Online sales must pay personal income tax

Circular 40/2021/TT-BTC guiding value-added tax, personal income tax and tax administration for business households, business individuals issued by the Ministry of Finance

Pass the turnover, so far, personal income tax is paid?

According to Clause 2 and Clause 3 Article 4 of Circular No. 40/2021/TT-BTC, tax shall be calculated as follows:

"Article 4. Tax rate

2. If the businesspeople and groups of businesspeople that earn revenue of VND 100 million or lower in the calendar year are exempted from VAT and PIT according to the laws on VAT and PIT. Business households and individuals shall make tax declaration in an accurate, truthful and complete manner and submit tax dossiers on time; and take responsibility before law for the accuracy, truthfulness and completeness of tax dossiers according to regulations.

3. A business household or businessperson that earns a revenue of VND 100 million/year or lower shall not pay VAT and PIT."

In this case, the business household or individual must pay personal income tax if the revenue in the calendar year is over VND 100 million.

Online sales must pay personal income tax

What is the method for calculating personal income tax when selling goods online?

Pursuant to Clause 1 Article 10 of Circular No. 40/2021/TT-BTC, PIT-liable turnover of business households and individuals includes:

- Revenues include tax (in case of taxable) of all sales, processing remuneration, commissions, service provision charges generated in the tax period from the production, business of goods and services, including bonuses, support to achieve turnover, sales promotion, trade discount, payment discount, cash or non-cash support;

- Price subsidies, surcharges, additional charge amounts and surcharge amounts enjoyed according to regulations;

- Compensations for breach of contract, other compensations (only included in the PIT-liable turnover);

- Other revenues earned by business households and individuals, regardless of whether they have been collected or not.

Pursuant to Clause 2 Article 10 of Circular No. 40/2021/TT-BTC, the rate of tax on revenues is specified as follows:

- PIT-liable prices include VAT and PIT-liable prices specified in Appendix I to this Circular.

- In case a business household or an individual conducts business activities in many domains or trades, it/he/she shall declare and calculate tax according to the percentage of tax calculated on the turnover applicable to each domain or business line. If the household business/self-employed individual is not able to determine the taxable revenue of each business line, or it is not practical, the tax authority shall impose the taxable revenue of each business line in accordance with regulations of law on tax administration.

Pursuant to Clause 3 Article 10 of Circular No. 40/2021/TT-BTC, the tax payable is determined by applying the following formula:

Payable PIT amount = 160;

Where:

- Revenue subject to PIT is prescribed in Clause 1 of this Article.

- The PIT rate is specified in Appendix I to this Circular.

Thus, the business household or individual must pay personal income tax if the revenue in the calendar year is over VND 100 million. The method of calculating personal income tax when online goods are sold complies with the above provisions.

Khanh Linh

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