Regulations on license tax for business households according to Vietnamese law

What is the business license tax rate? When is the deadline to pay business license tax? In what cases are business households exempted from paying license tax?

1. What is business license tax? How much is the license tax for business households?

License tax (or license fee) is a direct tax paid annually by individuals, business households, and organizations producing and trading goods and services based on investment capital or charter capital, revenue to the direct tax administration agency.

License fee collection rate for operating business households. production and business of goods and services according to Clause 2, Clause 3, Article 4, Decree 139/2016/ND-CP, supplemented by Point a, Clause 2, Article 1, Decree 22/2020/ND-CP, amended by Point b, Clause 2, Article 1, Decree 22/2020/ND-CP as follows: as follows:

– Business households with revenue over 500 million VND/year: 1,000,000 VND/year;

– Business households with revenue over 300 to 500 million VND/year: 500,000 VND/year;

– Business households with revenue over 100 million VND/year up to 300 million VND/year: 300,000 VND/year.

– Revenue as a basis for determining license fee rates for individuals, groups of individuals, and households according to the guidance of the Ministry of Finance.

Small and medium-sized enterprises converting from household businesses (including branches, representative offices, business locations) at the end of the fee exemption period License fees (fourth year from the year of establishment of the enterprise): In case of ending in the first 6 months of the year, pay the entire year’s license fee, in the case of ending in the last 6 months of the year, pay 50% of the yearly license fee.

Households, individuals, groups of individuals whose production and business have been dissolved and have production and business activities resumed during the first 6 months of the year, pay the entire year’s license fee. During the last 6 months of the year, pay 50% of the annual license fee.

2. When is the deadline for paying business license tax?

Pursuant to Clause 9, Article 18 of Decree 126/2020/ND-CP stipulates as follows:

License tax payment deadline: No later than January 30 of every year.

For business households that have terminated production and business activities and then resume operations, the tax payment deadline is as follows:

– In case of opening in the first 6 months of the year: No later than July 30 of the year of operation

– In case of opening operations during the last 6 months of the year: No later than January 30 of the year immediately preceding the year of operation.

Note:If a business household temporarily suspends business during the calendar year (from January 1 to December 31), it does not have to pay the year’s license fee. temporarily suspend business when meeting the following 02 conditions:

– Document requesting temporary suspension of production and business activities sent to the tax authority or business registration authority before the prescribed fee payment deadline (January 30 every year).

– License fee not paid for the year requesting temporary suspension of production and business activities.

3. In what cases are business households exempted from paying license tax?

Business households engaged in production and trading of goods and services are responsible for paying annual license tax, except for the following cases according to Article 3 Decree 139/2016/ND-CP amended and supplemented by Points a, b, c Clause 1 Article 1 Decree 22/2020/ND-CP stipulates as follows:

– Business households engaged in production and business activities with annual revenue of 100 million VND or less.

– Business households engaged in irregular production and business activities; does not have a fixed location according to the guidance of the Ministry of Finance.

– Households doing business in salt production.

– Households doing business in aquaculture, fishing, seafood and fishery logistics services.

Exemption from license tax in the first year of establishment or production and business activities (from January 1 to January 31 12) for:

– Newly established organizations (issued with new tax codes, new business codes).

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

– During the license tax exemption period, organizations, households, individuals, groups of individuals establish branches, representative offices, For business locations, branches, representative offices, and business locations are exempt from license tax during the organization’s time. Households, individuals, and groups of individuals are exempt from license tax.

Note: Business households do not have to submit license tax declaration documents.

The tax authority bases on tax declaration documents and tax management database to determine revenue as a basis for calculating the amount of license tax payable and notifies business households to comply with regulations.