What are incomes from franchising in Vietnam? How to calculate personal income tax from franchising?
What are incomes from franchising in Vietnam?
According to the provisions of Clause 8, Article 2 of Circular No. 111/2013/TT-BTC on taxable incomes, including incomes from franchising, specifically as follows:
Taxable incomes
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8. Incomes from franchising
Franchise is a commercial operation in which the franchiser allows and requests the franchisee to sell goods and services under the conditions set out by the franchiser in the franchise contract.
Incomes from franchising are the incomes the person earned from the aforesaid franchise contracts, including re-franchise according to regulations of law on franchise.
Thus, franchise is a commercial operation in which the franchiser allows and requests the franchisee to sell goods and services under the conditions set out by the franchiser in the franchise contract.
Incomes from franchising are the incomes the person earned from the aforesaid franchise contracts, including re-franchise according to regulations of law on franchise.
What are incomes from franchising in Vietnam? How to calculate personal income tax from franchising?
How to calculate personal income tax from franchising for non-residents?
Pursuant to the provisions of Clause 2, Article 22 of Circular No. 111/2013/TT-BTC on how to calculate personal income tax from franchising for residents and non-residents as follows:
Incomes from royalties and franchise
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2. Incomes from franchising
a) The tax on incomes from franchising earned by a non-resident equals the excess over 10 million VND of income from each franchise contract in Vietnam multiplied by 5% tax.
The determination of incomes from franchising is guided in Point 1 Clause 14 of this Article.
b) The assessable income from franchising shall be calculated when the payment for franchise is made between the franchiser and franchisee.
Thus, personal income tax from franchising for non-residents is calculated as follows:
Personal income tax payable = Assessable income from franchising x 5% tax.
In which:
- The assessable income from franchising is the excess over 10 million VND of income according to the transfer contract, regardless of the number of payments the taxpayer receives.
- The assessable income from franchising shall be calculated when the payment for franchise is made between the franchiser and franchisee.
How to calculate personal income tax from franchising for residents?
According to the provisions of Article 14 of Circular No. 111/2013/TT-BTC on personal income tax for residents as follows:
Basis for calculating tax on incomes from franchising
The basis for calculating tax on incomes from franchising is the assessable income and tax rate.
1. Assessable income
The assessable income from franchising is the excess over 10 million VND of income according to the transfer contract, regardless of the number of payments the taxpayer receives.
If the franchise for the same subject is made into multiple contract, the assessable income is the excess over 10 million VND of all franchise contracts.
2. Tax rate
The rate of personal income tax on the income from franchising is 5% according to the whole income tax table.
3. Time to calculate the assessable income
The assessable income from franchising shall be calculated when the payment for franchise is made between the franchiser and franchisee.
4. Tax calculation
Personal income tax payable = Assessable income x 5% tax
Thus, personal income tax from franchising for resident individuals is calculated as follows:
Personal income tax payable = Assessable income from franchising x 5% tax.
In which:
The assessable income from franchising is the excess over 10 million VND of income according to the transfer contract, regardless of the number of payments the taxpayer receives.
If the franchise for the same subject is made into multiple contract, the assessable income is the excess over 10 million VND of all franchise contracts.
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