Chapter I
POLICIES ON VAT AND PERSONAL INCOME TAX INCURRED BY RESIDENTS DOING BUSINESS
Article 1. Taxpayers
1. Taxpayers mentioned in Chapter I of this Circular are residents including individuals, groups of individuals, and households who manufacture and/or trade in goods, services in any field and sector prescribed by law (hereinafter referred to as businessperson or businesspeople). The business fields and sectors also include:
a) Independent practice in the fields and sectors that are permitted in the practising certificate or license as prescribed by law.
b) Acting as a lottery, insurance, multi-level marketing agent who directly signs a contract with the lottery company, insurer, or multi-level marketing company.
c) Business cooperation with other organizations.
d) Agriculture, forestry, salt production, aquaculture activities that do not satisfy conditions for tax exemption in Point e Clause 1 Article 3 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance.
2. Taxpayers mentioned in Clause 1 of this Article do not include businesspeople whose revenues are VND 100 million/year or lower.
Article 2. Tax calculation methods applied by businesspeople paying flat tax
1. Applied principles:
a) Businesspeople who pay flat tax (hereinafter referred to as payers of flat tax) are those who earn revenue from trading in goods/services in any field and sector prescribed by law, except for the businesspeople mentioned in Article 3, Article 4, and Article 5 of this Circular.
b) If the revenue subject to personal income tax (PIT) earned by the businessperson who pays flat tax in the year is VND 100 million/year or lower, the person shall not pay VAT and PIT.
If the revenue subject to PIT earned by a flat tax payer who does not do business for the whole year (less than 12 months of a calendar year) is VND 100 million per year or lower, such person shall not pay VAT and PIT. Persons who do not do business for the whole year include persons who are new to business; persons doing seasonal business; persons who suspend/shut down their business. The actual revenue for calculating tax payable in the year is the revenue earned during the months in which they actually do business. If a payer of flat tax who does not do business for the whole year has received a tax notice from the tax authority, the flat tax shall be reduced according to the months in which the business is suspended or shut down.
Example 1: Mr. A starts his business from April 2015 and expects to earn a revenue of VND 90 million after 09 months of business (averagely VND 10 million/month). The corresponding revenue of a year (12 months) is VND 120 million (> VND 100 million) In this case, Mr. A has to pay VAT and PIT on the actual revenue earned from April 2015, which is VND 90 million.
Example 2: Ms. B has received a tax notice of 2015 from the tax authority. In October 2015, Ms. B suspends/shuts down her business. In this case, she will receive a reduction in flat tax corresponding to the last 03 months of 2015.
c) Businesspeople who do business as a group or household and earns a revenue of VND 100 million/year or lower shall not pay VAT and PIT. It is considered that the revenue is earned by only 01 representative of the group or household in the tax year.
Example 3. Household C is established by a group of 04 persons. In 2015, household C has a revenue of VND 180 million from business (>VND 100 million). Household C has to pay VAT and PIT on the total revenue of VND 180 million.
d) Businesspeople who are not residents but have permanent business premises in Vietnam shall declare tax as if those who are residents.
2. Basis for tax calculation
The basis for tax calculation by a payer of flat tax is the taxable revenue and tax rate.
a) Taxable revenue
a.1) Revenue subject to VAT and PIT means the tax-inclusive revenue (if taxable) from the sale of goods, payment for processing, commission, provision of services earned in the tax period from the business (hereinafter referred to as taxable revenue).
If the flat tax payer uses invoices of the tax authority, the taxable revenue is based on the flat revenue and revenue on the invoice.
a.2) In case a businessperson fails to determine the flat revenue or the flat revenue is not practical, the tax authority is entitled to impose a flat revenue in accordance with regulations of law on tax administration.
b) Tax rates
b.1) Tax rates include VAT rate and PIT rate and vary according to the business line as follows:
- Distribution, provision of goods shall incur 1% VAT and 0.5% PIT.
- Service provisions and construction exclusive of building materials shall incur 5% VAT and 2% PIT.
- Manufacture, transport, provision of services associated with goods, construction inclusive of building materials shall incur 3% VAT and 1.5% PIT.
- Other business lines shall incur 2% VAT and 1% PIT.
b.2) The detailed list of business lines and corresponding tax rates is provided in Appendix 01 enclosed herewith.
b.3) The businessperson who involves in multiple business lines shall declare and calculate tax according to the rates applied to each of the business lines. If such businessperson is not able to separate revenue from each business line or it is not practical, the tax authority is entitled to impose a flat revenue upon each of the business line in accordance with regulations of law on tax administration.
c) Determination of tax payable
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VAT payable
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=
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Revenue subject to VAT
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x
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VAT rate
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PIT payable
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=
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Revenue subject to PIT
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x
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PIT rate
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Where:
- Revenue subject to VAT and revenue subject to PIT are prescribed in Point a and Point b.3 Clause 2 of this Article.
