Nowadays, social networks are becoming more and more popular, so the buying and selling of goods on social networks is growing. Many people wonder whether they need to pay taxes to the state when doing business online or not? And what are the methods of pay online business tax? To answer the concerns of many readers, Viet My Law and Accounting Company will send readers the following article. Please read more.

1. What taxes do online businesses need to pay?

Online business is an online sales activity and this is also an activity of supplying goods, so according to the provisions of Appendix I of the List of industries calculating Value Added Tax, Personal Income Tax at a percentage rate on revenue for business households and business individuals issued with Circular 40/2021/TT-BTC, the tax rate applicable to this activity is: VAT rate is 1%, personal income tax rate is 0.5%

Thus, online business people are obliged to pay taxes to the state. There are 2 types of taxes to pay attention to: VAT and personal income tax if the revenue from online sales is over 100 million VND/year. In addition to VAT and personal income tax, when doing online business, you also have to pay a business license fee, specifically as follows:

Business license fee can be understood as a fee that individuals and organizations will pay periodically every year to the state. For individuals and groups of individuals doing business, this fee is calculated based on revenue.

The fee for the subject is as follows:

Note:

– Pay the annual business license fee if the newly established household, individual, or group of individuals engaged in production or business is granted tax registration, tax code, and enterprise code in the first 6 months of the year;

– Pay 50% of the annual business license fee for households, individuals, or groups of individuals engaged in production or business that are granted tax registration, tax code, and enterprise code in the last 6 months of the year;

– Pay the annual business license fee for households, individuals, or groups of individuals engaged in production or business but do not declare the business license fee

– Exemption from the business license fee for households, individuals, or groups of individuals engaged in production or business with annual revenue of less than 100 million VND.

– Personal Income Tax and Value Added Tax

According to regulations, individuals with income from business activities who are “individuals, groups of individuals and households engaged in production and business of goods and services in all fields and industries of production and business as prescribed by law” and “excluding business individuals with revenue of VND 100 million/year or less” must pay personal income tax (PIT) and value added tax (VAT).

The formula for determining Value Added Tax (VAT) and Personal Income Tax (PIT) according to regulations is as follows:

PIT payable = Revenue subject to PIT x PIT rate

VAT payable = Revenue subject to VAT x VAT rate

– Accordingly:

• Personal income tax revenue: Is the tax revenue of all sales and service provision arising during the tax period from business activities.
• VAT tax revenue: Is the revenue including tax of all sales, processing, commissions, and service provision during the tax period from production and business activities.

– In case individuals paying lump-sum tax use invoices from tax authorities, taxable revenue will be based on lump-sum revenue and revenue on invoices.

– In case the lump-sum tax revenue cannot be determined or is determined inconsistently with reality, the competent tax authority shall determine the lump-sum tax revenue.

– Tax rates are specified as follows:

2. What is the method of pay online business tax?

Currently, there are two common methods of declaring and paying personal income tax: the lump-sum method and the method of organizing tax declaration and payment on behalf of individuals.

The lump-sum method

In reality, most households and individuals doing business online pay taxes using this method. Based on the provisions of Clause 1, Article 7, Circular 40/2021/TT-BTC of the Ministry of Finance, the lump-sum method is applied to business households (HKD) and business individuals who do not pay taxes using the declaration method (PPKH) and are not subject to paying taxes on each occurrence.

Method of organizing tax declaration and payment on behalf of individuals

This method of organizing tax declaration and payment on behalf of individuals is often applied to cases of sales through e-commerce trading platforms such as TIKTOK shop, Shopee, Lazada, etc.

This issue is specifically regulated in Point d, Clause 1, Article 8, Circular 40/2021/TT-BTC, amended and supplemented by Clause 2, Article 1, Circular 100/2021/TT-BTC:

“Organizations including owners of e-commerce trading platforms shall declare and pay taxes on behalf of individuals on the basis of authorization according to the provisions of civil law”.

In this case, the organization that declares and pays taxes on behalf of individuals shall declare and pay taxes monthly or quarterly in compliance with the provisions of the law on tax administration.

