From January 01, 08, Circular No. 40 / 2021 / TT-BTC issued by the Ministry of Finance has officially taken effect, marking an important turning point in tax management for business households and individual businesses. Below are instructions on how to calculate taxes and tax rates applicable to business households and individual businesses in 2021.
1. How to calculate tax for business households and individual businesses
As prescribed at Circular No. 40 / 2021 / TT-BTC , business households and individuals with revenue of 100 million VND/year or less will be exempt from value added tax (VAT) and personal income tax (PIT).
For cases with revenue exceeding this threshold, the application of tax calculation methods will be classified based on the scale and form of business, including the declaration method, the lump-sum method and the method for each occurrence with the following tax calculation methods and tax rates:
The basis for calculating tax for business households and business individuals is taxable revenue , and tax rate calculated on revenue according to Circular No. 40/2021/TT-BTC.
1.1. Taxable revenue for business households and business individuals
Revenue subject to VAT and revenue subject to personal income tax for business households and individuals is the revenue including tax (in cases subject to tax) of all sales, processing fees, commissions, and service provision fees arising during the tax period from production and trading activities of goods and services, including bonuses, support for achieving sales targets, promotions, trade discounts, payment discounts, support payments in cash or non-cash; subsidies, surcharges, extra fees, and additional fees received according to regulations; compensation for breach of contract, other compensation (only included in revenue subject to personal income tax); other revenue that business households and individuals are entitled to regardless of whether they have been collected or not collected.
1.2. Tax rate on sales
Tax rate on revenue includes VAT rate , and personal income tax rate apply in detail to each field and profession according to the instructions in Appendix I issued herewith. Circular 40 / 2021 / TT-BTC.
- In case a business household or individual conducts business in many fields and professions, the business household or individual shall declare and calculate tax according to the tax rate calculated on revenue applicable to each field and profession.
- In case business households or individual businesses cannot determine the taxable revenue of each field or industry or the determination is not consistent with business reality, the tax authority shall determine the taxable revenue of each individual business. fields and industries according to the provisions of law on tax administration.
1.3. How to determine the amount of tax payable
- VAT number payable = VAT taxable revenue x VAT rate
- Personal income tax number payable = Taxable revenue x Tax rate
2. Tax rate on revenue of business households and business 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)
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List of occupations |
% of VAT calculation |
PIT rate |
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1. Distribution and supply of goods |
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- 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% |
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- 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% |
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2. Services, construction excluding raw materials |
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- 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% |
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- 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% |
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- 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% |
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- Acting as a lottery agent, insurance agent, multi-level sales agent; - Compensation for breach of contract and other compensation. |
5% |
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3. Production, transportation, services associated with goods, construction including raw materials |
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- 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% |
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– 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% |
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4. Other business activities |
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- Production of products subject to VAT calculation by the credit method with the VAT rate of 5%; |
2% |
1% |
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- The provision of services subject to VAT calculation by the credit method with the VAT rate of 5%; |
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- Other activities not listed in groups 1, 2, 3 above; |
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