- VAT rate and PIT rate are prescribed in Point b Clause 2 of this Article.
d) Time for determination of taxable revenue
d.1) Flat revenue shall be determined during the period from November 20 to December 15 of the year preceding the tax year.
d.2) If a businessperson is new to business (who does not do business from the beginning of the year) or changes the business scale in the year, the flat revenue of the year shall be determined within 10 days from the beginning date or the changing date.
d.3) Variable revenue (according to invoices) shall be determined at the time prescribed in Point d Clause 2 Article 3 of this Circular.
Article 3. Tax calculation methods applied by businesspeople paying tax every time it is incurred
1. Applied principles:
a) Businesspeople paying tax every time it is incurred include: residents who earn revenue outside Vietnam’s territory; persons who do casual business and do not have permanent business premises; persons who engages in business cooperation with other organizations in a way that their personal revenues can be determined.
Depending on the characteristics of the business line, persons doing casual business may decide to declare flat tax as prescribed in Clause 2 of this Circular or declare tax whenever it is incurred as prescribed in this Article.
Permanent business premises are the places where businesspeople carry on their business such as: transaction offices, stores, shops, workshops, warehouses, terminals, depots, etc.
b) If the total revenue from business in the calendar year earned by a businessperson who pays tax whenever it is incurred is VND 100 million or lower, such businessperson shall not pay VAT and PIT.
Example 4: In 2015, Mr. C earns a revenue of VND 40 million from a contract with company X and VND 50 million from a contract with company Y. The total value of two contracts in the year is VND 90 million (< VND 100 million). In this case, Mr. C does not have to pay VAT and personal income tax on the revenue earned from these two contracts. In this case, Mr. C does not have to pay VAT and personal income tax on the revenue earned from these two contracts, which increases the total value of 03 contracts in the year to VND 110 million (> VND 100 million), Mr. C has to pay VAT and PIT on the revenue of VND 110 million from 03 contracts.
2. Basis for tax calculation
The basis for tax calculation by a businessperson who pays tax whenever it is incurred is the taxable revenue and tax rate.
a) Taxable revenue
a.1) Taxable revenue is the tax-inclusive revenue (if taxable) from the sale of goods, payment for processing, commission, provision of services according to the contract, including subsidies, surcharges, damages, fines for breach of contract (with regard to revenue subject to PIT) earned by the businessperson, whether such amounts have been collected or not. Taxable revenue in some cases:
a.1.1) Taxable revenue from selling goods by instalments is determined according to the lump-sum selling prices of goods exclusive of interest on deferred payment;
a.1.2) Taxable revenue from goods/services used for exchange or gifting is determined according to selling prices of the same or similar kind goods/services at the time of exchange or gifting;
a.1.3) Taxable revenue for goods processing is the revenue for the processing including wages, payment for fuel, machines, ancillary materials, and other costs serving the processing of goods;
a.1.4) Taxable revenue from transport is the total revenue from the charges for transport of passengers, cargo, and luggage earned in the tax period;
a.1.5) Taxable revenue from construction and installation is the value of the works, work items, or parts that are accepted, transferred, or completed in the calendar year. Revenue from construction and installation exclusive of building materials, machinery and equipment, the taxable revenue does not include the value of building materials, machinery and equipment.
b) Tax rate
VAT rate and PIT rate applied to businesspeople who pay tax whenever it is incurred are the same as that applied to flat tax payers prescribed in Point b Clause 2 Article 2 of this Circular.
c) Determination of tax payable
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VAT payable
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=
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Revenue subject to VAT
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x
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VAT rate
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PIT payable
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=
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Revenue subject to PIT
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x
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PIT rate
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Where:
- Revenue subject to VAT and revenue subject to PIT are prescribed in Point a Clause 2 of this Article.
- VAT rate and PIT rate are prescribed in Point b Clause 2 of this Article.
d) Time for determination of taxable revenue
- For goods sale, it is the time of transfer of the right to own or rights to use the goods, or the time of issuing the sale invoice if it is issued before the transfer of the right to own or rights to use the goods.
- For transport and service provision, it is the time of completion of provision of services for the buyer or the time of issuing the service provision invoice if it is issued before the completion of service provision.
- For construction and installation, it is the time of acceptance and transfer of the completed works, work items, or parts.
Article 4. Tax accounting method applied by persons leasing property
1. Applied principles:
a) Persons leasing property (hereinafter referred to as lessors) are those who earn revenue from the lease of their property, including: housing, premises, stores, workshops, warehouses, depots exclusive of accommodation services; lease of means of transport, machinery and equipment without operators; lease of other property without associated services.
Accommodation services not included in property lease mentioned in this point include: provision of short-term lodging establishments for tourists and other guests; provision of long-term lodging establishments for students, workers and the like; provision of lodging establishments together with food and drink services and/or entertainments. Accommodation services do not include: long-term provision of lodging establishments as if permanent establishments such as monthly or annual lease of apartments, which are classified as real estate activities according to Vietnam’s System of Business lines.
b) If the total revenue from lease contracts earned in the calendar year is VND 100 million or lower, the lessor shall not pay VAT and PIT. If the lessee pays a lump-sum of rent in advance for many years, the taxpayer shall not pay VAT and PIT if the annual revenue, which equals (=) lump-sum revenue divided by (:) the number years, is VND 100 million or lower.