3. What are the penalties for not pay online business tax?

Individuals and households doing online business who are subject to tax but evade paying taxes to the state may be subject to administrative penalties or criminal prosecution for this tax evasion. According to the provisions of Article 17 of Decree 125/2020/ND-CP of the Government on administrative sanctions for tax evasion as follows:

– A fine equal to one time the amount of tax that the person with the obligation to pay tax evades for taxpayers with one or more mitigating circumstances when committing one of the following violations:

• Failure to submit tax registration dossiers, failure to submit tax declaration dossiers or submitting tax declaration dossiers but submitting them after 90 days (from the deadline for submitting tax declaration dossiers or the deadline for submitting tax declaration dossiers).
• Failure to record revenues related to determining the amount of tax payable in accounting books; failure to declare or false declaration leading to a shortage of tax payable or an increase in the amount of tax refunded, exempted or reduced.
• Failure to issue invoices when selling goods or providing services (except in cases where taxpayers have declared tax amounts for the value of goods and services sold in the corresponding tax period; committing acts of Creating invoices for the sale of goods or provision of services with incorrect values ​​of goods or services or incorrect quantities, in order to declare taxes at a lower level than the actual amount and being discovered after the deadline for submitting tax declarations;
• Having acts of using illegal invoices or illegally using invoices to declare taxes, reducing the amount of tax payable or increasing the amount of tax refunded, exempted or reduced for taxpayers
• Having acts of using illegal documents or illegally using documents or using documents or materials that do not accurately reflect the nature of the transaction or the actual value of the transaction to incorrectly determine the amount of tax that the taxpayer must pay, the amount of tax exempted, reduced, or the amount of rent refunded; creating procedures and documents to destroy items and goods that are not true to reality, reducing the amount of tax payable or increasing the amount of tax refunded, exempted or reduced;
• Using goods that are not subject to tax, are exempt from tax, or are considered for tax exemption for purposes other than those prescribed without declaring the change of use purpose or declaring tax to the tax authority;
• Taxpayers conducting business activities during the period of requesting to suspend or temporarily suspend business activities but do not notify the tax authority, except for the case specified in Point b, Clause 4, Article 10 of Decree 125/2020/ND-CP

– A fine of 1.5 times the amount of money that the taxpayer evades for a taxpayer who commits one of the above acts without aggravating or mitigating circumstances.

– A fine of 2 times the amount of money that the taxpayer evades for a taxpayer who commits one of the acts listed above with one aggravating circumstance.

– A fine of 2.5 times the amount of money that the taxpayer evades for a taxpayer who commits one of the acts listed above with two aggravating circumstances.

– A fine of three times the amount of tax evaded shall be imposed on a taxpayer who commits one of the acts listed above with three or more aggravating circumstances.

– Remedial measures:

• Required to pay the full amount of tax evaded to the state budget for violations of the above provisions
• In case of tax evasion but the statute of limitations for penalties has expired, the taxpayer ((NNT) will not be penalized for tax evasion, however, the taxpayer must pay the state budget the full amount of tax evaded, late payment fees calculated on the amount of tax evaded within the prescribed time limit (this time limit is specified in Clause 6, Article 8 of Decree 125/2020/ND-CP)
• Required to adjust the loss amount, the amount of input VAT deductible on the tax records (if any) for the above acts

Tax evasion can be criminally prosecuted: According to Article 200 of the 2015 Penal Code, amended and supplemented in 2017, which stipulates the crime of tax evasion, the basis will be based on the amount of tax evaded by the taxpayer to determine whether or not to be criminally prosecuted immediately. There are cases where the amount of tax evaded by the taxpayer Taxes that have not reached the level of criminal prosecution but have been administratively sanctioned (VPHC) for tax evasion as prescribed are still subject to criminal prosecution.

We have sent readers an article on “How to pay online business tax?” If you have any questions about the article or have legal difficulties regarding taxes that need assistance, you can immediately contact VIET MY LAW AND ACCOUNTING for the fastest consultation.