What is the tax rate applying to household businesses that do business in multiple business lines in Vietnam?
What is the tax rate applying to household businesses that do business in multiple business lines in Vietnam?
Pursuant to Clause 2, Article 10 of Circular 40/2021/TT-BTC, regulations are as follows:
Tax Base
The tax base for household businesses and individuals is the taxable revenue and the tax rate calculated on revenue.
...
2. Tax Rate Calculated on Revenue
a) The tax rate on revenue includes the VAT rate and the PIT rate, applied specifically to each field and business line as guided in Appendix I issued together with this Circular.
b) In cases where household businesses and individuals operate in multiple fields and industries, they must declare and calculate taxes according to the tax rate on revenue applicable to each specific field and business line. If they cannot determine the taxable revenue of each field, business line, or if the determination is not consistent with actual business operations, the tax authority shall determine the taxable revenue for each field and business line in accordance with the law on tax administration.
Thus, household businesses must declare and calculate taxes separately based on the revenue tax rate applied to each business field and business line. The tax rates include:
- VAT rate (Value Added Tax).- PIT rate (Personal Income Tax).
The detailed applicable rate is guided in Appendix I issued together with Circular 40/2021/TT-BTC.
Moreover, if revenue from each field, business line cannot be distinguished, or the distinction is inconsistent with reality, the tax authority will impose revenue for each business line.
Revenue imposition is based on legal regulations on tax administration and actual business conditions.
What is the tax rate applying to household businesses that do business in multiple business lines in Vietnam? (Image from Internet)
What is the tax rate applying to each business line in Vietnam?
The detailed percentage of tax calculated on revenue, applied specifically to each business line, is according to the guidance in Appendix I issued together with Circular 40/2021/TT-BTC.
| No. | business line Category | VAT Rate % | PIT Rate % |
|---|---|---|---|
| 1. | Distribution, supply of goods | ||
| - Wholesale and retail activities for all types of goods (excluding agency goods sold at fixed prices for commissions); - Bonuses, sales support, promotions, trade discounts, payment discounts, financial or non-financial support for households with tax liabilities; |
1% | 0.5% | |
| - Distribution, supply activities of goods not subject to VAT, not required to declare VAT, or subject to 0% VAT as prescribed by VAT law; - Business cooperation activities with organizations in this business line group where the organization is responsible for VAT declaration for all revenue of the business cooperation activities as prescribed; - Bonuses, sales support, promotions, trade discounts, payment discounts, financial or non-financial support for households with tax liabilities associated with the purchase of goods and services subject to no VAT, or 0% VAT as prescribed by VAT law; - Compensation for breach of contract, other compensations. |
- | 0.5% | |
| 2 | Services, construction without materials provision | ||
| - Accommodation services including: short-term lodging for tourists, other itinerant individuals; long-term lodging not in apartments for students, workers, and similar individuals; lodging services combined with meals or entertainment facilities; - Goods handling services and other support services related to transportation such as business in stations, ticketing, vehicle custody; - Postal and courier services for letters and parcels; - Brokerage, auction and agency commission services; - Legal, financial, accounting, auditing consulting services; administrative tax and customs procedures services; - Data processing services, information portal leasing, information technology equipment, telecommunications; advertising on digital content products and services; - Office support and other business support services; - Sauna, massage, karaoke, disco, billiards, internet, gaming services; - Tailoring, laundry services; hairdressing, hairstyling; - Other repair services including: repair of computers and household items; - Consulting, design, construction supervision services for basic construction; - Other services subject to VAT according to the deduction method with a VAT rate of 10%; - Construction, installation without materials provision (including the installation of machinery, industrial equipment); |
5% | 2% | |
| - Provision of services not subject to VAT, not required to declare VAT, or subject to 0% VAT as prescribed by VAT law; - Business cooperation activities with organizations in this business line group where the organization is responsible for VAT declaration for all revenue of the business cooperation activities as prescribed; - Compensation for breach of contract, other compensations; |
- | 2% | |
| - Asset rental including: + Rental of houses, land, shops, factories, warehouses excluding accommodation services; + Rental of vehicles, machinery without operators; + Rental of other assets without services |
5% | 5% | |
| - Lottery agency, insurance agency, multi-level marketing agency; - Compensation for breach of contract, other compensations. |
- | 5% | |
| 3. | Production, transportation, services linked with goods, construction with material provision | ||
| - Production, processing, manufacturing of products and goods; - Mining, minerals processing; - Goods transportation, passenger transportation; - Services accompanied by goods sale such as training, maintenance, and technology transfer services accompanied by product sales; - Food and beverage services; - Repair and maintenance services for machinery, vehicles, automobiles, motorcycles, and other motor vehicles; - Construction, installation with material provision (including the installation of machinery, industrial equipment); - Other activities subject to VAT according to the deduction method with a VAT rate of 10%; |
3% | 1.5% | |
| - Activities not subject to VAT, not required to declare VAT, or subject to 0% VAT as prescribed by VAT law; - Business cooperation activities with organizations in this business line group where the organization is responsible for VAT declaration for all revenue of the business cooperation activities as prescribed. |
- | 1.5% | |
| 4. | Other business activities | ||
| - Production of products subject to VAT according to the deduction method with a VAT rate of 5%; | 2% | 1% | |
| - Provision of services subject to VAT according to the deduction method with a VAT rate of 5%; | 2% | 1% | |
| - Other activities not listed in groups 1, 2, 3 above; | 2% | 1% |
What is the principle for calculating PIT and VAT for household businesses in Vietnam?
Pursuant to Article 4 of Circular 40/2021/TT-BTC, the principles for calculating taxes for household businesses are as follows:
- The tax calculation principles for household businesses are implemented according to current legal regulations on VAT, PIT, and related legal documents.
- household businesses with revenue from production and business activities in the calendar year of 100 million VND or less are exempt from VAT and PIT as stipulated by the law on VAT and PIT.
household businesses are responsible for accurately, truthfully, fully declaring taxes and submitting tax documents on time; and are accountable to the law for the accuracy, truthfulness, and completeness of tax documents as regulated.
- For household businesses operating as a group of individuals or households, the revenue threshold of 100 million VND/year for determining that an individual is exempt from VAT and PIT is applied to one (01) sole representative of the group of individuals or households in the tax year.
- Shall the TIN of dependant be changed to a personal TIN in Vietnam?
- Shall an employee with a contract of less than 6 months be subject to enforcement by deduction of money from the taxpayer’ salary or income in Vietnam?
- How long is the tax enforcement decision effective in Vietnam?
- What is the deadline for submitting taxes of the fourth quarter in Vietnam? What types of taxes are declared quarterly in Vietnam?
- Do Lunar New Year gifts valued at 2 million for employees subject to personal income tax in Vietnam?
- What are cases where non-refundable ODA project owners are entitled to refund of VAT in Vietnam?
- What is the form for notification of payment of land and housing registration fee by tax authority in Vietnam according to Decree 126?
- What are 03 conditions for VAT deduction in Vietnam from July 1, 2025?
- Is the e-tax transaction code generated uniformly in Vietnam?
- What crime will be imposed for tax evasion with an amount of from VND 100,000,000 in Vietnam?
