What taxes and fees are required to be paid by household businesses in Vietnam? What is the time limit for payment of licensing fees in 2023 in Vietnam?

What is an household business?

Currently, there are no specific regulations on the concept of business households. Pursuant to Clause 1 Article 19 of the Decree 01/2021/NĐ-CP stipulating household business as follows:

Household business

1. A household business is established by an individual or family household members that shall take responsibility for business operations of the household business with all of their property. If a household business is established by members of a family household, one of them shall be authorized to act as the representative of the household business. The individual applying for registration of household business or the person authorized by the family household members to act as the representative of the household business shall be the owner of the household business.

As regulations above, a household business is established by an individual or family household members that shall take responsibility for business operations of the household business with all of their property.

A household business can be an individual applying for registration of household business or the person authorized by the family household members to act as the representative of the household business.

In addition, pursuant to Clause 2 Article 19 of the Decree 01/2021/NĐ-CP, households engaged in agriculture, forestry, aquaculture, salt production, street vendors, nomadic or seasonal businesspeople, and service providers earning low revenues are not required to apply for establishment of household businesses, except for conditional business lines. The provincial People’s Committees shall specify the low revenues applied within their provinces.

What taxes and fees are required to be paid by household businesses in Vietnam?

VAT and PIT

Pursuant to Clause 2 Article 4 of the Circular 40/2021/TT-BTC stipulating tax calculation rules as follows:

Tax calculation rules

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2. A household business or individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND shall not be required to pay VAT and PIT as prescribed by VAT and PIT laws. Household businesses and individual businesses shall declare tax truthfully and accurately; submit tax documents punctually; take legal responsibility for the accuracy, truthfulness and adequacy of the tax documents submitted.

As regulations above, a household business or individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND shall not be required to pay VAT and PIT as prescribed by VAT and PIT laws.

Household businesses and individual businesses shall declare tax truthfully and accurately; submit tax documents punctually; take legal responsibility for the accuracy, truthfulness and adequacy of the tax documents submitted.

Pursuant to Article 5 of the Circular 40/2021/TT-BTC stipulating method and basis for calculating tax payable by household businesses and individual businesses under periodic declarations as follows:

Periodic declarations shall be prepared by large-scale household businesses and individual businesses or other household businesses and individual businesses that choose to pay tax under periodic declarations.

Pursuant to Article 6 of the Circular 40/2021/TT-BTC stipulating method for calculating tax individual businesses under separate declarations as follows:

Individual businesses who have casual business operation and do not have fixed business locations shall pay tax separately.

Individual businesses paying tax under separate declarations include:

- Travelling traders;

- Individuals that are private construction contractors;

- Individuals transferring Vietnam’s top-level domains “.vn”;

- Individuals earning incomes from digital information products and/or services that do not choose to pay tax under periodic declarations.

Pursuant to Article 7 of the Circular 40/2021/TT-BTC (amended by Clause 1 Article 1 of the Circular 100/2021/TT-BTC) stipulating method and basis for calculating fixed tax payable by household businesses and individual businesses as follows:

Fixed tax shall be paid by household businesses and individual businesses other than those paying tax under periodic declarations and separate declarations prescribed in Article 5 and Article 6 of this Circular.

Pursuant to Article 8 of the Circular 40/2021/TT-BTC (amended by Clause 2 Article 1 of the Circular 100/2021/TT-BTC) stipulating tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals as follows:

Tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals

a) The organization leases property from the individual under a lease contract which prescribes that the lessee is the taxpayer;

b) The organization has business cooperation with the individual;

c) The organization pays bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash, compensations for breach of contract, other compensations for fixed tax payers;

d) The organization in Vietnam is a partner of an overseas digital platform provider (without permanent establishment in Vietnam) and pays the individual for digital information products and/or services under agreement with the overseas digital platform provider;

dd) Organizations including owners of e-commerce platforms declare and pay tax on behalf of individuals under authorization according to the regulations of civil laws;

e) Individuals declare and pay tax on behalf of others who are taxpayers under authorization according to regulations of civil laws.

