If the business household tax is paid according to the flat method, according to regulations, must it comply with the accounting regime? no?

If paying taxes for business households using the flat method, according to regulations, do they have to follow the accounting regime?

Payment of business household taxes by the presumptive method is prescribed in Clause 2, Article 7 of Circular 40/2021/TT-BTC as follows:

Tax calculation method for business households and individuals paying tax according to the flat method

1. The presumptive method is applied to business households and individuals who are not subject to tax payment according to the declaration method and are not subject to payment of tax each time it arises according to the instructions in Article 5 and Article 6 of this Circular.

2. Business households and individual businesses that pay taxes according to the presumption method (Contract Households) do not have to follow the accounting regime. Households using single invoices must store and present to the tax authority invoices, documents, contracts, and documents proving the legality of goods and services when requesting to issue or retail invoices each time they arise. Particularly in cases of households doing business at border markets, border gate markets, or markets in border gate economic zones in the territory of Vietnam, they must store invoices, documents, contracts, and documents proving legal goods and present them when requested by competent state management agencies.

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Thus, according to regulations, in case of paying taxes for business households using the flat method, they do not have to comply with the accounting regime.

In what cases does the tax authority determine the tax amount payable by the flat method for business households?

Determining the amount of tax payable by the flat method for business households is prescribed in Clause 1, Article 51 of the Law on Tax Administration 2019 as follows:

Determining tax rates for business households and individuals paying taxes according to the flat tax method

1. The tax authority determines the tax amount payable according to the flat tax method (hereinafter referred to as flat tax rate) in cases where business households and individual businesses do not implement or do not fully implement the accounting, invoice, and document regimes, except for the cases specified in Clause 5 of this Article.

2. The tax authority bases on the declaration documents of business households and individual businesses, the tax authority’s database, and the opinions of the Tax Advisory Council of communes, wards and towns to determine the flat tax rate.

3. The flat tax rate is calculated based on the calendar year or monthly in case of seasonal business. Presumptive tax rates must be publicized in communes, wards and towns. In case there is a change in industry, profession, business scale, stoppage or temporary suspension of business, the taxpayer must declare to the tax authority to adjust the flat tax rate.

4. The Minister of Finance stipulates in detail the basis and order to determine flat tax rates for business households and individual businesses.

5. Business households and individual businesses with a scale of revenue and labor that meet the highest level of criteria for micro-enterprises according to the law on supporting small and medium-sized enterprises must implement accounting regimes and pay taxes according to the declaration method.

Thus, according to regulations, the tax authority determines the tax amount payable according to the flat method for business households in cases where the business household does not implement or does not fully implement the accounting, invoice and document regime.

Except for business households with a scale of revenue and labor that meets the highest level of criteria for micro enterprises according to the law on support for small and medium enterprises.

In this case, the business household must follow the accounting regime and pay taxes according to the declaration method.

How much revenue does a business household have from production and business activities that do not have to pay value-added tax and personal income tax?

Revenue of business households is specified in Clause 2, Article 4 of Circular 40/2021/TT-BTC as follows:

Tax calculation principles

1. Tax calculation principles for business households and individual businesses are implemented in accordance with current legal regulations on VAT, personal income tax and relevant legal documents.

2. Business households and individual businesses with revenue from production and business activities in the calendar year of 100 million VND or less are not required to pay VAT and do not have to pay personal income tax according to the law on VAT and personal income tax. Business households and individuals are responsible for declaring taxes accurately, honestly, completely and submitting tax documents on time; Responsible before the law for the accuracy, truthfulness, and completeness of tax records according to regulations.

3. For business households and individuals doing business in the form of groups of individuals and households, the revenue level of 100 million VND/year or less to determine whether the individual is not required to pay VAT or personal income tax is determined for one (01) sole representative of the group of individuals or households in the tax year.

Thus, according to regulations, if a business household has revenue from production and business activities in the calendar year of 100 million VND or less, it does not have to pay value added tax and personal income tax.

Business households are responsible for declaring taxes accurately, honestly, completely and submitting tax documents on time; Be responsible before the law for the accuracy, truthfulness, and completeness of tax records according to regulations.