New points in Circular 40/2021/TT-BTC/2021 / TT-BTC on taxation with households business and individuals

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On June 1, 2021, the Ministry of Finance issued Circular 40/2021//TT-BTC (“Circular 40”) guiding value-added tax (“VAT”), personal income tax (“PIT”) and tax administration for households business and individuals.

Compared with the previous regulations, Circular 40 has the following new points:

1. Supplementing many incomes subject to VAT and PIT:

Circular 40 supplements a number of incomes subject to VAT and PIT as follows:

- Bonuses, support for reaching sales, promotions, commercial discounts, payment discounts, money support expenditures or not in cash for households (VAT 1% and PIT 0.5%);

- Compensation for breach of contract, other compensation (PIT 0.5%);

- Advertising on digital information content products and services (VAT 5% and PIT 2%).

2. Adding tax calculation methods for households business and individuals

Circular 40 has specified that households business and individuals can pay tax in 2 methods: declaration for large-scale households business and individuals and monthly declaration. Pay taxes on a one-time basis for individuals doing business in an infrequent and without a fixed business location.

In addition, households business and individuals that do not belong to the case of paying tax according to the above 2 methods will pay tax by the securities method or be selected to pay tax according to the method of declaration made quarterly.

3. Supplementing subjects responsible for tax declaration and payment on behalf of individuals

Circular 40 supplements subjects responsible for tax declaration and payment on behalf of individuals as follows:

- Organization signing business cooperate contract with individuals;

- Organization paying bonuses, promotions, discounts and compensations;

- Organization situated in Vietnam which is a partner of overseas digital platform suppliers (does not have a permanent establishment in Vietnam);

- Organization who is the owner of the e-commerce exchange shall declare and pay tax on behalf of the individual according to the schedule of the tax authority.

4. To add business individuals to pay taxes on a case-by-case rate

Circular 40 adds tax payable subjects on a case-by-case rate who are individuals earning income from digital information content products and services if they do not choose to pay tax according to the declaration method.

This Circular takes effect from August 1, 2021.



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