E-commerce activities mean conducting part or the whole process of commercial activities by electronic means connected to the internet, mobile telecommunications networks or other open networks. Currently popular is selling activities on e-commerce exchanges Tiki, Lazada, Shoppee … and social networking sites Zalo, Facebook … or providing digital information content products and services such as writing applications for Appstore (iOS operating system), CH Play (Android operating system), Youtube, Google…
Individuals conducting e-commerce business as business individuals must perform the obligations to register, declare and pay tax as follows:
Legal grounds:
– Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019 of the National Assembly providing for the Law on Tax Administration;
– Decree No. 139/2016/ND-CP dated October 4, 2016 of the Government amended and supplemented according to Decree No. 22/2020/ND-CP dated February 24, 2020 of the Government guiding license fees;
– Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government regulating invoices and documents;
– Decree No. 126/2020/ND-CP dated October 19, 2020 of the Government detailing a number of articles of the Law on Tax Administration;
– Circular No. 302/2016/TT-BTC dated November 15, 2016 of the Ministry of Finance amended and supplemented according to Circular No. 65/2020/TT-BTC dated July 9, 2020 of the Ministry of Finance guiding license fees;
– Circular 105/2020/TT-BTC dated December 3, 2020 of the Ministry of Finance guiding on tax registration;
– Circular No. 40/2021/TT-BTC dated June 1, 2021 of the Ministry of Finance guiding value-added tax, personal income tax and tax administration for business households and business individuals;
– Circular No. 78/2021/TT-BTC dated September 17, 2021 of the Ministry of Finance guiding the implementation of a number of articles of the Law on Tax Administration and Decree No. 123/2020/ND-CP regulating invoices, document.
– Circular No. 88/2021/TT-BTC dated October 11, 2021 of the Ministry of Finance guiding the accounting regime of business households and business individuals.
- Tax registration:
Business households and business individuals engaged in production, business and provision of goods and services are subject to tax registration and issuance of tax codes for tax declaration and payment.
Tax registration deadline: The deadline for tax registration is the same as the deadline for submitting the first tax declaration dossier. In case a business household registration certificate is granted by the business registration authority (but has not yet been granted a tax code), the business household must register for tax directly with the tax authority within 10 (ten) working days from the date stated on the Certificate of business household registration.
Tax registration dossier:
– Tax registration declaration form No. 03-DK-TCT (issued together with Circular No. 105/2020/TT-BTC dated December 3, 2020 of the Ministry of Finance);
– List of dependent shops and stores, form No. 03-DK-TCT-BK01 issued together with Circular No. 105/2020/TT-BTC (if any).
– A copy of the business household registration certificate (if any);
– A copy of the citizen ID card or a copy of the national ID card that is still valid for individuals who are Vietnamese nationals; a copy of the valid Passport for individuals who are foreign nationals or individuals who are Vietnamese nationals living abroad.
Tax registration dossier submission location:
– Business households shall register their business at the People’s Committees of districts in order to be granted a Tax Code concurrently with the Certificate of Business Household Registration.
– Business households not subject to business registration submit tax registration documents directly at the “one-stop” service counter of the District Tax Department, or send them by post or register through the eTax electronic tax transaction portal.
- Payment of License Fees (LF):
– Business households are obliged to pay LF, except for cases where LF are exempt, including: Business households with revenue of 100 million VND/year or less; Business households are not regular and do not have a fixed business location; New business households starting business for the first time are exempted from LF in the first year of operation.
– LF are as follows:
+ Revenue over 500 million VND/year: 1,000,000 VND/year.
+ Revenue over 300 to 500 million VND/year: 500,000 VND/year.
+ Revenue over 100 to 300 million VND/year: 300,000 VND/year.
– Deadline for submission of LF: January 30 every year at the latest.
- Tax bases:
Business households with revenue from production and business activities in the calendar year of 100 million VND or more are subject to VAT and PIT.
The tax base is the taxable revenue and the tax rate calculated on the revenue.
3.1. Taxable revenue:
Revenue subject to VAT and PIT for a business household is the tax-inclusive revenue (in the case of taxable) of all sales, processing fees, commissions, and service provision fees arising in the tax period from the production and trading of goods and services, including bonuses, sales support, sales promotion, trade discount, payment discount, whether in monetary form or not; price subsidies, surcharges, extras, and additional fees entitled to according to regulations; compensation for breach of contract and other compensations (only included in the revenue subject to PIT); other revenue that business households enjoy, regardless of whether money has been collected or not.
3.2. Tax rate on revenue:
The tax rate calculated on revenue includes the VAT rate and the PIT rate applicable to each business field according to the guidance in Appendix I issued with Circular No. 40/2021/TT-BTC, in which:
– Sales of goods: VAT 1%, PIT 0.5%.
– Digital information content service: VAT 5%, PIT 2%.
3.3. Determining the amount of tax payable:
Amount of VAT payable = Revenue subject to VAT x VAT rate
Amount of PIT payable = Revenue subject to PIT x PIT rate.
- Tax calculation method:
– Business households that conduct sales of goods on electronic exchanges and social networking sites may choose to declare and pay tax according to the contracting method or the declaration method.
– Business households earning income from providing digital information content products and services may choose to declare and pay tax according to each time it is incurred or the declaration method.
