Taxable income from franchising is the income exceeding 10 million VND as per the franchising contract, regardless of the number of payments or times the taxpayer receives money.

In the case where multiple contracts are executed for the same franchising subject, taxable income is the amount exceeding 10 million VND calculated on the total value of all franchising contracts.

What inccomes are taxable incomes from franchising in Vietnam?

Based on clause 8, Article 2 of Circular 111/2013/TT-BTC, income from franchising is the income individuals receive from franchising contracts, including the resale of franchising rights as per franchising laws.

* Franchising is a commercial activity where the franchisor allows and requires the franchisee to independently carry out the sale of goods, provision of services under the conditions of the franchising contract.

What are regulations on personal income tax deduction on incomes from franchising in Vietnam ?

Based on point h, clause 1, Article 25 of Circular 111/2013/TT-BTC, the deduction of personal income tax on incomes from franchising is as follows:

Organizations and individuals paying income from franchising are responsible for deducting personal income tax before paying income to individuals.

The deducted tax amount is determined by the income exceeding 10 million VND per franchise transfer contract multiplied by the 5% tax rate.

In cases where a contract of significant value is paid in multiple installments, upon the first payment, 10 million VND is subtracted from the payment amount, and the remainder is multiplied by the 5% tax rate to deduct tax.

For subsequent payments, the tax deduction is calculated on the total amount of each installment.

Vietnam: When is the personal income tax from franchising for non-residents determined?

Based on point b, clause 2, Article 22 of Circular 111/2013/TT-BTC:

For income from licensing and franchising

1. Tax on income from licensing

a) Tax on income from licensing of non-resident individuals is determined by the income exceeding 10 million VND per transfer contract, transfer of intellectual property rights, or transfer of technology in Vietnam multiplied by the 5% tax rate.

Income from licensing is determined according to the guidelines in clause 1, Article 13 of this Circular.

b) The time to determine income from licensing is the time when organizations and individuals pay income from the transfer of licensing to non-resident individuals.

2. Tax on income from franchising

a) Tax on income from franchising of non-resident individuals is determined by the income exceeding 10 million VND per franchise contract in Vietnam multiplied by the 5% tax rate.

Income from franchising is determined according to the guidelines in clause 1, Article 14 of this Circular.

b) The time to determine taxable income from franchising is the time of payment of franchising fees between the franchisee and the franchisor.

Thus, the time to determine personal income tax from franchising for non-resident individuals is the time of payment of franchising fees between the franchisee and the franchisor.