Basis for tax calculation for household and individual businesses in Vietnam

What are the regulations on the basis for tax calculation for household and individual businesses in Vietnam? – My Trinh (Soc Trang, Vietnam)

Căn cứ tính thuế với hộ kinh doanh, cá nhân kinh doanh

Basis for tax calculation for household and individual businesses in Vietnam (Internet image)

1. Tax calculation rules for household and individual businesses in Vietnam

- 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.

(Article 4 of Circular 40/2021/TT-BTC)

2. Basis for tax calculation in Vietnam

The basis for calculation of tax payable by household businesses and individual businesses in Vietnam shall be taxable revenue and tax rates.

* Taxable revenue

Revenue subject to VAT and revenue subject to PIT earned by household businesses and individual businesses are revenue inclusive of tax (if subject to tax) from

- Sale of goods, processing payment, commissions, payment for provision of services earned during the tax period from manufacture, sale of goods, provision of services, including bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash;

- Subsidies, surcharges, extra fees to which they are entitled;

- Compensations for breach of contract, other compensations (only included in revenue subject to PIT);

- Other revenues earned by household and individual businesses whether they are collected in reality.

* Tax rates

- Tax rates include VAT rates and PIT rates which vary according to business lines as specified in the following table:

No.

Business lines

VAT rate

PIT rate

1.

Distribution, provision of goods

 

 

- Wholesaling, retailing of goods (except commission agents);

- Bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash for fixed tax payers;

1%

0,5%

- Distribution, provision of goods that are not subject to VAT or subject to 0% VAT as prescribed by VAT laws;

- Business cooperation with an organization in this sector where the organization has the responsibility to declare VAT on the entire revenue earned from the business cooperation;

- Bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash for fixed tax payers in association with purchase of goods and services that are not subject to VAT or subject to 0% VAT as prescribed by VAT laws;

- Compensation for breach of contract, other compensations.

-

0,5%

2.

Services and construction exclusive of building materials

 

 

- Lodging services including: provision of short-term lodging for tourists and other visitors; provision of long-term lodging other than apartments for students, workers and similar persons; provision of lodging together with food and beverage services or entertainment.

- Material handling and other ancillary transport services such as station, ticketing, parking services;

- Postal services, delivery of posts and postal packages;

- Brokerage, bidding and agent commission-related services;

- Legal counseling, financial counseling, accounting, audit, tax and customs brokerage services;

- Data processing, lease of information portals, information technology and telecommunications devices; advertising on digital information products and/or services;

- Office assistance service and other business assistance services;

- Sauna, massage, karaoke, discotheque, billiards, internet, gaming services;

- Tailoring, laundry; hairdressing;

- Other repair services including: repair of computers and domestic appliances;

- Fundamental construction supervision, design, counseling services;

- Other services subject to deduction of 10% VAT;

- Construction and installation exclusive of building materials (including installation of industrial equipment);

5%

2%

- Provision of services that are not subject to VAT or subject to 0% VAT as prescribed by VAT laws;

- Business cooperation with an organization in this sector where the organization has the responsibility to declare VAT on the entire revenue earned from the business cooperation;

- Compensation for breach of contract, other compensations;

-

2%

- Lease of property including:

+ Lease of housing, land, stores, factories, warehouses except lodging services;

+ Lease of vehicles, equipment without operators;

+ Lease of other property without associated services;

5%

5%

- Operation as lottery agents, insurance agents, MLM agents;

- Compensation for breach of contract, other compensations.

-

5%

3.

Production, transport, service associated with goods; construction inclusive of building materials

 

 

- Production, processing or goods;

- Extraction, processing of minerals;

- Cargo transport, passenger transport;

- Services associated with goods such as training, maintenance, technology transfer associated with sale of products

- Food and beverage services;

- Repair and maintenance of equipment, motor vehicles, motorbikes and other motored vehicles;

- Construction and installation inclusive of building materials (including installation of industrial equipment);

- Other activities subject to deduction of 10% VAT;

3%

1,5%

- Activities that are not subject to VAT or subject to 0% VAT as prescribed by VAT laws;

- Business cooperation with an organization in this sector where the organization has the responsibility to declare VAT on the entire revenue earned from the business cooperation.

-

1,5%

4.

Other business activities

 

 

- Manufacture of products subject to deduction of 5% VAT;

2%

1%

- Provision of services subject to deduction of 5% VAT;

- Activities other than those specified in 1, 2, 3 above;

- A household business or individual business that does business in multiple business lines shall declare and calculate tax at the tax rates that apply to each business line.

In case a household business or individual business that fails to determine or correctly determine the taxable revenue earned from each business line, the tax authority shall impose the taxable revenue earned from each business lines in accordance with tax administration laws.

* Determination of tax payable

VAT payable = Revenue subject to VAT x VAT rate

PIT payable = Revenue subject to PIT x PIT rate

(Article 10 of Circular 40/2021/TT-BTC)

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