Detailed description of 3 tax administration models for business households and individuals based on revenue after the elimination of the presumptive tax regime

by KMC Consulting Company Limited

Criteria

Group 1 (Revenue ≤ VND 200 million)

Group 2 (VND 200 million < Revenue ≤ VND 3 billion)

Group 3 (Revenue > VND 3 billion)

1. Value-Added Tax (VAT)

Exempt from VAT liability
  • Subject to the direct method based on a percentage of revenue.

→ VAT payable = Revenue × Percentage rate.

  • Voluntarily register to apply the credit method if eligible

  • Mandatory application of the credit method.

    → VAT payable = Output VAT - Deductible input VAT

2. Personal Income Tax (PIT)

Exempt from PIT liability

  • Calculated based on a fixed percentage of revenue by business line.

    → PIT payable = Revenue × Percentage rate

  • Calculated based on taxable income x17%.

    → PIT payable = Revenue - Allowable expenses

3. Evenue Declaration Obligations

Declare twice a year (at the beginning/mid-year and year-end) to determine tax obligations

Declare quarterly (4 times per year) + finalize annually

Declare monthly (if revenue > VND 50 billion) or quarterly, with annual finalization

4. Invoice

Encouraged to use e-invoices with tax authority’s code for consumer transactions

Mandatory use of e-invoices with tax authority’s code; if revenue > VND 1 billion and and selling directly to consumers, must use e-invoices generated from cash registers.

Mandatory use of e-invoices with tax authority’s code or cash-register-based e-invoices

5. Accounting Books

Simple bookkeeping (supported by free simplified accounting software)

Simplified accounting records with free software support

Must comply with the accounting regime applicable to micro or small enterprises

6. Bank Account

Not mandatory

Required to open a separate business bank account

Required to open a separate business bank account

7. Transition Between Tax Calculation Methods

Not applicable
  • If revenue exceeds VND 3 billion for two consecutive years

→ reclassified into Group 3 tax calculation starting from the following year

Apply the same as enterprises. Input VAT is deductible from the first period.

8. Business via E-commerce Platforms

If the platform has a payment function:

  • The platform withholds, declares, and remits VAT and PIT on behalf of the taxpayer based on a percentage of revenue.
  • If annual revenue < VND 200 million, overpaid tax is refundable.

If the platform has no payment function:

  • The individual must self-declare and pay tax per transaction, monthly or quarterly.

If the platform has a payment function:

  • The platform withholds, declares, and remits VAT and PIT on behalf of the taxpayer based on a percentage of revenue.
  • If annual revenue < VND 200 million, overpaid tax is refundable.

If the platform has no payment function:

  • The individual must self-declare and pay tax per transaction, monthly or quarterly.

If the platform has a payment function:

  • The platform withholds, declares, and remits VAT and PIT on behalf of the taxpayer based on a percentage of revenue.
  • If annual revenue < VND 200 million, overpaid tax is refundable.

If the platform has no payment function:

  • The individual must self-declare and pay tax per transaction, monthly or quarterly.

9. Government Support

  • Free accounting software

  • Support in using e-invoices

  • Legal and tax consultation

  • Free accounting software

  • Support in using e-invoices

  • Legal and tax consultation
  • Free accounting software
  • Support in using e-invoices
  • Legal and tax consultation
  • Encouraged to convert into enterprises to enjoy incentives under Resolutions No. 68 and 198

For more detailed information about this or related Tax Advisory, please don't hesitate to contact us.
Website: https://kmc.vn/
Hotline: +84 81 489 4789 or +84 91 988 9331
Email: info@kmc.vn