03 types of taxes and fees that household businesses must pay

Legal Basis:

- Value Added Tax Law 2008;

- Circular 219/2013/TT-BTC;

- Personal Income Tax Law 2007;

- Decree 65/2013/ND-CP;

- Decree 12/2015/ND-CP;

- Decree 139/2016/ND-CP;

"The household business is operated by an individual or a group of individuals who are Vietnamese citizens aged 18 years or older with full civil act capacity, or a family as the owner*, can only register a business at one location, using fewer than ten workers and being liable with all their assets for their business activities."*

According to current legal regulations, household businesses may be subject to the following types of taxes: Business License Tax, Value Added Tax, and Personal Income Tax, Environmental Protection Tax, Natural Resource Tax, etc. Below, the editorial board will provide you with the three most fundamental taxes for household businesses. Specifically as follows:

1. Value Added Tax

According to Clause 4 Article 3 of Circular 219/2013/TT-BTC, individuals, families, independent business groups, and other entities engaged in production, business, and import activities are subject to value added tax.

Moreover, most types of goods and services used for production, business, and consumption in Vietnam are subject to value added tax, except for goods and services not subject to this tax as prescribed by law.

Goods and services of households or individual businesses with annual revenue of one hundred million VND or less are not required to pay value added tax.

=> Thus, if a household business has annual revenue exceeding 100,000,000 VND, it will have to pay value added tax.

2. Personal Income Tax

According to Article 2 of Decree 65/2013/ND-CP, resident individuals with taxable income are those with income generated both within and outside the territory of Vietnam, regardless of the income source, and non-resident individuals with taxable income are those with income generated in Vietnam, regardless of the income source.

=> Thus, household businesses that meet the above conditions will be subject to personal income tax.

According to Clause 1 Article 2 of Decree 12/2015/ND-CP, taxable personal income from business activities includes:

- Income from manufacturing, trading goods, and providing services according to legal regulations. In particular, income from agricultural, forestry, salt production, aquaculture, and fishing activities are only applicable in cases not exempted under Clause 5 Article 4 of Decree 12/2015/ND-CP.

- Income from independent professional activities of individuals with licenses or practicing certificates as prescribed by law.

Note:

Business income for tax purposes does not include income from individuals with annual revenue of 100 million VND or less.

3. Business License Tax

According to Clause 7 Article 2 of Decree 139/2016/ND-CP, individuals, group of individuals, households engaged in production and business activities must pay business license fees except in the following cases:

- Individuals, groups of individuals, households conducting production and business activities with annual revenue of 100 million VND or less. The revenue of 100 million VND or less used to determine individuals, groups of individuals, households exempt from business license fees is the total taxable personal income as prescribed by personal income tax law.

- Individuals, groups of individuals, households engaged in non-regular production, business activities without a fixed business location.

- Individuals, groups of individuals, households engaged in salt production.

- Organizations, individuals, groups of individuals, households engaged in aquaculture, fishing, and fishery logistics services.

The business license fee for household businesses is as follows:

- Individuals, groups of individuals, households with annual revenue over 500 million VND: 1,000,000 (one million) VND/year;

- Individuals, groups of individuals, households with annual revenue over 300 to 500 million VND: 500,000 (five hundred thousand) VND/year;

- Individuals, groups of individuals, households with annual revenue over 100 to 300 million VND: 300,000 (three hundred thousand) VND/year.

Note:

- The revenue used as the basis for determining the business license fee for individuals, groups of individuals, households in this clause is the total taxable personal income as prescribed by the law on personal income tax.

- Individuals, groups of individuals, households with revenue changes use the personal income tax revenue from the year preceding the business license fee calculation year as the basis for determining the fee.

- Individuals, groups of individuals, households newly entering into business during the year use the current year's taxable revenue as the basis for determining the business license fee according to personal income tax law.

The above provides a resolution regarding the three basic taxes that household businesses may be required to pay.

Respectfully!