New proposal for calculating personal income tax.

Illustrative image.

The new method for calculating personal income tax is detailed in the Draft Decree on the declaration, calculation, deduction, payment, and use of electronic invoices for household businesses and individual businesses (version 2).

Article 4 of the draft proposes a method for calculating personal income tax based on annual revenue milestones. Specifically, it is as follows:

Households and individual businesses with annual revenue up to 500 million VND are not required to pay personal income tax.

Households and individual businesses with annual revenue exceeding 500 million VND are subject to personal income tax calculation using the following method:

For household businesses and individual businesses with annual revenue exceeding the level specified in Clause 1 of this Article, the taxable income is determined by multiplying the taxable income by the tax rate.

In there:

Taxable income is determined by the revenue from the sale of goods and services minus (-) expenses related to production and business activities during the tax period;

Household businesses and individual businesses with annual revenue exceeding the level specified in Clause 1 of this Article up to 3 billion VND: tax rate 15%;

Household businesses and individual businesses with annual revenue ranging from over 3 billion VND to 50 billion VND: tax rate 17%;

Household businesses and individual businesses with annual revenue exceeding 50 billion VND: tax rate 20%.

Income from renting real estate as stipulated in Clause 4 of this Article is not subject to the tax calculation method prescribed in this Clause.

Households and individual businesses with annual revenue between 500 million and 3 billion VND can choose their tax calculation method.

Household businesses and individual businesses with annual revenue exceeding the level specified in Clause 1 of this Article up to 3 billion VND may choose to pay tax according to the provisions of points a and b of Clause 2 of this Article or pay tax at the tax rate multiplied by the taxable revenue.

Taxable revenue and tax rates are determined as follows:

- Taxable revenue is determined by the portion of revenue exceeding the level stipulated in Clause 1 of this Article.

In cases where a household or individual has multiple business locations and multiple business activities, the household or individual is allowed to deduct 500 million VND from the previous year's revenue when calculating personal income tax for the business location or business activity of the household or individual's choosing, but the total deduction cannot exceed 500 million VND for all business activities of the household or individual.

- Distribution and supply of goods: tax rate 0.5%;

- Services and construction without material procurement: tax rate 2%.

For specific activities such as property leasing, insurance agency, lottery agency, and multi-level marketing agency: the tax rate is 5%.

- Production, transportation, services related to goods, and construction with material procurement included: tax rate 1.5%;

- Activities providing digital content products and services related to entertainment, video games, digital films, digital photos, digital music, and digital advertising: tax rate 5%;

- Other business activities: tax rate 1%.

Tax calculation method for households and individuals renting out real estate.

Households and individuals who rent out real estate, excluding accommodation business activities, pay personal income tax determined by multiplying the portion of revenue exceeding the level stipulated in Clause 1 of this Article by the tax rate of 5%.

Time period for applying the tax calculation method

The tax calculation method stipulated in Clauses 2 and 3 of this Article shall be applied consistently for a period of 02 (two) consecutive years from the first year of application.

In the case of household businesses and individual businesses with annual revenue ranging from 500 million to 3 billion VND, the method of calculating personal income tax based on a percentage of revenue is applied as stipulated in Clause 3 of this Article.

This applies if, for two consecutive years, the business household or individual business owner self-determines or the tax authority has data confirming that their actual revenue exceeds 3 billion VND. From the following year onwards, they must switch to the method of calculating personal income tax based on taxable income as stipulated in Clause 2 of this Article.

Source: https://vtv.vn/de-xuat-moi-cach-tinh-thue-thu-nhap-ca-nhan-100251216150328722.htm