The following content details tax obligations involving business households based on present regulations for declaring and paying licensing tax; declaring and paying head tax via household’s invoices; declaring and paying property tax for households; the use of digital invoices and invoices generated from POS systems.
I. INSTRUCTIONS ON PAYING LICENSING TAX
Business households and individuals (BH) shall follow the present regulations regarding licensing fee submission specified in Decision No. 139/2016/ND-CP dated October 4th, 2016 of Government, Decision No. 22/2020/ND-CP dated February 24th, 2020 of Government, Circular No. 302/2016/TT-BTC dated November 15th, 2016 and Circular No. 65/2020/TT-BTC dated July 9th, 2020 of Ministry of Finance on licensing tax payment, particularly:
– BH are obliged to pay licensing tax unless they belong to one of the following exemptions: BH have revenue of 100 million VND/year or below; BH are not in stable operation and do not have a permanent location; BH are exempted from paying licensing tax in the first year of operation.
– Licensing tax levels are as follows:
+ Revenue over 500 million VND/year: 1,000,000 VND/year.
+ Revenue over 300 to 500 million VND/year: 500,000 VND/year.
+ Revenue over 100 to 300 million VND/year: 300,000 VND/year.
– BH (including head households, property-leasing households and individuals) are not required to submit a licensing tax declaration document; tax authorities (TA) shall use the tax profile and the taxation management database to determine the total annual revenue of the BH from all sources and business locations and calculate the licensing tax to be paid in the following year accordingly, after which the BH shall be notified. Separately, for property-leasing activities, the total annual revenue shall be determined from the cumulative revenue of every leasing contract of that year, which will serve as the basis for licensing tax calculations. For BH that were dissolved or suspended before returning to operations, of which the total revenue of the previous year is undetermined, then the revenue of a business entity with similar scope, location and type of business will serve as the basis for licensing tax calculations.
– BH are to pay licensing tax according to notifications from TA. For BH with stable operations at the beginning of the year then the deadline for licensing tax payment is January 30th of the following year, with the latest date for TA to send out tax payment notifications be January 20th of the following year. For BH that were dissolved or suspended before returning to operations then the deadline for paying licensing tax is July 30th of that year (if operations begin within the first six months of the year) or January 30th of the following year (if operations begin within the last six months of the year), with the latest date for TA to send out tax payment notifications be the 20th of the month following the initial month when operations begin.
II. INSTRUCTIONS FOR TAX DECLARATION AND TAX PAYMENT FOR HOUSEHOLDS PAYING HEAD TAX/CAPITATION
1. Head tax declaration
– Households must declare head tax regularly 1 time per year according to form No. 01/CNKD attached to Circular No. 40/2021/TT-BTC dated June 1, 2021 of The Ministry of Finance as supplemented by TA between November 20, 2021 and December 15, 2021.
– Type of business must be declared according to Sector 4 business listing of the Economic business categorization system of Vietnam attached to Decision No. 27/2018/QD-TTG dated July 6, 2018 of the Prime Minister Office.
– Households requiring invoices to send to clients must apply with TA on each occasion. Households are responsible for keeping and providing TA with invoices, documents, contracts, authentication of goods or services documentation per application. Separately, when households conduct business at border markets, ports, or markets within a border economic zone in Vietnam, they are obligated to catalogue every invoice, document, contracts, authentication of goods or services documentation and present them per the request of legal government bodies.
– For households using invoices supplied by TA per application then the revenue and head tax amount determined at the beginning of the year do not include any revenue or tax arising from invoice usage.
2. Tax declaration submission
– Households must submit the Standard tax declaration according to form No. 01/CNKD to the Tax declaration submission unit based at the local People’s Committee office before December 15th, 2021.
– Particularly, for households that recently started their business (including households that was dissolved or suspended before returning to operations, or households converting to the capitation model), households that underwent major changes in the year (including households converting to the tax declaration model, households changing the type of business, households changing the scope of business), the Standard tax declaration according to form No. 01/CNKD must be submitted to the tax assessment unit (LXP tax unit) or the “single-door” reception unit on the tenth day since operations resumed, tax calculation model converted, type of business changed, or scope of business changed at the slowest.
– For households applying for invoice per occasion, the tax declaration dossier must contain the following:
+ Tax declaration form for business households or individuals according to form No. 01/CNKD issued together with Circular 40/2021/TT- BTC;
+ Copies of economic contracts regarding services or goods provision in line with the type of business of the households or individuals;
+ Copies of documents verifying completion of contracts;
+ Copies of documents authenticating the sources of goods or services, such as: Listing of produce purchases if the goods are produce grown within the country; Listing of product purchases or trades if the goods are items imported by residents living near the border; Invoices supplied by the seller if goods are imports acquired by organizations or individuals conducting business within the country; Relevant documents authenticating the goods if the goods are supplied independently by the individual;…
TA reserve the right to request for the source documents (instead of copies) in order to verify the accuracy of the copies compared to the source.
