What is the tax rate for business activities of Vietnamese non-residents?

What is the tax rate for business activities of Vietnamese non-residents?

According to Clause 3, Article 25 of the Personal Income Tax Law 2007, specific regulations on taxes regarding income from business are stipulated.

Tax on Income from Business

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2. Revenue is the total amount arising from the provision of goods and services, including expenses paid by the buyer to the Vietnamese non-resident that are non-refundable.

In cases where the contract agreement does not include personal income tax, the taxable revenue must be converted to the total amount received in any form by the Vietnamese non-resident from the provision of goods and services in Vietnam, regardless of the location of the business activities.

3. The tax rate on income from business is defined for each field, sector of production, and business as follows:

a) 1% for business activities of goods;

b) 5% for business activities of services;

c) 2% for activities of production, construction, transportation, and other business activities.

Thus, based on the above regulation, the tax rate for business activities of goods by Vietnamese non-residents is 1%.

What is the tax rate for business activities of Vietnamese non-residents? (Image from the Internet)

When is the taxable period for income from sevice provision of Vietnamese non-residents?

According to Article 32 of the Personal Income Tax Law 2007, specific guidelines are provided as follows:

Timing for Determining Taxable Income

1. The timing for determining taxable income for income stipulated in Article 25 of the Personal Income Tax Law is when the Vietnamese non-resident receives income or when the invoice for selling goods or providing services is issued.

2. The timing for determining taxable income for income stipulated in Articles 26, 27, 30, and 31 of the Personal Income Tax Law is when the organization or individual in Vietnam pays income to the Vietnamese non-resident, or when the Vietnamese non-resident receives income from an organization or individual abroad.

3. The timing for determining taxable income for income stipulated in Articles 28 and 29 of the Personal Income Tax Law is when the transfer contract becomes effective.

Thus, based on the above regulation, the taxable period for income from sevice provision of Vietnamese non-residents is determined when the Vietnamese non-resident receives income or when the invoice for selling goods or providing services is issued.

How is the tax period for Vietnamese non-residents calculated?

According to Article 7 of the Personal Income Tax Law 2007, as amended by Clause 3, Article 1 of the Amended Personal Income Tax Law 2012, specific provisions are given as follows:

Tax Period

1. The tax period for resident individuals is stipulated as follows:

a) The tax period by year applies to income from business; income from salaries and wages;

b) The tax period for each occurrence of income applies to income from capital investment; income from capital transfers, excluding income from securities transfers; income from real estate transfers; income from winnings; income from royalties; income from franchising; income from inheritance; income from gifts;

c) The tax period for each occurrence of transfer or annually for income from securities transfers.

2. The tax period for Vietnamese non-residents is calculated for each occurrence of income for all taxable income.

Thus, according to the above regulation, the tax period for Vietnamese non-residents is calculated for each occurrence of income for all taxable income.

Is personal exemption applicable to income from business of Vietnamese non-residents?

Based on Article 19 of the Personal Income Tax Law 2007, as amended by Clause 4, Article 1 of the Amended Personal Income Tax Law 2012, Article 1 of Resolution 954/2020/UBTVQH14, and Clause 4, Article 6 of the Amendment of Laws on Taxation 2014, specific provisions about personal exemption are provided as follows:

personal exemption

1. personal exemption is the amount deducted from taxable income before calculating tax on income from business, salary, and wages for taxpayers who are resident individuals. The personal exemption includes two parts:

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

b) Deduction for each dependent is 4.4 million VND/month.

2. The determination of the personal exemption for dependents follows the principle that each dependent is only deducted once from one taxpayer.

3. Dependents are those whom the taxpayer has the responsibility to support, including:

a) Minor children; disabled children unable to work;

b) Individuals without income or with income not exceeding the designated level, including adult children studying at universities, colleges, professional secondary, or vocational education; spouses unable to work; parents who are retired or unable to work; others without support whom the taxpayer must directly support.

The Government of Vietnam stipulates the income level and declaration to determine dependents eligible for personal exemption.

Thus, according to the above regulation, income from business of Vietnamese non-residents is not eligible for personal exemption.