Is it mandatory to carry out business registration when conducting online sale in Vietnam?

Hello, Lawnet would like to answer as follows:

1. Is it mandatory to carry out business registration when conducting online sale in Vietnam?

According to the provisions of Clause 1, Article 55 of Decree 52/2013/ND-CP, traders and organizations shall make registrations online with the Ministry of Industry and Trade for setting up e-commerce service provision websites after their websites have been completed with adequate structure, utilities and information according to service provision plans and operating at registered addresses of domain names, and before officially providing services to users.

Thereby, conducting online sale will require business registration in the case of sales activities through the establishment of e-commerce service provision websites

As for conducting online sale on social networking platforms such as TikTok and Facebook, business registration will not be required.

Specifically, according to Article 3 of Decree 39/2007/ND-CP, individuals doing trade mean individuals who everyday themselves conduct one, several or all activities allowed by law on goods purchase and sale, service provision and other activities with purpose of profitability but do not register their business as prescribed by law on business registration and not be called as “trader” as prescribed by the Commercial Law. 

This group of subjects includes individuals carrying out commercial activities: Street trading (trading in public places) means activities of purchase and sale without a fixed location (purchase on street, sale on street or both purchase and sale on street), includes even the receipt of books, news, magazines, cultural products of traders allowed doing business in these products as prescribed by law, for sale on street;

Online sales on social networking platforms by individuals can be considered a form of personal commercial activity;

For example, doing online business by livestreaming on TikTok and then selling some items such as shampoo, cosmetics, or snacks is a petty trading activity or selling snacks according to Article 3 of Decree 39/2007/ND-CP.

Thus, when selling online, you will have to register your business if you set up your own e-commerce website.

2. How much personal income tax do households and individuals conducting online sale have to pay under the current regulation in 2024 in Vietnam?

Pursuant to Clause 2, Article 4 of Circular 40/2021/TT-BTC, 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.

Therefore, for households and individuals conducting online sale, they only have to pay personal income tax when their calendar year revenue is over 100,000,000 VND.

Calculation of personal income tax in 2024 for online businesses:

Personal income tax calculation in 2024 for online businesses is carried out according to Clause 3, Article 10 of Circular 40/2021/TT-BTC as follows:

Determination of tax payable

VAT payable = Revenue subject to VAT x VAT rate

PIT payable = Revenue subject to PIT x PIT rate

Where:

- Revenue subject to VAT and revenue subject to PIT earned by household businesses and individual businesses are revenue inclusive of tax (if subject to tax) from sale of goods, processing payment, commissions, payment for provision of services earned during the tax period from 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.

- VAT rates and PIT rates are specified in Appendix I hereof.

Best regards!

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