– Pursuant to Article 2 of Law No. 71/2014/QH13 amending and supplementing a number of articles of the Tax Law amending and supplementing Clause 1, Article 3 of the Law on Personal Income Tax No. 04/2007/QH11:
“1. Amend and supplement Clause 1, Article 3 as follows:
1. Income from business, including:
a) Income from production and trading of goods and services;
b) Income from independent practice activities of individuals who have licenses or practice certificates as prescribed by law.
Income from business specified in this Clause does not include income of business individuals with revenue of 100 million VND/year or less.”
– Pursuant to Circular No. 40/2021/TT-BTC dated June 1, 2021 (effective from August 1, 2021) guiding value-added tax, personal income tax and tax administration for business households and business individuals.
+ At Item dd, Clause 1, Article 2, the objects of application of this Circular are specified:
“1. Business households and business individuals are residents engaged in the production and trading of goods and services in all fields and lines of production and business as prescribed by law, including some of the following cases:…
dd) E-commerce activities, including individuals earning income from digital information content products and services in accordance with the law on e-commerce.”
+ In Clause 12, Article 3, the following terms are explained:
“12. “Digital information content product” means a content and information product including text, data, images, and sound presented in digital form and stored; transmitted on the network environment according to the provisions of Clause 11 Article 3 of Decree No. 71/2007/ND-CP dated May 3, 2007 of the Government detailing and guiding the implementation of a number of articles of the Law on Information Technology on the information technology industry and guiding or amending, supplementing or replacing documents (if any).”
+ Clause 1, Article 5 stipulates the tax calculation method applicable to business households and individuals paying tax according to the declaration method:
“1. The declaration method applies 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.”
+ Clause 2, Article 6 provides for business individuals to pay tax for each time it is incurred:
“2. Business individuals that pay tax for each time it is incurred include:
… d) Individuals earning income from digital information content products and services if they do not choose to pay tax according to the declaration method . “
+ In Appendix I List of occupations for calculation of VAT and PIT, providing guidance on determining the percentage of revenue for business households and individuals, promulgated together with Circular No. 40/2021/TT-BTC of the Ministry of Finance.
|No||List of occupations||% of VAT calculation||PIT rate|
|2.||Services, construction does not include bidding for raw materials|
– Data processing services, portal rental, information technology and telecommunications equipment; advertising on digital information content products and services
– Pursuant to Article 31 of Circular No. 205/2013/TT-BTC dated December 24, 2013 of the Ministry of Finance guiding the implementation of Agreements on avoidance of double taxation and prevention of tax evasion with respect to taxes on income and property between Vietnam and other states or territories and in force in Vietnam, the guidance are as follows:
“Article 31. Determination of tax liability for income from dependent personal services
1. Under the provisions of the Agreements, an individual who is a resident of the Contracting State to an Agreement concluded with Vietnam and earns income from employment in Vietnam shall pay income tax on such income from employment in Vietnam in accordance with Vietnam’s current regulations on personal income tax.
2. If the individual mentioned in Clause 1 simultaneously satisfies all three of the following conditions, wages earned from work performed in Vietnam will be exempt from income tax in Vietnam:
a) That individual is present in Vietnam for less than 183 days in a 12-month period commencing or ending in the tax year; and
b) The employer is not a resident of Vietnam regardless of whether the wage is paid directly by the employer or through an entity acting on behalf of the employer; and
c) Such wage is not borne by a permanent establishment that the employer has in Vietnam and must pay…”
– Pursuant to Article 16 of Circular 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance guiding the implementation of a number of articles of the Law on Tax Administration; Law amending and supplementing a number of articles of the Law on Tax Administration and Decree No. 83/2013/ND-CP dated 22/7/2013 of the Government guiding:
“Article 16. Tax declaration and payment of personal income tax
7. Tax declaration for residents with income generated abroad
a) Principles of tax declaration
Residents with income generated abroad shall declare tax for each time it is incurred, especially residents with income from salary; wages arising abroad shall declare tax quarterly.
8. Tax declaration for non-residents with income arising in Vietnam but receiving them abroad
a) Principles of tax declaration
a.1) Non-residents with income arising in Vietnam but received them abroad shall declare tax according to the time of arising. Particularly, non-residents earning incomes from salaries or wages arising in Vietnam but receiving them abroad shall declare tax quarterly.
13. In case a foreign individual earns taxable income and is eligible for tax exemption or reduction due to the application of the Agreement on avoidance of double taxation between Vietnam and other states and territories, the following procedures shall be carried out: …”
Based on the above provisions, the principles of Personal Income Tax are as follows:
– In case individuals have total revenue from business in a calendar year of 100 million VND/year or less, they are not required to declare and pay VAT and PIT.
– In case individuals have total revenue from business in a calendar year of over VND 100 million/year, they shall declare and pay tax according to each time it is incurred according to the guidance in Clause 2, Article 6 of Circular No. 40/2021/TT-BTC of the Ministry of Finance, the tax calculation rate on revenue applied to PIT is 2%, VAT is 5% according to the guidance in Appendix I issued together with Circular No. 40/2021/TT-BTC of the Ministry of Finance mentioned above.
* In case the Agreement on avoidance of double taxation between Vietnam and foreign countries officially takes effect and the individual is eligible for PIT exemption as prescribed in Article 31 of Circular 205/2013/TT-BTC dated December 24, 2013 of the Ministry of Finance, the tax exemption and reduction dossiers must be made according to the provisions of Clause 13, Article 16 of Circular No. 156/2013/TT-BTC mentioned above.