How to calculate tax for business households and individuals in 2021

Create at: 25/12/2020 15:18

✅Business households and individuals with a revenue of over 100 million VND/year must pay personal income tax and value-added tax. The tax calculation method for business households below will help people estimate their own tax payable.

✅Taxpayers are resident individuals, including households, individuals, and groups of individuals engaged in the production and trading of goods and services in all fields and lines of production and business as prescribed in law.

⚡ Tax payable when the revenue is over 100 million VND/year:

According to Clause 1, Article 2 of Circular 92/2015/TT-BTC stipulating the principles of applying the tax calculation method to business households and individuals paying tax according to the presumptive method as follows:

Businesspeople who pay presumptive tax (hereinafter referred to as payers of presumptive tax) are those who earn revenue from trading in goods/services in any field and sector prescribed by law, except for the business individuals who pay tax on each occasion arising, Rental Property; act as a lottery agent, insurance agent, multi-level sales agent.
If the revenue subject to personal income tax (PIT) earned by the business person who pays presumptive 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 taxpayer 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.

📌 Thus, business households and individuals only have to pay personal income tax and value-added tax when the revenue is over 100 million VND/year.

⚡ Taxes applicable to business households and individuals:

Business households and individuals are subject to three types of taxes: license tax, personal income tax, and value-added tax.

The license tax is paid once a year at the beginning of the year or at the time of the establishment of a business household that has registered a business household tax code if it falls in the first 6 months of the year. In the last 6 months of the year, business households pay taxes for the last half of the year. According to Decree 136/2016/ND-CP, business households, shops, and business individuals who do not declare and pay license tax will have to pay a license tax for a whole year when detected by the tax authorities, regardless of the time of detection is the last 6 months of the year or the first 6 months of the year.
According to Article 3 of Circular 92/2015/TT-BTC stipulating that business individuals with revenue are less than 100 million VND/year, they will be exempt from personal income tax and value-added tax. In this case, if the revenue arises from house rental, shop rental, or revenue based on a contract signed with another organization, company, or individual, it is easy for the business to prove it to the tax authorities. In other cases, business individuals are considered to be unable to determine output revenue, so the determination of flat taxable revenue will be under the authority of tax administration authorities.

⚡ The formula for calculating flat tax applied to business households and individuals:

1. How to calculate business license tax:

✳️ According to Decree 139/2016/ND-CP, applied from 01/01/2017, the license tax of individual business households, shops, and business individuals is calculated based on the average annual revenue:

Average revenue/year	License tax rate/year
Revenue over 500 million VND	1.000.000 VND
Revenue over 300 million VND to 500 million VND	500.000 VND
Revenue over 100 million VND to 300 million VND	300.000 VND

2. How to calculate value-added tax and personal income tax of business households and individuals:

✳️ Pursuant to the provisions of Circular 92/2015/TT-BTC:

➡️The formula for calculating value-added tax:

VAT payable = Revenue subject to VAT x VAT rate

➡️The formula for calculating personal income tax:

PIT payable = Revenue subject to PIT x PIT rate

⭕ Taxable turnover of business households and individuals has the difference between buying sales invoices from tax authorities or not using sales invoices when doing business:

In case a business household paying flat tax uses an invoice from a tax authority, the taxable revenue is determined according to the flat revenue and the revenue on the invoice.
In case the output revenue cannot be determined, the determination of taxable revenue falls under the authority of the tax administration authority.

⭕ The rate of tax calculation according to revenue is applied according to the business lines of business households and individuals. Below is the "List of occupations that calculate VAT and PIT as a percentage of revenue for business households and individuals", please refer to:

Business line	VAT rate	PIT rate
Distribution, provision of goods
Wholesaling, retailing of goods (except for the value of goods sold by agents for commissions)	1	0,5
- Accommodation services including: the 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: the provision of long-term lodging establishments as if permanent establishments such as the monthly or annual lease of apartments, which are classified as real estate activities according to Vietnam’s System of Business lines. - Material handling services and other ancillary services for transport such as terminal operation, selling tickets, parking services; - Postal and courier services - Brokerage, auction, and agent commission services; - Legal consultation, financial consultation, accounting, auditing; tax agent services, customs agent services; - Data processing services, lease of gateways, IT and telecommunication equipment; - Office support services and other business support services; - Sauna, massage, karaoke, dance club, billiards, Internet, gaming services; - Tailoring and laundering services; hairdressing services; - Other repair services include repairs of computers and domestic appliances; - Fundamental construction consultancy, design, and supervision services; - Other services;	5	2
Construction and installation exclusive of building materials (including installation of industrial machinery and equipment)
- Lease of property including: + Houses, land, stores, workshops, warehouses, depots except for accommodation services + Lease of vehicles and other machinery and equipment without operators. + Lease of other property without associated services	5	5
- Lottery, insurance, multi-level marketing agent activities	-	5
Manufacturing, transport, services associated with goods, construction inclusive of building materials
- Manufacturing, processing of goods; - Extraction and processing of minerals; - Passenger transport, cargo transport; - Services associated with goods such as training, maintenance, technology transfers associated with goods sale; - Food and beverage services; - Repair and maintenance of machinery, equipment, and vehicles; - Construction and installation inclusive of building materials (including installation of industrial machinery and equipment)	3	1,5
-Other business activities	2	1
- Other activities not listed in groups 1, 2, 3 above.	2	-
- Other services are not subject to VAT

If customers have questions about regulations and policies on taxes, please contact TASCO Tax Agent in the following ways for free and direct advice and service at TASCO:

TASCO - Tax agent responsible for all service

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