Example 5: Ms. C signs a housing lease contract for 02 years from October 2015 to the end of September 2015 for a monthly rent of VND 10 million. A lump-sum of rent is paid for 02 years. Taxable revenue of Ms. C and tax payable on the lump-sum from housing lease is determined as follows:
In 2015, Ms. C leases out her house for 03 months (from October to December) and earns a revenue of: 03 months x VND 10 million = VND 30 million (< VND 100 million). Thus, Ms. C does not have to pay VAT and PIT on the house rent in 2015.
In 2016, Ms. C leases out her house for 12 months (from January to December) and earns a revenue of: 12 months x VND 10 million = VND 120 million (> VND 100 million). Thus, Ms. C has to pay VAT and PIT on the house rent in 2015.
In 2017, Ms. C leases out her house for 09 months (from January to September) and earns a revenue of: 09 months x VND 10 million = VND 90 million (< VND 100 million). Thus, Ms. C does not have to pay VAT and PIT on the house rent in 2017.
After determining annual taxable revenue, Ms. C declares tax on the lump-sum of VND 180 million. Taxable revenue is VND 120 million and tax payable for the whole contract is VND 12 million (VND 120 million x (5% + 5%)).
c) Businesspeople who have a co-ownership of a piece of property for lease and earn a revenue of VND 100 million/year or lower shall not pay VAT and personal income tax. It is considered that the revenue is earned by only 01 representative of the group or household in the tax year.
Example 6: A and B are two people who have a co-ownership of a piece of property. In 2015, they agree to leases it out for VND 180 million/year, which is higher than VND 100 million/year. A is the representative who fulfills tax obligations. In this case, A has to pay VAT and PIT on the lease of such property on the revenue of VND 180 million.
2. Basis for tax calculation
The basis for tax calculation by a property lessor is the taxable revenue and tax rate.
a) Taxable revenue
Taxable revenue from property lease is determined as follows:
a.1) Revenue subject to VAT from property lease is the tax-inclusive revenue (if taxable) from rents periodically paid by the lessee under the lease contract and other revenues exclusive of fines and damages received by the lessor under the lease contract.
a.2) Revenue subject to PIT from property lease is the tax-inclusive revenue (if taxable) from rents periodically paid by the lessee under the lease contract and other revenues including fines and damages received by the lessor under the lease contract.
a.3) In case the lessee advances a lump sum for multiple years, the revenue subject to VAT and PIT shall be determined according to the lump sum.
b) Tax rate
- VAT rate on property lease is 5%
- PIT rate on property lease is 5%
c) Determination of tax payable
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VAT payable
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=
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Revenue subject to VAT
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x
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5% VAT
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PIT payable
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=
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Revenue subject to PIT
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x
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5% PIT
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Where:
- Revenue subject to VAT and revenue subject to PIT are prescribed in Point a Clause 2 of this Article.
- VAT rate and PIT rate are prescribed in Point b Clause 2 of this Article.
d) Time for determination of taxable revenue
Time for determination of taxable revenue is the beginning date of each payment term written on the lease contract.
Article 5. Tax calculation method applied by persons who directly sign lottery, insurance, multi-level marketing agent contracts
1. Applied principles:
b) The person who directly signs the lottery, insurance, or multi-level marketing agent contract is the person who directly signs an agent contract with the lottery company, insurer, or multi-level marketing company to sell goods/services at prices fixed by the company and receive commission (hereinafter referred to as agent).
b) If the total commission, bonuses in any shape or form, subsidies and other revenues received by the agent in the year is VND 100 million or lower, the person shall not pay PIT.
Example 7. Mr. D directly signs a contract with lottery company X to act as a level I agent of company X. In 2015, Mr. D receives a total commission of VND 230 million (> VND 100 million) In this case, Mr. D has to pay tax on the revenue of VND 230 million from lottery agent activities.
2. Basis for tax calculation
The basis for tax calculation by a person who acts as a lottery, insurance, or multi-level marketing agent is the taxable revenue and tax rate.
a) Taxable revenue
Taxable revenue is the tax-inclusive revenue (if taxable) from the commission, bonuses in any shape or form, subsidies, and other revenues received by the person from the lottery company, insurer, or multi-level marketing company (hereinafter referred to as commission).
b) PIT rate
Rate of PIT incurred by lottery agents, insurance agents, and multi-level marketing agents is 5%.
c) Determination of tax payable
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PIT payable
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=
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Revenue subject to PIT
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x
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5% PIT
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Where:
- Revenue subject to PIT is prescribed in Point a Clause 2 of this Article.
- PIT rate is prescribed in Point b Clause 2 of this Article.
d) Time for determination of taxable revenue
Time for determination of taxable revenue is the time the lottery company, insurer, or multi-level marketing company pays commission to the person.
Tìm kiếm
Thông tư 92/2015/TT-BTC (Bản Word)
Thông tư 92/2015/TT-BTC (Bản Pdf)