According to the official dispatch summarizing feedback and explanations regarding the National Assembly’s opinions on the draft Law on Personal Income Tax (amended), recently submitted by the Ministry of Finance to the Government, the ministry proposes exempting individuals conducting business via social media with an annual revenue of up to 500 million VND from personal income tax.
For individuals with annual revenue exceeding 500 million VND, the tax payable will be calculated based on revenue minus expenses (profit) multiplied by a specific tax rate.
Specifically, individuals with annual revenue between 500 million VND and 3 billion VND will be subject to a 15% tax rate; those with revenue between 3 billion VND and 50 billion VND will face a 17% tax rate; and individuals with revenue exceeding 50 billion VND will be taxed at 20%.
Individuals with annual revenue exceeding 500 million VND will calculate their tax based on revenue minus expenses (profit) multiplied by a specific tax rate.
Notably, if individuals with annual revenue between 500 million VND and 3 billion VND cannot determine their deductible expenses to calculate profit and apply the 15% tax rate, they will pay personal income tax based on the revenue exceeding 500 million VND, multiplied by a tax rate of 0.5%, 1.5%, 2%, or 5%, depending on the industry.
For example, an individual distributing goods with an annual revenue of 510 million VND will only pay personal income tax on the 10 million VND exceeding 500 million VND, at a tax rate of 0.5%.
According to the Ministry of Finance, with the proposed adjustments to personal income tax, all business individuals will pay tax based on their actual income. Those with lower income will pay less tax, and those with no income will not pay any tax.
The 500 million VND annual revenue threshold for tax exemption will no longer significantly impact individual businesses.
Only individuals with annual revenue between 500 million VND and 3 billion VND who cannot determine their expenses will pay tax based on the revenue exceeding 500 million VND.
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