Vietnam: How do business households and individuals pay tax according to the declaration method?
- How is a business household subject to tax according to the declaration method in Vietnam?
- How do business households and individuals pay tax according to the declaration method in Vietnam?
- How are the invoice and document regimes applicable to business households and individuals paying tax according to the declaration method in Vietnam?
How is a business household subject to tax according to the declaration method in Vietnam?
According to Sentence 16, Manual on electronic invoices No. 2 of Ho Chi Minh City Tax Department of Vietnam instructs taxpayers according to the method of declaration as follows:
- The declaration method is applicable to large-scale business households and individuals;
- Business households and individuals do not meet the requirements of large scale but choose to pay tax according to the declaration method.
Vietnam: How do business households and individuals pay tax according to the declaration method?
How do business households and individuals pay tax according to the declaration method in Vietnam?
According to Question 16 Manual on electronic invoices No. 2 of Ho Chi Minh City Tax Department, guidance on tax declaration for business households and individuals paying tax according to the following declaration method:
- Business households and individuals that pay tax according to the declaration method shall declare tax on a monthly basis, except for cases where business households and business individuals have just started doing business and business households and individuals meet the following criteria: Quarterly tax declaration and quarterly tax declaration options as prescribed in Article 9 of Decree 126/2020/ND-CP are:
“Article 9. Conditions for quarterly declaration of VAT and personal income tax
1. Conditions for quarterly declaration
a) The following taxpayers may declare VAT quarterly:
a.1) Any taxpayer that declares VAT monthly as prescribed in Point a Clause 1 Article 8 of this Decree and has a total revenue from sale of goods and services in the previous year of up to 50 billion VND. The total revenue shall be determined according to the VAT returns during the calendar year.
In case the taxpayer declares tax for all dependent units and business locations at the headquarters, the total revenue shall also include that of the dependent units and business locations.
a.2) The taxpayer’s business is recently inaugurated. From the calendar year succeeding the first 12 months, the revenue generated in the preceding calendar year (full 12 months) shall be the basis for deciding whether the taxpayer has to declare tax monthly or quarterly.
b) Quarterly declaration of personal income tax:
b.1) A taxpayer who has to declare personal income tax monthly as prescribed in Point a Clause 1 Article 8 of this Decree may declare personal income tax quarterly if all requirements for quarterly declaration are fulfilled.
b.2) Quarterly declaration shall be applied from the first month in which tax is incurred and remain unchanged throughout the calendar year.
2. Taxpayers shall determine their eligibility to declare tax quarterly themselves.
a) Taxpayers that fulfill all requirements for quarterly declaration may choose between monthly or quarterly declaration throughout the calendar year.
b) In case a taxpayer who is declaring tax monthly fulfills the requirements for quarterly declaration and wishes to declare tax quarterly, the taxpayer shall submit a written request (Appendix I hereof) to the supervisory tax authority by January 31 of the year in which quarterly declaration is applied. If such a written request is not submitted by this deadline, the taxpayer shall keep declaring tax monthly throughout the calendar year.
c) In case a taxpayer finds that the requirements for quarterly declaration are not fulfilled, the taxpayer shall declare tax monthly from the first month of the next quarter. In this case, the taxpayer is not required to submit tax declaration dossiers of the previous quarters. However, the taxpayer shall submit a document specifying the difference between monthly declared tax and quarterly declared tax (Appendix I hereof) and pay the late payment interest as per regulations.
d) In case the tax authority finds that a taxpayer is not eligible to declare tax quarterly, the tax authority shall determine the difference between monthly declared tax and quarterly declared tax and charge late payment interest (if any) as per regulations and the taxpayer shall declare tax monthly from the receipt of the tax authority’s notice.”
- If business households and individuals pay tax according to the declaration method, if it is determined that the taxable revenue is not realistic, the tax authority shall determine the taxable revenue according to the provisions of Article 50 of the Law on Tax Administration 2019 of Vietnam.
- Business households and individuals that pay tax by the declaration method are not required to finalize tax.
- Business households shall make electronic tax declarations and electronic tax payments (similar to enterprises) if they are eligible to conduct electronic transactions in the tax field.
How are the invoice and document regimes applicable to business households and individuals paying tax according to the declaration method in Vietnam?
According to Question 16, Manual on electronic invoices No. 2 of Ho Chi Minh City Tax Department provides guidance on the invoice and voucher regime applicable to business households and individuals paying tax according to the following declaration method:
- Must comply with the accounting, invoice and voucher regime as prescribed in Circular 88/2021/TT-BTC dated October 11, 2021 of the Ministry of Finance of Vietnam.
- In case business households and individuals do business in the fields and lines of business with grounds for determining revenue as certified by competent authorities, they are not required to follow the accounting regime.
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