Business License Tax for Individuals Cooperating in Business with a Company

Must business license tax be paid by an individual cooperating in business with a company?

Regarding your question, Article 2 of Decree 139/2016/ND-CP on business license tax provides:

Business license tax payers

Business license tax payers are organizations and individuals conducting production and business of goods or services, except for the cases specified in Article 3 of this Decree, including:

1. Enterprises established in accordance with law.

2. Organizations established under the Law on Cooperatives.

3. Public service units established in accordance with law.

4. Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations and people’s armed forces units.

5. Other organizations conducting production and business activities.

6. Branches, representative offices and business locations of the organizations specified in Clauses 1, 2, 3, 4 and 5 of this Article, if any.

7. Individuals, groups of individuals and households conducting production and business activities.

The above regulation refers to taxpayers. Please note Clause 7 concerning individuals, groups of individuals and households conducting production and business activities. Therefore, in principle, when an individual signs a business cooperation contract, production and business activities arise and the individual becomes subject to business license tax.

However, due to the specific nature of business cooperation activities as an agreement between an enterprise and an individual, which is not strictly managed by the State, in practice the payment of the fee has not been guided in detail and will depend entirely on the notice of the tax authority.

What does the business license tax declaration dossier of an individual cooperating in business with a company include?

Point b Clause 1 Article 10 of Decree 126/2020/ND-CP provides:

Deadline for submission of tax declaration dossiers for land-related revenues, business license tax, registration fee, rights-granting fees and other revenues under the law on management and use of public assets

Taxpayers shall comply with the regulations on deadlines for submitting tax declaration dossiers under Article 44 of the Law on Tax Administration. For deadlines for submitting declaration dossiers for land-related revenues, business license tax, registration fee, rights-granting fees and other revenues under the law on management and use of public assets as prescribed in Clause 5 Article 44 of the Law on Tax Administration, the following applies:

1. Business license tax

a) Business license tax payers, except business households and business individuals, newly established, including small and medium-sized enterprises converted from business households, or establishing additional dependent units or business locations, or commencing production and business activities, must submit the business license tax declaration dossier no later than January 30 of the year following the year of establishment or commencement of production and business activities.

Where there is a change in capital during the year, the business license tax payer must submit the business license tax declaration dossier no later than January 30 of the year following the year in which the change occurs.

b) Business households and business individuals are not required to submit business license tax declaration dossiers. The tax authority shall rely on the tax declaration dossier and tax management database to determine revenue as the basis for calculating the amount of business license tax payable and notify the business license tax payer to comply with Article 13 of this Decree.

…

Under the above regulation, a business individual is not required to submit a business license tax declaration dossier; instead, payment will be made based on the notice of the tax authority.

Which cases are exempt from business license tax?

Cases exempt from business license tax are provided in Article 3 of Decree 139/2016/ND-CP, as amended and supplemented by Clause 1 Article 1 of Decree 22/2020/ND-CP, including:

Individuals, groups of individuals and households conducting production and business activities with annual revenue of VND 100 million or less.

Individuals, groups of individuals and households conducting production and business activities on an irregular basis and without a fixed business location as guided by the Ministry of Finance.

Individuals, groups of individuals and households producing salt.

Organizations, individuals, groups of individuals and households engaged in aquaculture, fishing and fishery logistics services.

Commune cultural post offices; press agencies, including print, radio, television and electronic press.

Cooperatives and cooperative unions, including branches, representative offices and business locations, operating in the agricultural sector in accordance with the law on agricultural cooperatives.

People’s credit funds; branches, representative offices and business locations of cooperatives, cooperative unions and private enterprises conducting business in mountainous areas. Mountainous areas are determined in accordance with regulations of the Committee for Ethnic Minority Affairs.

Exemption from business license tax in the first year of establishment or commencement of production and business activities, from January 1 to December 31, applies to:

– Newly established organizations, granted a new tax code and enterprise code.

– Households, individuals and groups of individuals commencing production and business activities for the first time.

– During the period of business license tax exemption, if an organization, household, individual or group of individuals establishes a branch, representative office or business location, such branch, representative office or business location is exempt from business license tax during the period in which the organization, household, individual or group of individuals is exempt.

Small and medium-sized enterprises converted from business households, as prescribed in Article 16 of the Law on Support for Small and Medium-Sized Enterprises, are exempt from business license tax for 03 years from the date of issuance of the first Enterprise Registration Certificate.

– During the period of business license tax exemption, if a small or medium-sized enterprise establishes a branch, representative office or business location, such branch, representative office or business location is exempt from business license tax during the period in which the enterprise is exempt.

– Branches, representative offices and business locations of small and medium-sized enterprises eligible for business license tax exemption under Article 16 of the Law on Support for Small and Medium-Sized Enterprises and established before this Decree takes effect shall have their exemption period calculated from the effective date of this Decree until the end of the exemption period of the small or medium-sized enterprise.

– Small and medium-sized enterprises converted from business households before this Decree takes effect shall be exempt from business license tax under Articles 16 and 35 of the Law on Support for Small and Medium-Sized Enterprises.

Public general education institutions and public preschool education institutions.