3. Instructions on paying head tax
– Households must pay taxes to the National Budget or through tax collection organizations (if available) according to the Payment Notice sent by the TA.
– Payment Notice shall be sent by the TA on the 20th of January at the slowest to households with stable operations since the beginning of the year, or the 20th of each month for households that recently began operations and households that recently underwent major changes in the year. For households with stable operations since the beginning of the year, the TA will send the Payment Notice together with the public Listing of business households operating in the same business area. In case the TA has already made public the Listing on the digital portal then the Listing shall not be sent; the households shall access the public Listing on the portal for inspection, comparison, and feedback.
– The time limit for tax payment is the last day of each month. In case a household only recently began its business or underwent changes in activities then the time limit is the last day of the month following the beginning of the business or the changes in business activities.
– In case a household requests for invoice generation per occasion from the TA then the tax payment deadline for revenue on invoices is the same as the tax declaration deadline for revenue on invoices.
– After the head tax is paid to the National Budget, households shall receive a proof of payment in the form of a Payment certificate with authentication from a commercial bank (if the payment is submitted digitally) or a Payment certificate with authentication from the State Treasury (if payment is directly submitted at the State Treasury office) or a tax/fee invoice from an authorized tax collection organization (for regions that authorize tax collection organizations) or a tax/fee invoice from the TA (for households in locations without a tax collection point or an authorized tax collection organization, or in impoverished and specially impoverished regions, based on regulations regarding administrative units in impoverished regions) in order to certify that households have met their tax obligations.
– Households shall submit tax payment via two methods: on the eTax Mobile app linked with the bank payment system; or on the digital tax declaration and submission starting from 2023 according to the roadmap from the TA.
4. Publicizing business household information
– The TA shall publish data regarding business households on the capitation model twice, with the first instance published between December 20th, 2021 and December 30th, 2021; the second instance published between January 30th, 2022 until the end of the year at the slowest. The published information shall contain: List of households exempted from head tax payment; List of households included in head tax payment.
– Location and form of data publication:
+ Publicly display relevant documents at the single-door reception unit of the Tax Department/Regional Tax Department; at the office of the People’s Committee of a district or province; at the entryway or a convenient location for the display of information at the office of the People’s Committee of a commune, ward, or town; at the office of the tax collection unit; at the Market management board.
+ Send relevant public documents to the People’s Council and Fatherland Front of districts, communes, wards, and towns.
+ Publicly publish business households included in head tax payment by region on the digital portal of the tax authorities.
+ Households are able to look up publicly available data on the eTax Mobile app or at the website: http://gdt.gov.vn.
5. Regarding feedback
If business households have questions regarding the revenue total and the head tax amount, they are able to contact the TA through the following methods:
Directly contact the tax assessment unit (LXP tax unit). Directly contact the “single-door” reception unit of the TA. Contact the Support unit of the Tax Department through the phone number publicly displayed at the reception unit of the TA. Send documents to the TA at any level. Send feedback to the email address of the Tax Department which is publicly displayed at the reception unit of the TA.
The tax authorities are obligated to reply to feedback within 2 days after receiving feedback at the slowest.
6. For households dissolving or suspending business activities
– Households dissolving or suspending business activities must notify the TA at least 1 day prior to the dissolution or suspension of business at the slowest. In case the business households are dissolved or suspended following the orders of a government body then no notification is needed.
– TA shall adjust the head tax amount to be paid according to regulations based on the time of notification by the taxpayer(s) or by the government body for households dissolving or suspending business activities.
III. INSTRUCTIONS ON TAX DECLARATION AND TAX PAYMENT FOR HOUSEHOLDS DECLARING TAXES
1. Tax declaration
– Declaring households include: large scale BH; and BH not sufficiently large in scope but opting for tax payment through the tax declaration model. The criteria for determining large scale BH are revenue total or labour usage, particularly: in agricultural, forestry, fishery and manufacturing, construction industries, the number of workers registering for social insurance is ten or more per annum, or the revenue total of the previous year is 3 billion VND or more; in commerce or services, the number of workers registering for social insurance is ten or more per annum, or the revenue total of the previous year is 10 billion VND or more.
– BH must keep an accounting ledger with invoices and documentation. In case BH operate within industries that government bodies are able to verify the total business revenue of BH then BH are not required to keep an accounting ledger.
– BH must implement accounting practices as prescribed in Circular No. 88/2021/TT-BTC dated October 11th, 2021 of Ministry of Finance from January 1st, 2022.
– BH must declare taxes monthly or quarterly as per regulations.