4.1. Declaration method:
– Business households paying tax according to the declaration method (Declaring households) include: Large-scale business households and business households that have not yet met the requirements of large-scale but choose to pay tax according to the declaration method. A large-scale business household is a household that meets at least 1 of the 2 criteria in terms of number of employees or total revenue as follows:
| Field | Average number of employees participating in social insurance per year | Total revenue of the preceding year |
| · Agriculture, forestry, fishery and industrial and construction fields | from 10 people or more | from 3 billion VND or more |
| · Trade, Services | from 10 people or more | from 10 billion VND or more |
– Declaring households must comply with the accounting regime according to Circular No. 88/2021/TT-BTC, apply invoices and documents according to Decree No. 123/2020/ND-CP, Circular No. 78/2021/TT-BTC and do not have to make tax finalization.
– Declaring households shall declare tax on a monthly or quarterly basis according to the provisions of Article 9 of Decree No. 126/2020/ND-CP.
Tax declaration dossier: Tax return (form No. 01/CNKD) and List of business activities (form No. 01-2/BK-HDKD) issued together with Circular No. 40/2021/TT-BTC.
Deadline for submitting tax declaration dossier:
– For monthly declaration: no later than the 20th day of the month following the month in which the tax liability arises.
– For quarterly declaration: no later than the last day of the first month of the next quarter adjacent to the quarter in which the tax liability arises.
Deadline for paying tax: no later than the last day of the deadline for submitting tax declaration dossier.
4.2. Method of each time tax is incurred:
– Individuals who pay tax on each occasion are individuals who do business infrequently and do not have a fixed location, are not required to comply with the accounting regime, but must keep invoices, vouchers, contracts, documents proving that the goods and services are legal and present them with the tax declaration dossier each time it is incurred.
– Individuals who pay tax each time it is incurred shall declare tax when there is a taxable revenue.
Tax declaration dossier:
– Declaration form No. 01/CNKD (issued together with Circular 40/2021/TT-BTC).
– Attached documents (copy): Economic contract; Minutes of acceptance and liquidation; Documents proving the origin of goods such as: List of agricultural products purchase and sale / List of goods purchased, sold and exchanged by border residents / Invoice of the seller if the goods are imported or purchased from organizations and individuals doing business in the country / Related documents to prove that the goods are self-produced by the individual.
Deadline for submitting tax declaration dossier: the 10th day at the latest from the date of arising tax obligations.
Deadline for paying tax: no later than the last day of the deadline for submitting tax declaration dossier.
4.3. Flat method:
– Business households that pay tax by the flat method (Flat household) are not required to comply with the accounting regime, invoice and voucher.
– Flat households that declare flat tax once a year and declare and pay separate tax on revenue, and request the tax authority to issue an invoice each time it is incurred.
Tax declaration dossier: Tax return (form No. 01/CNKD) issued together with Circular 40/2021/TT-BTC.
Deadline for submitting tax declaration dossier: the 10th day at the latest from the date of business start.
Deadline for paying flat tax: is the deadline stated on the notice of payment of tax authorities.
- Electronic transaction method:
Business households can register and declare tax by means of electronic transactions with tax authorities and business registration agencies as follows:
5.1. Electronic transactions with tax authorities:
Business households that do not have an electronic transaction account with the tax authority need to register an account in 1 of 2 ways:
– Option 1: register through the National Public Service Portal (https://dichvucong.gov.vn)
– Option 2: register via the Electronic Tax System (https://canhan.gdt.gov.vn) or via eTax Mobile, HCM Tax applications.
Business households make electronic tax declarations as follows: log in to the electronic tax system https://canhan.gdt.gov.vn and go to the tax declaration and business tax declaration section and select declaration 01/CNKD – tax declaration for business individuals (TT40/2021).
5.2. Electronic transactions with business registration agencies:
Business households access the electronic portals of districts and perform online transactions with a number of administrative procedures such as: registration of establishment of business households; re-issue the business registration certificate; suspend business household activities; registration of changes to business registration contents; terminate the business.
- Tax payment:
Pay tax at commercial banks such as Vietinbank, Vietcombank, BIDV, MB Bank, Agribank or pay tax electronically on the ETax Mobile, HCM Tax application through the link with the bank’s payment application.
Account number: 7111…… – Collection agency of District Tax Department…. opened at the District State Treasury…. Economic content: VAT (1701), PIT (1003).
After paying into the state budget, the individual receives a tax payment receipt, which is a money payment receipt certified by the bank, as a basis for determining that the individual has fulfilled the tax payment obligation.
- Some notes on sanctioning administrative violations:
– Business households that register for tax and submit tax declaration dossiers late will be sanctioned for administrative violations of taxes and invoices in accordance with the Government’s Decree No. 125/2020/ND-CP dated October 19, 2020 (effective from December 5, 2020).
– Business households that pay tax later than the prescribed deadline must pay late tax payment interest at the rate of 0.03%/day calculated on the late payment tax amount as prescribed in the Law on Tax Administration No. 38/2019/QH14.
– Business households that conduct business activities but fail to register, declare and pay taxes in accordance with regulations, leading to acts of tax evasion with an amount of 100 million VND or more or individuals who commit acts of tax evasion with an amount of less than 100 million VND but have been administratively sanctioned for tax evasion will be examined for penal liability according to the provisions of Criminal Law No. 12/2017/QH14 dated June 20, 2017 amending and supplementing a number of articles of the Criminal Code No. 100/2015/QH13 dated November 27, 2015 and administratively sanctioned for tax evasion and tax fraud under Clause 2, Article 138 of the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019.
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