When is the taxable incomes from business determined in Vietnam?

When is the taxable incomes from business determined in Vietnam?

According to Article 25 of the Law on Personal Income Tax 2007, which regulates tax on business income:

Tax on Business Income

1. Tax on business income of non-resident individuals is determined by multiplying revenue from production and business activities stipulated in Clause 2 of this Article by the tax rate defined in Clause 3 of this Article.

2. Revenue is the total amount arising from the provision of goods and services, including expenditures paid by the purchaser on behalf of the non-resident individual 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 that the non-resident individual receives in any form from the provision of goods and services in Vietnam, regardless of the location where the business activities are conducted.

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Additionally, Article 32 of the Law on Personal Income Tax 2007 stipulates the timing for determining taxable income:

Timing for Determining Taxable Income

1. The time for determining taxable income for the income specified in Article 25 of this Law is when the non-resident individual receives the income or when the invoice for the sale of goods or provision of services is issued.

2. The time for determining taxable income for the income specified in Articles 26, 27, 30, and 31 of this Law is when the organization or individual in Vietnam pays income to the non-resident individual or when the non-resident individual receives income from an organization or individual abroad.

3. The time for determining taxable income for the income specified in Articles 28 and 29 of this Law is when the transfer contract comes into effect.

Thus, the time to determine personal income taxable income from business is when the non-resident individual receives the income or when the invoice for goods sale, service provision is issued.

When is the taxable incomes from business determined in Vietnam? (Image from the Internet)

What are the personal income tax regulations for individual businesses who are Vietnamese residents?

According to Article 10 of the Law on Personal Income Tax 2007 (amended by Clause 4 Article 2 of the Law amending Tax Laws 2014), individual businesses pay personal income tax as a percentage of revenue for each sector, industry of production, and business.

- individual businesses pay personal income tax as a percentage of revenue for each sector, industry of production, and business.

- Revenue is the total amount from sales, manufacturing charges, commissions, and services provision arising in the tax period from production, business of goods, services activities.

In cases where a individual business cannot determine the revenue, the tax authority has the right to determine the revenue according to the provisions of the tax management laws.

- The personal income tax rate for a resident individual business corresponds to each business sector as follows:

- Distribution, supply of goods: 0.5%;

- Services, construction without included materials: 2%.

Especially for asset leasing activities, insurance agency, lottery agency, multi-level selling agency: 5%;

- Production, transportation, services associated with goods, construction including materials: 1.5%;

- Other business activities: 1%.

What are the personal income tax regulations for individual businesses who are Vietnamese non-residents?

According to Article 25 of the Law on Personal Income Tax 2007, tax on business income of non-resident individuals is determined by multiplying revenue from production and business activities by the tax rate. Where:

- Revenue is the total amount arising from the provision of goods, services, including costs paid by the purchaser for the non-resident individual 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 that the non-resident individual receives in any form from the provision of goods, services in Vietnam, regardless of the business activities' location.

- The tax rate for business income is defined for each sector, industry of production, and business as follows:

+ 1% for goods trading activities;

+ 5% for service activities;

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

When is the tax period for business income in Vietnam?

According to Article 7 of the Law on Personal Income Tax 2007 (amended by Clause 3 Article 1 of the Amended Law on Personal Income Tax 2012), which sets out the tax period:

(1) The tax period for resident individuals is prescribed as follows:

- The annual tax period applies to income from business; income from wages, remuneration;

- The tax period for each income occurrence applies to income from capital investment; income from capital transfer, excluding income from securities transfer; income from real estate transfer; prize-winning income; income from royalties; income from franchising; inheritance income; gift income;

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

(2) The tax period for non-resident individuals is prescribed as follows

The tax period for non-resident individuals is calculated for each occurrence of income applicable to all taxable incomes.