On the Ministry of Finance's Electronic Information Portal, Ms. M. Lien sent a question:
"I am planning to sell goods under the form of business households, paying taxes under the contract or declaration method. The products include seafood (shrimp paste, fish paste) and aquatic veterinary drugs, sold by wholesale and retail. According to Circular 219/2010, these are items not subject to VAT. However, Circular 40/2021 stipulates that the group of "Distribution and supply of goods" has different tax rates. So what taxes will my business household have to pay and how much tax rate if the expected revenue is 17 million VND/month?"
This is a question sent through the Ministry of Finance's Information Portal and answered by the Tay Khanh Hoa Inter-district Tax Team (Khanh Hoa Tax Department).
Pursuant to Clause 2, Article 1 of Circular 26/2015/TT-BTC: Goods are animal feed (shrimp paste, fish paste) that are not subject to VAT.
Clause 11, Article 10 of Circular 219/2013/TT-BTC (amended and supplemented in Circular 43/2021/TT-BTC): Goods are veterinary and aquatic drugs subject to 5% VAT.
Appendix I issued with Circular 40/2021/TT-BTC: Group of distribution and supply of goods applies:
VAT rate: 1% (for goods subject to VAT).
personal income tax rate: 0.5% (for all revenue from distribution and supply of goods).
According to the instructions, taxable revenue is all sales, processing, commissions and revenues that business households are entitled to (excluding taxes).
The formula for determination:
VAT = Revenue for VAT x 1%.
personal income tax = Revenue subject to personal income tax x 0.5%.
Specific cases:
For households selling seafood (shrimp paste, fish paste) and veterinary medicines:
Seafood:
Not subject to VAT - No VAT payment required.
Only 0.5% of personal income tax must be paid on revenue.
Veterinary and aquatic drugs:
Subject to 5% VAT - Submit 1% VAT on revenue.
At the same time, pay personal income tax of 0.5% on revenue.
For example: With a revenue of 17 million VND/month, the tax payable is as follows:
personal income tax: 17,000,000 x 0.5% = 85,000 VND/month.
VAT (if there is a sale of veterinary drugs): 17,000,000 x 1% = 170,000 VND/month.
In short, according to the instructions of the tax authority, households selling shrimp and fish khams only have to pay 0.5% personal income tax, while businesses selling veterinary and aquatic drugs must pay an additional 1% VAT on revenue, applied according to the provisions of Circular 40/2021/TT-BTC.
