Online sales have become a popular business trend chosen by many people because they bring high profits, many benefits and conveniences for business people. Accordingly, many shops have the question “how to pay online business tax?”. Especially for shops with high monthly revenue, they have more questions about declaring online business taxes. This question will be answered in the following article of Vietnam-US Law and Accounting.

1. How is online business understood?

Online business is a very popular sales method in recent times for many women, mothers, students… Online sales will be done relatively easily on social networking sites such as: Facebook, Instagram,… in which sellers do not need to invest too much capital and human resources.

Online sales is a type of service, trading products that takes place mainly on the Internet and through the most popular sales channels such as business websites, social networking sites.

In the current online sales model, both buyers and sellers use smart mobile devices such as computers, phones, connected to each other via the Internet. With this type of purchase, buyers may not need to go directly to the store but can still view and own the products they want. On the contrary, sellers may not need to open a shop but can still approach and exchange information and goods with buyers.

2. Do online businesses have to pay taxes?

The State’s regulations on tax payment for each case are as follows:

➤ Case 1: Individuals who sell online spontaneously, without a store and without a business registration, only need to register a personal tax code for online business to declare taxes.

➤ Case 2: Individuals/organizations selling online have stores, register for business as a business household or enterprise and pay taxes in accordance with the regulations of each type.

In short, online sales are required to pay taxes. However, depending on each case, each form of business, and the revenue achieved, the tax payment level will be different.

3. What types of taxes must be paid when doing online business?

The seller will have to pay the following taxes:

* Personal income tax

Personal income tax is the amount of money that sellers with revenue of VND 100 million/year or more must pay a portion to the state budget. Online sellers with income will have to pay this tax, with the following personal income tax calculation:

Personal income tax payable = Taxable personal income tax revenue x Personal income tax rate

In which:

Taxable personal income tax revenue is the revenue including tax (in cases subject to tax) of all sales, processing fees, commissions, and service provision fees arising during the tax period from production and trading activities of goods and services. The personal income tax rate is 0.5%.

If the revenue is VND 100 million/year or more, the seller must pay tax at a rate of 0.5%. This tax is calculated monthly, can be declared monthly or quarterly but settled annually.

In case the seller cannot determine the revenue; the competent authority will determine the amount of tax payable.

* Value Added Tax

Value Added Tax (VAT) is an indirect tax; added to the selling price of goods and services. Consumers will pay VAT when using the product, but the seller will directly fulfill the tax obligation to the State.

The method of calculating VAT payable is as follows:

Amount of VAT payable = Revenue subject to VAT x VAT rate

Online businesses must pay VAT equal to 1% of revenue when it reaches over 100 million VND/year.

If the online seller: Does not submit a tax registration application, does not declare tax, does not issue invoices with a value of over 200,000 VND, writes on the invoice an amount lower than the actual payment value or uses illegal invoices and documents to reduce the amount of tax payable, etc., will be subject to different levels of penalties, from warnings to fines.

* Business license fee

Online sellers will have to pay a business license fee annually. In particular, individuals and business households with revenue of VND 100 million/year or more will apply a business license fee of VND 300,000 to VND 1,000,000. Specifically:

• Revenue from VND 100 to 300 million, the fee is VND 300,000.
• Revenue from VND 300 to 500 million, the fee is VND 500,000.
• Revenue from VND 500 million, the fee is VND 1,000,000.

On the contrary, sellers who do not regularly sell, do not have a fixed location, or have revenue of less than VND 100 million/year will not have to pay a business license fee to the state.

4. How to pay online business tax in accordance with regulations

Step 1: Log in to thuedientu.gdt.gov.vn

Step 2: Select “Pay tax” then Select “Create payment slip” then Select “Currency type” VND/USD then Select bank name, account number => Select tax management agency information.

Step 3: Select Treasury information then Select Treasury bank then Select “Tax type” then Select “Tax calculation period” then Select “tax item”.

Step 4: Select the item to be paid then Select “Search” and select the appropriate sub-item.

Step 5: Fill in the tax amount that the business/individual must pay, select “Complete”.

Step 6: Then carefully check the information on the payment slip, if displayed correctly, select “Sign and pay” and Enter the pin code and wait for confirmation of successful signing.

Step 7: Next, select “Pay Tax” then “Look up payment receipt” then Fill in “Date of payment receipt” then Select “Look up”

5. Administrative penalty for late tax declaration

According to Decree No. 125/2020/ND-CP on penalties for administrative violations of tax and invoice, accordingly:

• Administrative violations with tax amounts of VND 100 million or more or goods value of VND 500 million or more are determined to be large-scale administrative violations of tax;
• Delay in submitting tax declarations from 1 to 30 days will be fined from VND 2 to 5 million. If late payment is more than 30 days, the penalty is from VND 5 to 15 million;
• In case of submitting tax declarations after 90 days, it is considered tax evasion but the taxpayer has paid the full amount of tax and late payment before the tax authority announces the inspection decision or before making the record, he/she will not be punished for tax evasion but will be fined from 15 to 25 million VND.

The above is information on how to pay online business taxes that has been shared by Viet My Law and Accounting above. This is a popular form of business in the current technology era, business people need to pay attention to comply with the provisions of the law.