Proposal for business households to be taxed on stable revenue for 2 years
The Ministry of Finance is seeking opinions on the draft Decree regulating the declaration, calculation of taxes, tax deduction, tax payment, and use of electronic invoices by business households and individuals (2nd time).
Accordingly, Article 4 of the draft Decree stipulates personal income tax for business households and individuals as follows:
(1) Business households and individuals with production and business activities with annual revenue of VND500 million or less are not required to pay personal income tax.
(2) Personal income tax on business income of business households and individuals with annual revenue of over VND 500 million is determined by taxable income (x) with tax rate. In which:
- Taxable income is determined by the revenue of goods and services sold tru (-) expenses related to production and business activities during the tax calculation period;
- Business households and individuals with annual revenue of over VND 500 million to VND 03 billion: tax rate of 15%;
- Business households and individuals with annual revenue of over 03 billion VND to 50 billion VND: tax rate of 17%;
- Business households and individuals with annual revenue of over VND 50 billion: tax rate of 20%.
Income from real estate lease as prescribed in Clause (4) does not apply the tax calculation method prescribed in this Clause.
(3) Business households and individuals with annual revenue of over VND500 million to VND03 billion can choose to pay taxes according to the provisions of Point (i) and Point (ii), Clause (2) or pay taxes at tax rate multiplied by (x) on taxable revenue. Tax and tax rate revenue is determined as follows:
- Taxable revenue is determined by the revenue exceeding the level prescribed in Clause (1)
In case the household or individual has many business locations and many business lines, the household or individual will be deducted VND 500 million from the previous year's revenue when calculating personal income tax of the business location or business line chosen by the household or individual, but the total deduction is not more than VND 500 million for all business activities of the household or individual.
- Distribution and supply of goods: tax rate of 0.5%;
- Services and construction not including bidding for raw materials: tax rate of 2%. In particular, property leasing activities, insurance agents, lottery agents, and multi-level sales agents: tax rate of 5%;
- Production, transportation, services associated with goods, construction with raw material packages: tax rate of 1.5%;
- Activities of providing digital information content products and services on entertainment, electronic games, digital movies, digital photos, digital music, digital advertising: tax rate of 5%;
- Other business activities: tax rate 1%.
(4) Households and individuals leasing real estate, except for accommodation business activities, paying personal income tax is determined by revenue of over 500 million VND (x) with a tax rate of 5%.
(5) The tax calculation method prescribed in Clause (2), Clause (3) shall be applied stably for 02 (two) consecutive years from the first year of application.
In case a business household or individual has an annual revenue of over VND 500 million to VND 03 billion and is applying the method of calculating personal income tax at the rate of the revenue as prescribed in Clause (3) if for two consecutive years the tax authority has data to determine that the business household or individual has an actual revenue of over VND 3 billion, from the following year it must switch to the method of calculating personal income tax on income for tax calculation as prescribed in Clause (2)).
Thus, according to the above proposal, business households with a revenue of over VND 500 million are taxed on stable revenue for 2 years.
Revenue is the basis for determining taxes for business households
According to the draft, revenue used as a basis for tax determination for business households is stipulated in Article 5 of the draft Decree as follows:
- Revenue is the total sales fee, processing fee, service provision fee including subsidies, allowances, and advances that business households and individuals are entitled to, regardless of whether they have collected or not, and excluding value added tax.
- Taxable revenue for property leasing activities is the amount of money that the lessee pays each period according to the lease contract. In case the lessee pays the rent in advance for many years, the revenue to calculate taxable income shall be determined according to the one-time payment revenue.
