Circular No. 40/2021/TT-BTC dated June 01, 06 with the scope of application covering all individuals earning income from business, including the following:
🔸 Business households and individuals doing business in all fields and lines of production and business;
🔸 Business households and individuals operating in border areas in the Vietnamese territory;
🔸 Individuals leasing properties;
🔸 Individuals transferring the Vietnamese national internet domain name “.vn”;
Circular 40/2021/TT-BTC also adds cases where enterprises must declare and pay on behalf of individuals in the prescribed cases.
On June 01, 06, the Ministry of Finance issued Circular 40/2021/TT-BTC dated June 01, 6 guiding value added tax, personal income tax and tax administration for business households and individuals.
This Circular takes effect from August 01, 08. Here are the new points to note:
1. Clarifying the concept of household business
"Household business" means a production or business establishment registered to be established by an individual or members of a household and is responsible with all its assets for the household's business activities as prescribed in Article 79 of Decree No. No. 01/2021/ND-CP dated January 04, 01 of the Government on business registration and guiding documents or amending, supplementing or replacing (if any).
In case members of a household register as a household business, one member shall be authorized to act as the representative of the household business. Individuals registering business households, the person authorized by household members to act as the business household representative is the owner of the business household.
Households engaged in agriculture, forestry, fishery, salt production, and those selling street goods, snacks, trips, mobile businesses, seasonal businesses, and service workers with low incomes are not required to register as household businesses. business, except for business lines with conditional business investment, the People's Committees of the provinces and centrally-run cities shall prescribe the low-income levels applicable in the locality.
(Currently, households have production and business activities of goods and services in all fields and lines of production and business as prescribed by law).
“Household businesses, individuals doing large-scale business” means a business household or business individual whose scale in terms of revenue and labor meets the highest level of criteria for a micro-enterprise or higher, specifically as follows: business household, individual doing business in the field agriculture, forestry, fishery and industry and construction with an average annual number of employees participating in social insurance of 10 or more or the total turnover of the preceding year from 3 billion VND or more ; business households and individuals doing business in the field of commerce and services with an average annual number of employees participating in social insurance of 10 or more or the total turnover of the preceding year from 10 billion VND or more.
2. Adding many incomes subject to VAT and PIT
Compared with the current, Circular 40/2021 adds a number of taxable incomes such as:
- Bonuses, support to achieve sales, sales promotion, trade discount, payment discount, cash or non-cash support for contracted households (VAT 1% and PIT 0,5%);
- Compensation for breach of contract, other compensation (PIT 0,5%);
- Advertising on digital information content products and services (VAT 5%, PIT 2%);…
3. Add tax calculation method for business households and individuals
According to the provisions of the Tax Administration Law, large-scale business households and individuals must pay taxes according to the declaration method and comply with the accounting regime.
Business households and individuals pay tax according to the method of monthly or quarterly tax declaration as prescribed and do not have to finalize tax (as stipulated in Decree 126/2020).
Accordingly, Circular 40/2021 guides business households and individuals to pay tax according to the following declaration method:
- The declaration method is applicable to large-scale business households and individuals; and business households and individuals that do not meet the requirements of large scale but choose to pay tax according to the declaration method.
- Business households and individuals paying tax according to the declaration method shall declare tax on a monthly basis.
Except for business households and individuals that meet the criteria for quarterly tax declaration and choose to declare quarterly tax as prescribed in Article 9 of Decree 126/2020, they may choose to declare quarterly tax. (Applicable according to the principles of the business)
- If business households and individuals pay tax according to the declaration method, if it is determined that the taxable revenue is not realistic, the tax authority shall determine the taxable revenue according to the provisions of Article 50 of the Law on Tax Administration.
- Business households and individuals paying tax by the declaration method are not required to finalize tax.
Note: Business households and individuals are eligible to pay tax according to the declaration method if the tax authority has managed tax according to the presumptive method before August 01, 8 and there is no request to convert the tax method. tax calculation method, they continue to pay tax according to the presumptive method until the end of the tax period in 2021.
