What is the tax rate on income from business activities for each business line in Vietnam?

What is the tax rate on income from business activities for each business line in Vietnam?

* For resident individuals:

Based on Article 10 of the 2007 Personal Income Tax Law (amended by Clause 4 Article 2 of the 2014 Law on Amending Laws on Taxes):

Tax for individual business:

1. Individual businesses shall pay personal income tax based on the revenue ratio for each business line, and business activity.

2. Revenue is the total amount of money from sales, processing fees, commissions, and service provision arising in the tax period from production and business activities of goods and services.

In cases where individual businesses cannot determine their revenue, the tax authority has the authority to determine the revenue according to the provisions of the tax management law.

3. Tax rates:

a) Distribution and supply of goods: 0.5%;

b) Services, construction without providing materials: 2%.

For asset leasing, insurance agency, lottery agency, and multi-level selling activities: 5%;

c) Production, transportation, services related to goods, construction with the provision of materials: 1.5%;

d) Other business activities: 1%.

The tax rates for resident individuals in business are as follows:

- Distribution and supply of goods: 0.5%;

- Services, construction without providing materials: 2%.

For asset leasing, insurance agency, lottery agency, and multi-level selling activities: 5%;

- Production, transportation, services related to goods, construction with the provision of materials: 1.5%;

- Other business activities: 1%.

* For non-resident individuals:

Based on Article 25 of the 2007 Personal Income Tax Law:

Tax on income from business:

1. Taxes on income from business activities of non-resident individuals are determined by the revenue from the production and business activities specified in Clause 2 of this Article multiplied by the tax rates specified in Clause 3 of this Article.

2. Revenue is the total money arising from providing goods and services, including costs paid by the buyer for the non-resident individual without reimbursement.

If the contract agreement does not include personal income tax, the taxable revenue must be converted to the total amount that the non-resident individual receives in any form from the provision of goods and services in Vietnam, regardless of the location of the business activities.

3. Tax rates for income from business activities in each field and sector are as follows:

a) 1% for business activities of goods;

b) 5% for business activities of services;

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

The tax rates for income from business activities of non-resident individuals in each field and sector are as follows:

- For business activities of goods: 1%;

- For business activities of services: 5%;

- For production, construction, transportation, and other business activities: 2%.

What is the tax rate on income from business activities for each business line in Vietnam?​ (Image from the Internet)

What is the tax period for business income in Vietnam?

Based on Article 7 of the 2007 Personal Income Tax Law (amended by Clause 3 Article 1 of the 2012 Amended Personal Income Tax Law):

Tax periods:

1. Tax periods for resident individuals are prescribed as follows:

a) The annual tax period applies to income from business activities, salary, and wages;

b) The tax period for each income generation applies to income from capital investment, capital transfer (excluding securities transfer), real estate transfer, winnings, royalties, franchising, inheritance, and gifts;

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

2. Tax periods for non-resident individuals apply to each income generation for all taxable incomes.

The tax period for resident individuals with business income is annually.

The tax period for non-resident individuals with business income is determined based on each income occurrence.

What business lines are subject to personal income tax in Vietnam?

Based on Clause 1 Article 2 of Circular 111/2013/TT-BTC, the business income subject to personal income tax includes income derived from production and business activities in the following fields:

(1) Income from the production and business of goods and services in all fields and sectors prescribed by law, such as production and business of goods; construction; transportation; catering; and service businesses, including rental services for houses, land use rights, water surfaces, and other assets.

(2) Income from independent practice activities of individuals in fields and sectors with licenses or practice certificates as required by law.

(3) Income from production and business activities in agriculture, forestry, salt production, and aquaculture that do not meet the conditions for tax exemption as guided at point e clause 1 Article 3 of Circular 111/2013/TT-BTC.