What methods are there to calculate taxes for individual businesses in Vietnam?

What methods are there to calculate taxes for individual businesses in Vietnam?

According to Clause 1, Article 2, Circular 40/2021/TT-BTC stipulates the following regulated entities:

Regulated entities

1. Household businesses, individual businesses that are residents having activities manufacture, sale of goods and services (hereinafter referred to as “business operation”) in any of the business lines and sectors prescribed by law, including the following cases:

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At the same time, Article 3, Circular 40/2021/TT-BTC stipulates as follows:

Definitions

In addition to the terms defined by the Law on Tax Administration, tax Laws and relevant Decrees, the terms below are construed as follows for the purpose of this Circular:

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4. “household businesses and individual businesses paying tax under periodic declarations” are large-scale household businesses and individual businesses or other household businesses and individual businesses that choose to pay tax under periodic declarations.

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6. “individual businesses paying tax under separate declarations” are individual businesses who have casual business operation and do not have fixed business locations.

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8. “household businesses and individual businesses paying fixed tax” are household businesses and individual businesses that fail to comply with or fully comply with regulations on accounting, invoices and documents, except household businesses and individual businesses paying tax under periodic or separate declarations.

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Thus, for individual businesses in construction activities in Vietnam, there will be the following tax calculation methods:

[1] Paying tax under periodic declarations: is the tax declaration method, calculating tax according to the ratio of actual revenue generated by month or quarter.

[2] Paying tax under separate declarations: is a tax declaration method, calculating tax according to the ratio of actual revenue each time it arises for individuals who do business irregularly and do not have a fixed business location. determined

[3] Paying fixed tax: is the method of calculating tax according to the ratio of flat revenue determined by the tax authority to calculate the presumptive tax rate according to the provisions of the Law on Tax Administration 2019 .

What methods are there to calculate taxes for individual businesses in Vietnam? (Image from the Internet)

What principles are used to calculate individual businesses in Vietnam?

According to Article 4 of Circular 40/2021/TT-BTC, regulations on tax calculation rules are as follows:

- Rules for calculating tax payable by household businesses and individual businesses shall comply with applicable regulations of law on VAT, TIN and relevant legislative documents.

- 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.

- For household businesses and individual businesses in the form of groups of individuals or households, the revenue of not exceeding 100 million VND/year as the basis for exemption from VAT and PIT shall be determined for 01 representative of the group of individuals of household in the tax year.

Does paying tax usingperiodic declaration method require tax finalization in Vietnam?

In Article 5 of Circular 40/2021/TT-BTC, there are regulations on method and basis for calculating tax payable by household businesses and individual businesses under periodic declarations:

Method and basis for calculating tax payable by household businesses and individual businesses under periodic declarations

1. Periodic declarations shall be prepared by large-scale household businesses and individual businesses or other household businesses and individual businesses that choose to pay tax under periodic declarations.

2. Household businesses and individual businesses paying tax under periodic declarations shall declare tax monthly, except new businesses and businesses that satisfy the criteria for declaring tax quarterly prescribed in Article 9 of Decree No. 126/2020/ND-CP.

3. If the revenue of a household business or individual business that is paying tax under periodic declarations is found to be false, the tax authority shall impose the taxable revenue as prescribed in Article 50 of the Law on Tax Administration.

4. Household businesses and individual businesses paying tax under periodic declarations shall comply with on accounting, invoices and documents. A household business or individual business is not required to do accounting if their a business line has the basis for determination of revenue which is confirmed by a competent authority,

5. Household businesses and individual businesses paying tax under periodic declarations are not required to finalize tax.

Thus, if business individuals or business households pay taxes according to the declaration method, they do not have to finalize taxes in Vietnam.

Best regards!