General Department of Taxation: Business household is not household
According to provisions of the law on tax, any individual, households engaging in business activities also incur tax obligations. Source: Internet |
The draft circular on tax instruction and management for business households, drafting board has replaced subject for application and imposing tax as a business household instead of a household. Others have stated that, instead of calling all individuals, groups and business households ( it means that business households between members of the household), the Ministry of Finance may just build regulations on tax administration for business households in general.
Responding to this issue, the General Department of Taxation said the business household is not a household. The reason is, according to the regulations on business registration, it stipulates the concept of "a business household is registered for establishment by an individual or household members”.
However, according to provisions of the law on tax, any individual, households engaging in business activities also incur tax obligations (except for the income of households and individuals directly participating in activities of agricultural production, forestry, salt making, aquaculture and fishing that are unprocessed or just go through preliminary treatment and are not processed into other products), there is no distinguishing between implementing business registration as a business household or not.
In the current context, the business activities of individuals are not only a household model operating independently within a limited space at the place of residence but has developed in many different forms such as business cooperation with organisations, participating in sharing economic chains, operating digital, operating across borders or without a fixed business location.
The new draft circular stipulates the scope of application for "business households" and "business individuals" is appropriate to cover subjects engaging in business activities subject to tax.
Besides, for the legal tax adjustments to the business activities of persons, there are only two main taxes including value added tax and personal income tax. In terms of households, if it is not engaged in production and business activities, it can only be subject to tax on using non-agricultural land. Therefore, in the draft circular, the concept of a “business household” is not used because the scope of the circular only applies to business activities.
The General Department of Taxation stated that according to the regulation on import tax, there are 10 taxable incomes with different tax rates and calculation methods. In particular, only income earning from salaries and wages will be applied progressive taxation (tax rates from 5% - 35%), while other incomes are applied the full tax rate.
Business activities are subject to the whole income tax table specified for each sector, in which the service providing sector (including the provision of digital information content services) is subject to the value-added tax rate by 5% and personal income tax by 2% (the total of two taxes is 7%).
According to the General Department of Taxation, if comparing the tax rate of the business individual (7%) with the highest tax rate of an individual earning income from wages (35%) is not appropriate, because about 90% of individuals earning income from salary are only at level 1 and level 2 (5% -10%).
In addition, the whole income tax table for an individual's business should be similar to the tax rate of an enterprise with the same type of business, not comparable with income from wages to apply the progressive taxation. The General Department of Taxation affirmed this regulation is also consistent with international practice on individual income tax.
Related News
Regularly check tax obligations to avoid temporary exit suspension
09:47 | 21/11/2024 Regulations
Abolishing regulations on tax exemption for small-value imported goods must comply with international practices
13:54 | 15/11/2024 Regulations
Ensure harmony of interests of “3 parties” when applying 5% VAT on fertilizers
08:54 | 30/10/2024 Regulations
Businesses can choose a suitable electronic invoice model generated from the cash register
14:18 | 25/10/2024 Finance
Latest News
Monetary policy forecast unlikely to loosen further
15:51 | 22/11/2024 Finance
World Bank outlines path for Vietnam to reach high income status
13:44 | 22/11/2024 Finance
Strictly control public debt and ensure national financial security 2025
09:26 | 22/11/2024 Finance
Revising the title of a draft of 1 Law amending seven finance-related laws
14:33 | 21/11/2024 Finance
More News
Transparency evates the standing of listed companies
09:47 | 21/11/2024 Finance
State-owned securities company trails competitors
14:46 | 20/11/2024 Finance
Strengthening the financial “health” of state-owned enterprises
09:23 | 20/11/2024 Finance
U.S. Treasury continues to affirm Vietnam does not manipulate currency
13:46 | 19/11/2024 Finance
Exchange rate fluctuations bring huge profits to many banks
13:43 | 19/11/2024 Finance
A “picture” of bank profits in the first nine months of 2024
09:42 | 19/11/2024 Finance
Many challenges in restructuring public finance
10:02 | 18/11/2024 Finance
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs
09:19 | 17/11/2024 Finance
Disbursement of public investment must be accelerated: Deputy PM
19:32 | 16/11/2024 Finance
Your care
Monetary policy forecast unlikely to loosen further
15:51 | 22/11/2024 Finance
World Bank outlines path for Vietnam to reach high income status
13:44 | 22/11/2024 Finance
Strictly control public debt and ensure national financial security 2025
09:26 | 22/11/2024 Finance
Revising the title of a draft of 1 Law amending seven finance-related laws
14:33 | 21/11/2024 Finance
Transparency evates the standing of listed companies
09:47 | 21/11/2024 Finance