After the Government of Vietnam officially signed and promulgated Decree 139/2016/ND-CP regulating business license fees applied from January 01, 2017, the Ministry of Finance continued to seek opinions on the Draft Circular guiding the implementation of certain provisions related to business license fees under Decree 139.
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When stipulating cases exempted from license tax fees, Decree 139 identifies 7 exempt cases. However, 2 out of 7 of these cases are not specific or clear. To provide more detail, the Draft Circular provides the following guidance:
- Individuals, groups of individuals, and households engaging in production and business activities with annual revenue of 100 million VND or less. The revenue level of 100 million VND/year or less to determine individuals, groups of individuals, and households exempt from license tax fees is the personal income tax revenue of one year (12 months) as prescribed by personal income tax law.- Individuals, groups of individuals, and households engaging in production and business activities irregularly and without a fixed location.
Irregular business activities and fixed locations are implemented according to the guidance at Point a, Clause 1, Article 3 of Circular 92/2015/TT-BTC dated June 15, 2015, by the Ministry of Finance.
Individuals, groups of individuals, and households without a fixed business location include cases where individuals directly sign contracts as lottery agents, insurance agents, or agents selling at listed prices with tax withholding at the source.
According to the Draft Circular, the basis for determining the license tax fee rate is as follows:
- Organizations engaging in the production and trading of goods and services: Based on the charter capital recorded in the business registration certificate, recorded in the enterprise registration certificate, or recorded in the cooperative charter.
In cases where there is no charter capital, it is based on the investment capital recorded in the enterprise registration application or investment certificate or decision document on investment policy.- Individuals and households engaging in the production and trading of goods and services: Based on personal income tax revenue as prescribed by personal income tax law.
In cases where individuals, groups of individuals, and households have changes in revenue, the basis for determining the license tax fee rate is the personal income tax revenue of the year immediately preceding the year of license tax fee calculation.
For organizations, individuals, groups of individuals, and households engaging in production and business activities and notifying tax authorities of a temporary cessation of business for the entire calendar year, they are not required to pay the license tax fee for the year of temporary cessation. In cases of temporary cessation of business for less than a full calendar year, the full annual license tax fee must still be paid.
It is expected that if approved, this Circular will take effect from January 01, 2017. In cases where license tax fee payers engaging in business activities have declared and paid the license tax fee before January 01, 2017, they do not need to submit a license tax fee declaration dossier for subsequent years if there are no changes in factors leading to changes in the license tax fee payable.
