What is the evaluation of the personal income tax rate for some incomes from providing advertising on technology platforms in Vietnam?
- What is the current personal income tax rate for providing advertising on technology platforms in Vietnam?
- What is the evaluation of the personal income tax rate for some incomes from providing advertising on technology platforms in Vietnam?
- Proposing to increase the personal income tax rate for income from providing advertising on technology platforms in Vietnam?
What is the current personal income tax rate for providing advertising on technology platforms in Vietnam?
According to the provisions of Article 25 of the 2007 Law on Personal Income Tax in Vietnam for the provision of advertising on technology platforms as follows:
Tax on incomes from business
1. Tax on incomes from business of a non-resident is determined to be equal to his/her turnover from production or business activities specified in Clause 2 of this Article multiplied by the tax rate specified in Clause 3 of this Article.
2. Turnover is the total sum of money derived from the provision of goods or services, including also expenses paid by the goods or service buyer on behalf of the non-resident but not refunded to the goods or service buyer.
If a contract between the goods or service provider and buyer does not specify personal income tax, the taxable turnover that must be converted is the total sum of money in any form earned by the non-resident from the provision of goods or services in Vietnam, regardless of places where business activities are conducted.
3. Tax rates applicable to incomes from business are specified for different production sectors or business lines as follows:
a/ 1% for goods trading;
b/ 5% for service provision;
c/ 2% for production, construction, transportation and other business activities.
Thus, the personal income tax rate for the provision of advertising on technology platforms is currently 2%.
What is the evaluation of the personal income tax rate for some incomes from providing advertising on technology platforms in Vietnam?
What is the evaluation of the personal income tax rate for some incomes from providing advertising on technology platforms in Vietnam?
In subsection 1.2, section 1, part 2, appendix 2, attached with the draft report on evaluation of personal income tax rates for a number of incomes from the provision of advertising on technology platforms as follows:
The 2014 Law on Amendments to Tax Laws amending and supplementing a number of articles in the Tax Laws and tax guidance documents (effective from January 1, 2015) stipulates:
- For household businesses and individual businesses with a turnover of over VND 100 million/year, pay personal income tax at the rate set on turnover according to each production and business line and field (Distributing and supplying goods: 0.5%; Services; construction excluding raw materials: 2% (Particularly for property leasing, insurance agents, lottery agents, multi-level sales agents: 5%; Products production, transportation, services associated with goods, construction including raw materials: 1.5%; Other business activities: 1%).
This regulation ensures a simple, clear and transparent policy, improves the efficiency of tax collection management, tax compliance of business households and individuals, and saves social costs.
Although the personal income tax is collected according to the ratio of revenue, excluding expenses and deductions, the rate is calculated to suit individual business activities corresponding to each field. Production and business sectors and lines of business and lower than the ratio of revenue currently applied to enterprises whose costs and income cannot be determined (distribution and supply of goods: 1%: 1%) ; services: 5%; construction, transportation and other activities: 2%...).
During the implementation process, it was suggested that the personal income tax ratio on revenue should be calculated and adjusted to suit the characteristics of individual business activities, especially new business models.
When compared with the personal income tax rate of other types of income, the tax rate applied to some activities is still quite low.
For example, for income from salaries and wages, the tax rate applicable to taxable income above VND 80 million/month is 35%, while individuals have income from advertising activities on the technology platforms with very high income, the personal income tax rate on revenue is only 2%.
Therefore, it is necessary to study and adjust the personal income tax ratio on revenue for some specific business activities accordingly.
Proposing to increase the personal income tax rate for income from providing advertising on technology platforms in Vietnam?
This proposal is stated in the draft Government's Proposal on Law and Ordinance Development Program in 2024; Adjustment of the Program on Law and Ordinance Development in 2023.
Specifically, in subsection 1.3, section 1, part 2, appendix 2 issued together with the draft report, the following notes:
To ensure reasonable regulation of individual's income, suitable for new business types, it is proposed to add a higher tax rate for the provision of software products and services; digital information content products and services on entertainment, video games, digital movies, digital photos, digital music; digital advertising.
This proposal will also increase state budget revenue.
The specific tax rate should be studied and evaluated carefully, to ensure that the role of the personal income tax policy in the tax system is promoted.
In addition, in Resolution No. 406/NQ-UBTVQH15 in 2021 on promulgating a number of solutions to support businesses and people affected by the Covid-19, it is also excluded or not reduced tax on income and revenue from providing software products and services; digital information content products and services on entertainment, video games, digital movies, digital photos, digital music; individual digital advertising.
View the entire draft Government Proposal: here.
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