2. Tax declaration submission
The tax declaration dossier for BH opting for this model must include:
a) Tax declaration sheet according to form No. 01/CNKD issued together with Circular 40/2021/TT- BTC;
b) Appendix containing the listing of business activities within the period according to form No. 01-2/BK-HDKD issued together with Circular No. 40/2021/TT-BTC. In case BH’s revenue total could be verified by relevant government bodies then BH are not required to submit Appendix according to form No. 01-2/BK-HDKD.
3. Location to submit tax declarations
The location to submit tax declarations for BH is the Tax Department directly managing the area in which BH engage in production and business activities.
4. Time limit for tax declaration submission
a) The time limit for submitting monthly tax declaration dossiers is the 20th of the month following the instance of tax occurrence at the slowest.
b) The time limit for submitting quarterly tax declaration dossiers is the last day of the first month within the quarter following the instance of tax occurrence at the slowest.
5. Time limit for tax payment
The time limit for tax payment is the last day of the time limit for tax declaration submission. In the case of additional tax declarations, the time limit for tax payment is the time limit of the tax submission period in which errors or miscalculation occur.
6. For households dissolving or suspending business activities
Households dissolving or suspending business activities must notify the Tax Department directly governing the area of operation at least 1 day prior to the dissolution or suspension of business activities. Households are not required to submit tax declaration dossiers, unless households cease business activities before the end of the month if tax declaration is monthly or households cease business activities before the end of the quarter if tax declaration is quarterly.
7. For households converting from the capitation model within the year
Households following the capitation model when converted to the tax declaration model must submit additional tax declarations according to form No. 01/CNKD prior to the conversion. The TA shall base on said additional tax declarations to adjust and deduct taxes paid during the conversion period. The time limit for recently converted households to submit additional declarations is the tenth day after the tax calculation model is changed at the slowest.
IV. INSTRUCTIONS FOR USING INVOICES FOR BUSINESS HOUSEHOLDS, BUSINESS INDIVIDUALS
1. BH using digital invoices
– BH using digital invoices (excluding the case of invoice usage per incurring occasion) must implement accounting practices and pay tax through the tax declaration model.
– To use digital invoices, business households shall require an email, a digital signature (issued through an organization providing authentication services), and a computer connected to the internet or a mobile device with the digital invoice application installed. Digital invoices of business households are implemented through organizations providing digital invoice services (information about organizations providing digital invoice services is publicly available on the information portal of the General Department of Taxation); or directly through the information portal of the General Department of Taxation (for cases where BH declare taxes per occasion or businesses in impoverished areas or specially impoverished areas according to regulations of the government, then BH are eligible for free billing services for 12 months).
– BH, households declaring taxes per occasion requiring invoices to send to clients must request the TA to provide digital invoices on each occasion.
2. For BH using paper invoices purchased from TA
– The BH that use the purchase invoice from the TA are determined as BH operating in impoverished or specially impoverished areas according to government regulations, who are unable to conduct transactions with the TA by electronic means, and do not have the necessary information technology infrastructure, accounting software system, digital invoice generation software to use digital invoices and to transmit digital invoice data to clients and to the TA.
– BH falling under the above category are only recognized for a maximum period of 12 months. The maximum period of 12 months is calculated once: from July 1st, 2022 (for BH operating before July 1st, 2022); or from the time of registration to start using invoices (for newly established BH after July 1st, 2022).
– BH that purchase invoices from the TA are responsible for submitting reports on invoice usage and sending invoice data to the TA according to form No. 01/TH-HDĐT, Appendix IA issued with Decree No. 123/2020/ND-CP along with relevant tax declarations.
3. For BH using digital invoices generated by POS systems
– BH using digital invoices generated from POS systems are determined as: business households and business individuals that pay taxes according to the tax declaration model and provide goods and services directly to consumers through a business model (commercial centers; supermarkets; retailers; food; restaurants; hotels; medicine retailers; entertainment services and other services) and opt to use digital invoices generated by POS systems.
– BH using digital invoices generated from POS systems are not required to use digital signatures on invoices when selling goods or providing services, but must still use digital signatures when registering/changing information or when sending digital invoice data to TA; expenditures for purchasing goods and services using invoices generated by POS systems are determined to be expenses with sufficient legal invoices and documents when determining tax liabilities; BH must be proactive 24/7 in generating invoices, promptly handling errors for each transaction lodged in POS systems if the digital invoice software with TA-authorized codes has been installed to the POS systems in compliance with the data format published by the General Department of Taxation; at the end of the day, BH only have to transfer the digital invoice data generated during the day to the TA through the organization providing services for receiving, transmitting, and storing electronic data.
– The implementation of digital invoices generated by POS systems follows the roadmap provided by the TA. In case a BH using digital invoices with a TA-authorized code chooses to switch to using digital invoices generated by a POS system, the BH must apply for a change to the digital invoice registration information according to the provisions of Article 15 of Decree No. 123/2020/ND- CP./.