On June 1st, 2021, the Ministry of Finance issued Circular No. 40/2021/TT-BTC guiding on value-added tax, personal income tax and tax management for business households and individuals (hereinafter referred to as “Circular 40/2021”) with the following notable points:
a. Regulations on cases not required to declare and pay value-added tax and personal income tax:
Circular 40/2021 clearly stipulates that business households or individuals whose revenue from business operation in the western calendar year does not exceed 100 million VND shall not be required to pay VAT and PIT as prescribed by the laws on VAT and PIT.
b. Supplementing tax calculation methods applied for business households and individuals:
Circular 40/2021 has added tax calculation methods for business households and individuals paying tax via the declaration method. Accordingly, this method will be applied to business households and individuals doing business on a large scale or if they choose to pay tax via the declaration method even though their business activities have not yet met the requirements of a large scale.
Business households and individuals paying tax via the declaration method shall declare tax monthly or quarterly, and must comply with the regulations on accounting, invoices, and vouchers, but do not have to make tax finalization.
In case business households and individuals paying tax by the declaration method determine the taxable revenue unrealistically, the tax authority shall fix the amount of the assessable income according to the provisions of Article 50 of the Law on Tax Administration.
c. Supplementing subjects being responsible for declaring and paying taxes on behalf of individuals
In addition to the cases specified in Clause 2, Article 8 of Circular No. 92/2015/TT-BTC, Circular 40/2021 supplements the entities taking responsibility for declaring and paying tax on behalf of individuals as follows:
- Organizations entering into business cooperation with individuals;
- Organizations paying bonuses, sales support, sale promotions, commercial discounts, payment discounts, cash or non-cash support, compensations for breach of contract, and other compensations to business households adopting the deemed taxation method;
- Organizations in Vietnam who are partners of overseas digital platform providers (without a permanent establishment in Vietnam), pay income from digital information content products and services to individuals under agreements with the overseas digital platform providers;
- Organizations who are the owners of an e-commerce platform shall declare and pay tax on behalf of individuals according to the roadmap announced by tax authorities;
- Organisations that declare and pay tax on behalf of individuals based on authorization agreements under the civil code.
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This Legal Update is for general information only and is not a substitute for legal advice.
