Do household businesses and individuals paying fixed tax have to follow accounting for tax calculation in Vietnam?

Do household businesses and individuals paying fixed tax have to follow accounting for tax calculation in Vietnam?

Pursuant to Article 7 of Circular 40/2021/TT-BTC stipulating method and basis for calculating fixed tax payable by household businesses and individual businesses as follows:

1. Fixed tax shall be paid by household businesses and individual businesses other than those paying tax under periodic declarations and separate declarations prescribed in Article 5 and Article 6 of this Circular.

2. Household businesses and individual businesses paying fixed tax (hereinafter referred to as “fixed tax payers”) are not required to do accounting. Fixed tax payers shall retain and present to tax authorities the invoices, contracts, documents proving the legality of their goods and services when applying for issuance or sale of separate invoices. Fixed tax payers having business operation at bordering markets, checkpoint markets, markets within border-gate economic zones in Vietnam shall retain invoices, contracts, documents proving the legality of their goods and present them at the request of competent authorities.

3. Fixed tax payers that have not done business for a full year (12 months) include: new fixed tax payers, fixed tax payers having seasonal business operation, fixed tax payers whose business operation is suspended or shut down. The revenue of not exceeding 100 million VND/year as the basis for determination of eligibility for exemption from VAT and TIN is the taxable revenue of a calendar year (12 months). The revenue as the basis for calculation of fixed tax payable in the year shall be proportional to the number of months of business operation.

Example 1: Mr. A starts his business in April 2022 and expects to make a revenue of 90 million VND in 09 months (10 million VND/month in average). The corresponding revenue of a year (12 months) will be 120 million VND (>100 million VND) Therefore, Mr. A has to pay VAT and PIT on the actual revenue earned since April 2022 (90 million VND)

4. Fixed tax payers shall declare tax annual as prescribed in Point c Clause 2 Article 44 of the Law on Tax Administration, pay tax by the deadline specified in the tax notices issued by tax authorities as prescribed in Clause 2 Article 55 of the Law on Tax Administration. In case a fixed tax payer uses invoices issued or sold by the tax authority, tax on these invoices shall be separately declared and paid.

Thus, business households and individuals that pay taxes by the presumptive method are not required to comply with the accounting in Vietnam.

In the above case, if your household is a household business paying fixed tax, it is not necessary to apply the accounting to calculate tax. Households that use individual invoices must store and present to the tax authorities invoices, contracts, and documents proving lawful goods and services when requesting for issuance and retailing of invoices each time they arise.

What is tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam?

According to Article 8 of Circular 40/2021/TT-BTC stipulating tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals as follows:

1. An organization or individual shall declare and pay tax on behalf of another individual in the following cases:

a) The organization leases property from the individual under a lease contract which prescribes that the lessee is the taxpayer;

b) The organization has business cooperation with the individual;

c) The organization pays bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash, compensations for breach of contract, other compensations for fixed tax payers;

d) The organization in Vietnam is a partner of an overseas digital platform provider (without permanent establishment in Vietnam) and pays the individual for digital information products and/or services under agreement with the overseas digital platform provider;

dd) The organization is the owner of an e-commerce platform, declares and pay tax on behalf of the individual according to the tax authority’s roadmap. Before being able to declare and pay tax on behalf of individuals, organizations that are owners of e-commerce platforms shall provide information about the individuals’ business operation on their platforms as requested by tax authorities, such as: full name; ID/passport number; taxpayer identification number (TIN); address; email address; phone number; goods and services provided; revenue; the seller’s bank account; other relevant information;

a) The organization or individual is authorized by the other individual to declare and pay tax on his/her behalf as prescribed by civil laws.

2. The organization or individual declares and pays tax on behalf of another individual as instructed in Clause 1 of this Article shall declare and pay tax as follows:

a) In the cases specified in Point a Clause 1 of this Article, the organization shall declare and pay tax monthly, quarterly, separately or annually as prescribed by tax administration laws.

b) In the cases specified in Points b, c, d, dd Clause 1 of this Article, the organization shall declare and pay tax monthly or quarterly as prescribed by tax administration laws.

c) In the cases specified in Point e Clause 1 of this Article, the organization or individual shall declare and pay tax as authorized by the individual in accordance with tax administration laws.

3. In case the individual earns a revenue of not exceeding 100 million VND/year at multiple locations, the individual estimates or determines that the total revenue exceeds 100 million VND/year, he/she may authorize the paying organization to declare and pay tax on the revenue generated at the authorized unit in the tax year. In case a fixed tax payer also receives bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash, compensations for breach of contract, other compensations in addition to presumptive revenue, the paying organization shall declare and pay tax on the actual amounts in the tax year on behalf of the individual. In case an organization declares and pays tax on behalf of an individual who leases out his/her property, the revenue of not exceeding 100 million VND/year as the basis for determination of eligibility for tax exemption shall be determined in accordance with Point c Clause 1 Article 9 of this Circular.

Best Regards!