4. Additional subjects responsible for declaring and paying taxes on behalf of individuals
This content guides all cases where the organization is responsible for declaring tax on behalf of an individual, including the cases guided in Clause 2, Article 8 of Circular 92/2015 (lease of real estate in Vietnam). ), in addition, Circular 40/2021 adds new objects according to the guidance in Decree 126/2020 such as:
1. Organizations and individuals declare tax on behalf of individuals or pay taxes on behalf of individuals in the following cases:
- The organization leases the property of an individual whose property lease contract has an agreement that the lessee is the taxpayer;
- Organization of business cooperation with individuals;
- Organizing the payment of bonuses, sales support, sales promotion, trade discount, payment discount, cash or non-cash support, compensation for breach of contract, other compensation for contracted households;
- An organization in Vietnam that is a partner of an overseas digital platform provider (without a permanent establishment in Vietnam) pays income from digital information content products and services to individuals according to agreement with overseas digital platform providers;
- The organization that is the owner of the e-commerce trading floor shall declare and pay tax on behalf of the individual according to the schedule of the tax authority. During the time when it is not possible to declare tax on behalf of an individual, the organization that is the owner of the e-commerce trading floor must provide information related to the individual's business activities. individuals through the floor at the request of tax authorities in accordance with the law such as: full name; personal identification number or identity card or citizen identification number or passport; tax code; address; email; phone number; goods and services provided; business revenue; seller's bank account; other relevant information;
- Organizations and individuals declare tax on behalf of individuals, pay taxes on behalf of individuals as authorized by civil law.
5. Add a business individual to pay tax on each arising
According to the current regulations in Circular 92/2015, the method of tax declaration each time arising for individuals trading in trips,…
Circular 40/2021 adds that individuals who earn income from digital information content products and services, if they do not choose to pay tax according to the declaration method, etc., are also eligible to pay tax according to each issuance. born.
6. New points on tax calculation method for individuals who lease property
This content supplements guidance on determining the revenue of 100 million as a basis for determining tax-exempt entities for individuals who lease properties according to the principle: "Individuals who lease property do not generate revenue full 12 months in a calendar year (including cases where there are many rental contracts), a turnover of 100 million dong/year or less to determine that the lessor is not required to pay VAT, is not required to pay VAT. PIT is the taxable turnover of a calendar year (12 months); The actual taxable turnover to determine the payable tax amount in the year is the revenue corresponding to the actual number of months in which the property is leased.”
This guide is understood that individuals who have a property lease contract with an average of 8,33 million VND or more per month are liable to pay tax even if they do not have full 12 months in a positive year. calendar.
Example: Mr. B enters into a house rental contract with a rental agreement of 10 million VND/month for the period from October 10 to the end of September 2022. Thus, the actual revenue in 9 is 2023 million dong, but total revenue in 2022 months of 30 is 12 million dong; actual revenue in 2022 is 120 million dong, but total revenue in 2023 months of 90 is 12 million dong. Therefore, Mr. B is subject to VAT and must pay PIT corresponding to the actual revenue generated in 2023 and 120 according to the above contract.
7. General regulations on tax calculation bases for business households and individuals
Instead of stipulating specific tax bases for each tax calculation method as currently, Circular 40/2021 provides general provisions on tax bases as follows:
The tax base for business households and individuals is the taxable turnover and the tax rate calculated on the turnover.
- Revenue subject to VAT and revenue subject to PIT for business households and individuals is the tax-inclusive revenue (in case of taxable income) of all sales, processing fees, commissions, money for service provision arising in the tax period from the production and trading of goods and services, including bonuses, sales support, sales promotion, trade discount, payment discount. payment and support in cash or non-cash; price subsidies, surcharges, extras, and additional fees are entitled to according to regulations; compensation for breach of contract and other compensations (only included in the revenue subject to PIT); Other revenues that business households and individuals enjoy, regardless of whether money has been collected or not.
- Tax rate on revenue:
- The tax rate calculated on turnover includes the VAT rate and the personal income tax rate applied in detail to each field and business line according to the guidance in Appendix I issued together with Circular 40/2021.
- In case business households and individuals operate in many fields and lines of business, business households and individuals shall declare and calculate tax at the rate of tax calculated on turnover applicable to each field or industry. profession. In case business households and individuals cannot determine the taxable turnover of each field or line or determine that it is not suitable with the reality of business, the tax authority shall determine the taxable revenue of each business line. fields and professions in accordance with the law on tax administration.
