02 cases subject to tax for affiliate marketers in Vietnam

02 cases subject to tax for affiliate marketers in Vietnam (Image from the internet)

What is affiliate marketing?

Affiliate marketing is an online brokerage model in which businesses pay partners (which can be individuals or organizations) when they refer customers to purchase products through links on internet platforms, e-commerce platforms (Shopee, Lazada, Tiki ...).

When users or customers click on product links, services, or make purchases or register for services, the affiliate marketers receive a commission from the businesses or e-commerce platforms. This is considered a form of brokerage commission.

Do affiliate marketers have to pay personal income tax (PIT) in Vietnam?

According to point c, clause 2, Article 3 of Decree 65/2013/ND-CP stipulating taxable income:

Taxable income

...

2. Income from wages and salaries received from employers, including:

c) Remuneration received in forms like: Brokerage commission, participation in topics, projects, royalties, and other remuneration and commissions;

d) Income received from participating in business associations, boards of directors, supervisory boards, management boards, associations, career associations, and other organizations;

...

Affiliate marketers receive commissions for each transaction, which is the source of income when consumers click on the product links they share. The brokerage commission is identified as remuneration received from wages and salaries, which is taxable personal income.

Additionally, when affiliate marketers receive each brokerage commission payment without a labor contract of 2 million VND or more, they must pay PIT (according to the provisions at point i, clause 1, Article 25 of Circular 111/2013/TT-BTC).

Thus, individuals engaged in affiliate marketing on online platforms still have to pay personal income tax as required by law.

02 cases of tax payment for affiliate marketers in Vietnam

* Case 1: Affiliate marketers not registered as business households or individual businesses

In this case, the affiliate marketers will be subject to personal income tax calculated on their business income, wages, and salaries.

Article 14 of Decree 65/2013/ND-CP stipulates the progressive tax rate schedule applied to taxable income from business, wages, and salaries as follows:

Additionally, according to Resolution 954/2020/UBTVQH14 of the Standing Committee of the National Assembly, affiliate marketers paying taxes in this case will be considered for family circumstance deductions with the following rates:

- Family circumstance deduction of 11 million VND/month (132 million VND/year) applied to the taxpayer themselves;

- And family circumstance deduction of 4.4 million VND/month applied to each dependent of the taxpayer.

* Case 2: Affiliate marketers registered as individual businesses or business households in Vietnam

According to the provisions of Article 4 of Circular 40/2021/TT-BTC, in this case, affiliate marketers registered as individual businesses or business households with annual revenue from business activities of 100 million VND or more must pay value-added tax and personal income tax.

Also, according to Article 10 of Circular 40/2021/TT-BTC, the taxable revenue is based on the commission that the business household or individual business earns.

The tax rate on revenue includes the value-added tax rate and the personal income tax rate.

Specifically: according to Appendix I issued with Circular 40/2021/TT-BTC, the tax rate applicable to business households and individual businesses engaged in affiliate marketing and receiving commissions is 7% (including 5% value-added tax and 2% personal income tax).

Thus, if affiliate marketers register as business households or individual businesses, they will only pay a 7% tax rate.

Le Nguyen Anh Hao

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