Vietnam: Are household businesses eligible for VAT and PIT exemption? What is the tax payment deadline for household businesses?
What is the tax payment deadline for household businesses in Vietnam?
According to the provisions of Clause 4 Article 11 of Circular 40/2021 / TT-BTC on tax payment deadline for household businesses in Vietnam as follows:
Tax administration of household businesses and individual businesses under periodic declarations
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4. Tax payment deadlines
Household businesses and individual businesses paying tax under periodic declarations shall pay tax by the deadline specified in Clause 1 Article 55 of the Law on Tax Administration, which is the deadline for submission of the tax declaration dossier. In case the tax declaration dossier has to be supplemented, tax shall be paid by the deadline for submission of the tax declaration dossier of the erroneous tax period.
Are household businesses in Vietnam eligible for VAT and PIT exemption?
According to the provisions of Article 4 of Circular 40/2021 / TT-BTC on payment of VAT and PIT of household businesses in Vietnam as follows:
Article 4. Tax calculation rules
1. Rules for calculating tax payable by household businesses and individual businesses shall comply with applicable regulations of law on VAT, TIN and relevant legislative documents.
2. A household business or individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND shall not be required to pay VAT and PIT as prescribed by VAT and PIT laws. Household businesses and individual businesses shall declare tax truthfully and accurately; submit tax documents punctually; take legal responsibility for the accuracy, truthfulness and adequacy of the tax documents submitted.
3. For household businesses and individual businesses in the form of groups of individuals or households, the revenue of not exceeding 100 million VND/year as the basis for exemption from VAT and PIT shall be determined for 01 representative of the group of individuals of household in the tax year.
Thus, in case the revenue of household businesses is less than 100 million VND, household businesses are eligible for VAT and PIT exemption.
Revenue of household businesses is revenues earned from production and business activities, including tax (if subject to tax) from the sale of goods, processing payment, commissions, payment for the provision of services earned during the tax period from the manufacture, sale of goods, provision of services, including bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash; subsidies, surcharges, extra fees to which they are entitled; compensations for breach of contract, other compensations (only included in revenue subject to PIT); other revenues earned by household and individual businesses whether they are collected in reality.
What are the taxes paid by household businesses in Vietnam?
There are 3 taxes paid by household businesses in Vietnam: Licensing fees (tax), value-added tax (VAT), and personal income tax (PIT). In addition, households must pay other taxes depending on the business item.
However, according to Article 3 of Decree 139/2016/ND-CP (amended and supplemented by points a, b, and c, clause 1, Article 1 of Decree 22/2020/ND-CP on licensing fees for household businesses as follows:
Exemption from licensing fees
The cases of exemption from licensing fees are:
1. The individuals, groups of individual and households that have their trade/production activities with annual revenues of less than 100 million dong.
2. The individuals, groups of individual and households that have their irregular trade/production activities without fixed location as guided by the Ministry of Finance.
3. The individuals, groups of individual and households that produce salt.
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8. Exemption of license fees for the first year from the date of establishment or official commencement of production/business (from January 01 to December 31) shall be granted to:
a) New organizations (issued with new TINs/enterprise ID numbers).
b) Household businesses, individuals or groups of individuals engaging in production/business.
c) During the exemption period, if an organization, household business, individual or group of individuals establishes a new branch, representative office or business location, the new branch, representative office or business location shall be also exempted from the license fee for the same exemption period granted to that organization, household business, individual or group of individuals.
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Accordingly, households that have their trade/production activities with annual revenues of less than 100 million dong, households that have irregular trade/production activities without fixed location, salt-producing households, and households engaged in first-time production and business activities will be exempted from licensing fees.
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