How to determine the amount of tax to pay
+ Amount of VAT payable = Taxable turnover x VAT rate
+ PIT payable = PIT taxable revenue x PIT rate
8. Table of looking up PIT and VAT rates for business households and individuals
APPENDIX I
LIST OF BUSINESS LINES FOR VAT, PIT AND PIT RESULTS BY % ON REVENUE FOR BUSINESS HOUSEHOLDS, BUSINESS PERSONS
(Issued together with the Minister's Circular No. 40/2021/TT-BTC dated June 01, 6)
List of occupations | % of VAT calculation | PIT rate |
1. Distribution and supply of goods | ||
- Wholesale and retail activities of all kinds of goods (except for the value of goods sold by agents at the right price to enjoy commission); – Bonuses, sales support, sales promotion, trade discount, payment discount, cash or non-cash support for contracted households; | 1% | 0,5% |
- Distribution and supply of goods are not subject to VAT, do not have to declare VAT, are subject to 0% VAT according to the law on VAT; - Business cooperation activities with organizations belonging to this industry group that organizations are responsible for declaring VAT on the entire revenue of business cooperation activities according to regulations; – Bonuses, sales support, sales promotion, trade discount, payment discount, cash or non-cash support for contracted households associated with the purchase of goods and services that are not subject to VAT , not required to declare VAT, subject to 0% VAT according to the law on VAT; - Compensation for breach of contract and other compensation. | 0,5% | |
2. Services, construction excluding raw materials | ||
- Accommodation services include: Activities of providing short-term accommodation facilities for tourists and other visitors; providing long-term accommodation other than apartments for students, workers and the like; activities of providing accommodation with catering services or recreational facilities; - Loading and unloading services and other supporting services related to transportation such as yard business, ticketing, vehicle maintenance; – Postal services, delivery of letters and parcels; – Brokerage, auction and agency commission services; – Legal consulting services, financial consulting, accounting, auditing; tax and customs administrative services; – Data processing services, portal rental, information technology and telecommunications equipment; advertising on digital information content products and services; – Office support services and other business support services; – Services of sauna, massage, karaoke, discotheque, billiards, internet, games; – Tailoring and laundry services haircut, hairdressing, shampooing; – Other repair services include: repairing computers and household appliances; – Consulting services, design, supervision of basic construction; - Other services subject to VAT calculation according to the credit method with the VAT rate of 10%; – Construction and installation excluding raw materials (including the installation of industrial machinery and equipment); | 5% | 2% |
- Service provision activities are not subject to VAT, do not have to declare VAT, are subject to 0% VAT according to the law on VAT; - Business cooperation activities with organizations belonging to this industry group that organizations are responsible for declaring VAT on the entire revenue of business cooperation activities according to regulations; - Compensation for breach of contract and other compensation; | 2% | |
- Lease of property includes: + Lease of houses, land, shops, factories, warehouses, except for accommodation services; + Leasing means of transport, machinery and equipment without the operator; + Lease of other assets without services; | 5% | 5% |
- Acting as a lottery agent, insurance agent, multi-level sales agent; - Compensation for breach of contract and other compensation. | 5% | |
3. Production, transportation, services associated with goods, construction including raw materials | ||
- Producing, processing and processing products and goods; - Mining and processing of minerals; - Transport of goods, transport of passengers; - Services attached to the sale of goods such as training, maintenance, technology transfer services accompanied by the sale of products; - Food Service; – Repair and maintenance services for machinery, equipment, means of transport, cars, motorbikes, motorbikes and other motor vehicles; – Construction and installation including raw materials (including the installation of industrial machinery and equipment); - Other activities subject to VAT calculation by the credit method with the VAT rate of 10%; | 3% | 1,5% |
– Activities that are not subject to VAT, are not required to declare VAT, are subject to 0% VAT according to the law on VAT; - Business cooperation activities with organizations in this industry group that organizations are responsible for declaring VAT on the entire revenue of business cooperation activities as prescribed. | 1,5% | |
4. Other business activities | ||
- Production of products subject to VAT calculation by the credit method with the VAT rate of 5%; | 2% | 1% |
- The provision of services subject to VAT calculation by the credit method with the VAT rate of 5%; | ||
- Other activities not listed in groups 1, 2, 3 above; |