Licensing fees

Pursuant to Clause 2 Article 4 of the Decree 139/2016/NĐ-CP and Clause 3 Article 1 of the Circular 65/2020/TT-BTC stipulating as follows:

The rate of licensing fees for the individuals and households having the production and business of goods and services is as follows:

- The individuals, groups of individuals and households with revenues over 500 million dong/year: 1,000,000 dong/year;

- The individuals, groups of individuals and households with revenues between 300 and 500 million dong/year: 500,000 dong/year;

- The individuals, groups of individuals and households with revenues between 100 and 300 million dong/year: 300,000 dong/year;

The turnover serving as the basis for determining license tax rates applicable to individuals, groups of individuals, households and business locations newly launched by households is as follows:

- The turnover serving as the basis for determining license tax rates applicable to individuals, groups of individuals and households (except for individuals leasing out property) is the total assessable turnover in the preceding year of the production/business activities (excluding property leasing activities) of business locations according to the Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Minister of Finance.

For individuals, groups of individuals and households that have dissolved or suspended their production/business, then resume their business and fail to determine the turnover of the preceding year, the turnover serving as the basis for determining license tax rates is the turnover of the taxable year of the business establishment of the same scale and business line in the same area as prescribed in the Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Minister of Finance.

- The turnover serving as a basis for determining license tax rates applicable to individuals leasing out property is the total assessable turnover under the property lease contracts in the taxable year. If an individual has concluded multiple contracts to lease out property in one location, the turnover serving as the basis for determining license tax rates applicable such location is the total turnover obtained from the property lease contracts in the taxable year. If the individual leases his/her property in multiple locations, the turnover serving as a basis for determining license tax rates applicable to each location is total turnover obtained from property lease contracts of locations in the taxable year, including the case where multiple property lease contracts are concluded in one location.

If a property lease contract lasts for multiple years, license tax shall be paid annually corresponding to number of years in which an individual, group of individuals or household declares and pays value added tax or person income tax. If the individual, group of individuals or household declares, pays and makes lump-sum payment of value-added tax or personal income tax under the property lease contract which lasts for multiple years, such individual, group of individuals or household shall pay the license tax for one year.

- The individuals, groups of individuals, households, business and production locations (that are not entitled to license tax exemption) that commence their production/business for the first 6 months of the year shall pay license tax for the whole year, or pay 50% of the license tax payable for the whole year if commencing their production/business in the last 6 months of the year.

What is the time limit for payment of licensing fees in 2023 in Vietnam?

Time limit for payment of licensing fees

Pursuant to Clause 1 Article 10 of the Decree 126/2020/NĐ-CP stipulating the time limit for payment of licensing fees in Vietnam as follows:

- New businesses (except household businesses and individual businesses), including medium and small enterprises converted from household businesses) and existing businesses that establish new dependent units or business location shall submit the licensing fee declaration by January 30 of the year preceding the establishment or inauguration year.

In case capital in changed during the year, the licensing fee payer shall submit the declaration by January 30 of the year succeeding the year in which the change occurs.

- Household businesses and individual businesses are not required to submit licensing fee declarations. Tax authorities shall determine the licensing fees payable according to their tax declaration dossiers and tax administration database and inform them in accordance with Article 14 of this Decree.

Time limit for payment of licensing fees in 2023 in Vietnam

Pursuant to Clause 9 Article 18 of the Decree 126/2020/NĐ-CP stipulating the time limit for payment of licensing fees in 2023 in Vietnam as follows:

Deadlines for payment of tax-related amounts, fees for grant of right to extraction of water resources and minerals, fees for grant of sea area usage, registration fees and licensing fees

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9. licensing fee:

a) Licensing fee shall be paid annually by the 30^th of January.

b) For medium and small enterprises converted from household businesses (including their dependent units and business locations), upon expiration of the licensing fee exemption period (3 years from the establishment date):

b.1) If the expiration date is in the first 6 months of the year, licensing fee shall be paid by the 30^th of July of the same year.

b.2) If the expiration date is in the last 6 months of the year, licensing fee shall be paid by the 30^th of January of the succeeding year.

c) Household businesses and individual businesses that shut down and subsequently resume their business operation shall pay licensing fee as follows:

c.1) If the resumption date is in the first 6 months of the year, licensing fee shall be paid by the 30^th of July of the same year.

c.2) If the resumption date is in the last 6 months of the year, licensing fee shall be paid by the 30^th of January of the succeeding year.

Time limit for payment of licensing fees in 2023 in Vietnam is 30/01/2023.

Best regards!