Vietnam: What is the presumptive tax?

According to Article 38 of the Law on Tax administration 2006 of Vietnam, tax presumption method or presumptive tax amounts shall be applied in the following cases:

- Business households and individuals that fail to implement or inadequately implement the accounting, invoice and voucher regulations;

- Business households and individuals without business registrations and tax registrations.

Types of taxes applied according to the tax presumption method include:

- VAT;

- Special consumption tax;

- PIT;

- Resource tax;

- Environmental protection fees for mineral exploitation activities.

Tax agencies shall determine presumptive tax amounts on the basis of written declarations of business households and individuals, databases of tax agencies and opinions of tax consulting councils of communes, wards or townships.

For presumptive tax paying households operating in the form of individual business groups, tax authorities base on the group's assigned taxable income, income division ratio and declare tax deductions for each member's family circumstances to calculate and notify presumptive tax amounts payable for the whole year and the temporary tax amount paid quarterly for each member of the group.

Presumptive tax amounts are calculated according to the calendar year. Presumptive tax amounts are determined for each quarter and are stable for a year.

In case of change of their business lines, sectors or business scale, taxpayers shall declare such change to tax agencies for adjustment of presumptive tax amounts.

Presumptive tax amounts shall be publicized in communes, wards or townships.

Depending on the type of tax, type of business and income level of each business household, there are different ways to calculate presumptive tax amounts.

Relevant documents: The Amending Law on Tax Administration 2012 of Vietnam

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE