Which individual businesses shall declare VAT and PIT under separate declarations in Vietnam?

Which individual businesses shall declare VAT and PIT under separate declarations in Vietnam?

Pursuant to Clause 1, Article 6 of Circular 40/2021/TT-BTC regulating the circumstances under which individual businesses apply the VAT and PIT declaration method under separate declarations as follows:

Method of tax calculation for individual businesses paying taxes under separate declarations

1. The method of tax declaration under separate declarations applies to individuals who do not engage in regular business activities and do not have a fixed business location. Non-regular business activities are determined based on the characteristics of production and business activities of each field, profession, and self-identified by individuals to choose the method of tax declaration as guided in this Circular. A fixed business location is where individuals conduct production and business activities, such as transaction locations, shops, stores, workshops, warehouses, docks, yards, or similar locations.

...

Thus, the method of VAT and PIT declaration under separate declarations applies to individuals who do not engage in regular business activities and do not have a fixed business location.

In which, non-regular business activities and no fixed business location for individual businesses are guided as follows:

- Non-regular business activities are determined based on the characteristics of production and business activities of each field, profession, and self-identified by individuals to choose the method of tax declaration as guided in Circular 40/2021/TT-BTC.

- A fixed business location is where individuals conduct production and business activities, such as transaction locations, shops, stores, workshops, warehouses, docks, yards, or similar locations.

Which individual businesses shall declare VAT and PIT under separate declarations in Vietnam? (Image from Internet)

Which individual businesses shall pay VAT and PIT under separate declarations in Vietnam?

According to Clause 2, Article 6 of Circular 40/2021/TT-BTC, individual businesses paying VAT and PIT under separate declarations include:

- Individuals engaging in mobile business activities;

- Individuals who are private construction contractors;

- Individuals transferring the Vietnamese national internet domain name ".vn";

- Individuals with income from digital content services and products if they do not choose to pay tax by the declaration method.

Where to submit VAT and PIT declaration dossiers under separate declarations with individual businesses?

According to Clause 2, Article 12 of Circular 40/2021/TT-BTC, the place to submit tax declaration dossiers for individual businesses paying taxes under separate declarations is regulated at Clause 1, Article 45 of the Law on Tax Administration 2019. Specifically:

- In the case of mobile business activities, submit the tax declaration dossier to the Tax Department directly managing the location where the business activity occurs.

- In the case of individuals with income from digital content services and products, submit the tax declaration dossier to the Tax Department directly managing the location where the individual resides (permanent or temporary residence).

- In the case of individuals with income from transferring the Vietnamese national internet domain name “.vn”, submit the tax declaration dossier to the Tax Department where the individual resides. If the individual transferring the domain is a non-resident, submit the tax declaration dossier to the tax authority directly managing the organization that manages the Vietnamese national internet domain name “.vn”.

- In the case of individuals who are private construction contractors, submit the tax declaration dossier to the Tax Department directly managing the location where the construction activity occurs.

What are bases for calculating VAT and PIT with household businesses and individual businesses in Vietnam?

According to Article 10 of Circular 40/2021/TT-BTC, the basis for calculating VAT and PIT with household businesses and individual businesses is taxable revenue and the tax rate on revenue. Specifically:

- Taxable revenue

Taxable revenue for VAT and PIT for household businesses and individual businesses includes tax (if subject to tax) for the entire sales, processing fees, commissions, service fees arising within the tax period from production and business activities of goods and services, including bonuses, sales support, promotions, trade discounts, payment discounts, support in cash or non-cash; subsidies, surcharges, additional fees, extra fees enjoyed according to regulations; compensation for contract violations, other compensations (only calculated into PIT taxable revenue); other revenue that household businesses and individual businesses enjoy, regardless of whether cash has been received or not.

- Tax rate on revenue

+ The tax rate on revenue includes VAT rate and PIT rate applied in detail to each field and profession as guided in Appendix I issued with Circular 40/2021/TT-BTC.

+ In cases where household businesses and individual businesses operate in multiple fields and professions, they must declare and calculate tax according to the tax rate on revenue applied to each field and profession. If household businesses and individual businesses cannot determine taxable revenue for each field and profession or do not determine appropriately to the actual business situation, the tax authority shall determine taxable revenue for each field and profession following tax administration regulations.

- Determining the tax payable

VAT payable = VAT taxable revenue x VAT rate

PIT payable = PIT taxable revenue x PIT rate

Where:

+ VAT taxable revenue and PIT taxable revenue are guided in Clause 1, Article 10 of Circular 40/2021/TT-BTC.

+ VAT rate and PIT rate are guided in Appendix 1 issued with Circular 40/2021/TT-BTC.