June 1, 2021, The Ministry of Finance promulgates Circular No. 40/2021/TT-BTC provide guidance on value-added tax (VAT), personal income tax (PIT), and tax administration for business households and individuals. This Circular takes effect from August 1, 2021. Accordingly, the principles for calculating VAT and PIT of business households and individuals are determined as follows:
First, the tax calculation principles for business households and individuals comply with the provisions of the current law on VAT, PIT, and relevant legal documents.
Second, business households and individuals with turnover from production and business activities in the calendar year of 100 million VND or less are not having to pay VAT and PIT as prescribed by Law on VAT and PIT. Business households and individuals are responsible for making accurate, truthful, and complete tax declarations and submitting tax dossiers on time; take responsibility before law for the accuracy, truthfulness, and completeness of tax records as prescribed.
Third, business households and individuals doing business in the form of groups of individuals or households must have a turnover of 100 million VND/year or less to determine that individuals are not required to pay VAT and cannot pay PIT determined for one (01) sole representative of a group of individuals or households in the tax year.
At the same time, according to this Circular, the tax calculation method is calculated according to the following formula:
Amount of VAT payable = Revenue subject to VAT x VAT rate
Amount of PIT payable = Revenue subject to PIT x PIT rate
In there:
– Revenue subject to VAT and revenue subject to PIT for business households and individuals is the tax-inclusive revenue (in taxable cases) of all sales, processing, and commissions, money for service provision arising in the tax period from the production and trading of goods and services, including bonuses, sales support, sales promotion, trade discount, discount payment or support in cash or non-cash; price subsidies, surcharges, extras, and additional fees are entitled to according to regulations; compensation for breach of contract and other compensations (only included in the revenue subject to PIT); other revenues that business households and individuals are entitled to, regardless of whether money has been collected or not.
– Tax rate on sales
• The tax rate calculated on turnover includes the VAT rate and the PIT rate applied in detail to each field and industry according to the guidance in Appendix I issued together with Circular 40/2021/TT-BTC.
• In case business households and individuals operate in many fields and lines of business, business households and individuals shall declare and calculate tax at the rate of tax calculated on turnover applicable to each field or industry. In case business households and individuals cannot determine the taxable turnover of each field or line or determine that it is not suitable with the reality of business, the tax authority shall determine the taxable revenue of each business line, the field in accordance with the law on tax administration.