Tax policy for business individuals
Individual businesses and households can only register their business at a certain location, employ no more than 10 workers, and must pay taxes and fees according to regulations. If they regularly employ 10 or more workers, they must convert to an enterprise form.
Taxes and fees payable
According to the provisions of the Law on Tax Administration, business individuals (CNKD) must register for tax at the tax office where the CNKD is headquartered, within 10 working days from the date of being granted the Certificate of Business Registration, or register for tax at the same time as the deadline for submitting the first tax declaration for CNKD that is not required to register for business.
According to current regulations, businesses with annual revenue of VND100 million or less do not have to pay value added tax (VAT) and personal income tax (PIT). Businesses with annual revenue of VND100 million or more must pay: Business license fee, VAT, PIT, special consumption tax (SCT), resource tax (if any), environmental protection tax (EPT) (if any), and environmental protection fee for mineral exploitation activities (if any).
The specific business license fee is as follows: annual revenue from 100 million VND or less is exempt from business license fee, from 100 - 300 million VND/year the business license fee is 300 thousand VND, from 300 - 500 million VND/year is 500 thousand VND, from over 500 million VND/year is 1 million VND.
How to determine tax by lump sum method
In case the business pays tax by lump sum method, the calculation of VAT and personal income tax is as follows: VAT payable = VAT taxable revenue x VAT rate (%); PIT payable = PIT taxable revenue x PIT rate (%)
Taxable revenue is the total sales, processing fees, commissions, and service provision fees arising during the tax period, including both lump-sum revenue and revenue on invoices (for businesses using invoices from tax authorities).
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Based on the self-declared contract revenue; the contract revenue of the year immediately preceding the tax year; information in the separate database of each locality; forecast of economic growth and price index... The Tax Department coordinates with the Tax Advisory Council of communes, wards and towns to approve the stable contract revenue, send it to the business and make it public according to regulations.
The percentages of VAT and personal income tax calculated on revenue for businesses distributing and supplying goods are 1% and 0.5%, respectively; for services and construction without contracted materials, they are 5% and 2%; for production, transportation, services associated with goods, and construction with contracted materials, they are 3% and 1.5%; for other business activities, they are 2% and 1%.
How to declare and pay lump-sum tax?
Enterprises paying lump-sum tax shall declare lump-sum tax once a year according to Form 01/CNKD at the tax office where the enterprise has its business location no later than December 15 of the previous year. In case the enterprise paying lump-sum tax has just started doing business, or changed its business line or scale during the year, it shall submit the tax declaration no later than 10 days from the date of starting business or changing its business line or scale.
Businesses paying lump-sum tax using invoices from tax authorities, in addition to declaring lump-sum revenue, must self-declare and pay tax on revenue on invoices in the Invoice Usage Report according to form 01/BC-SDHĐ-CNKD (Circular 92/2015/TT-BTC) quarterly, no later than the 30th day of the quarter following the quarter in which the tax liability arises.
Regarding the deadline, the business entity must pay the quarterly lump sum tax no later than the last day of the quarter. For business entities using invoices from the tax authority, the deadline for paying tax on the revenue on the invoice is the 30th day of the quarter following the quarter in which the tax liability arises.
The basis for tax calculation is determined as follows: VAT payable = VAT taxable revenue x VAT rate (%); PIT payable = PIT taxable revenue x PIT rate (%).
Taxable revenue is the tax-inclusive revenue (in case of taxable cases) of all sales, processing fees, commissions, and service provision fees determined according to sales, processing, commission, and service contracts, including subsidies, surcharges, and extras; compensations and penalties for breach of contract (for revenue subject to personal income tax) that the business enterprise is entitled to regardless of whether the money has been collected or not.
The percentage of VAT and personal income tax calculated on revenue is the same as the lump-sum tax rate mentioned above.
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