Business tax filing is a method of calculating tax based on tax returns filed monthly or quarterly, and has been widely applied since... Circular 40/2021/TT-BTC It has taken effect. The shift from lump-sum tax to declaration-based tax helps to increase transparency in revenue, but also poses challenges regarding accounting capacity for individual business owners today.
Filing business tax returns is not only a legal responsibility under the Tax Administration Law No. 38/2019/QH14, but also an opportunity to access electronic invoices and the digital economy. Understanding the regulations regarding documents and accounting records is crucial. Circular 88/2021/TT-BTC This is key to helping businesses avoid unnecessary administrative penalties.
Mandatory tax filing requirements and implementation roadmap for household businesses.
According to Circular 40/2021/TT-BTC, not all business households are required to file tax returns. The boundary between lump-sum tax and tax declaration for business households is determined based on the revenue scale and specific business sector of each business unit.
Large-scale businesses are required to switch to the declaration-based method. This is a significant turning point that demands business owners have a more systematic and rigorous understanding of cost accounting and the management of input and output invoices than before.
Criteria for identifying large-scale household businesses
Large-scale household businesses are defined based on a minimum revenue threshold from the preceding year. Once this threshold is reached, filing a household business tax return becomes a mandatory requirement to maintain legal business operations as stipulated by law.
| Field of operation | Revenue of the previous year | Number of workers (optional) |
| Agriculture, forestry, and fisheries | Over 3 billion VND | Over 10 people |
| Industry, construction | Over 3 billion VND | Over 10 people |
| Trade and services | Over 10 billion VND | Over 10 people |
Benefits of proactively filing tax returns for household businesses.
Even if they haven't reached a large scale, household businesses can voluntarily register to declare taxes as household businesses. This makes it easier for household businesses to issue electronic invoices to corporate customers, thereby expanding cooperation and increasing competitiveness in the market.
Accounting record system according to Circular 88/2021/TT-BTC
The biggest bottleneck when implementing tax declaration for household businesses is the accounting system. Unlike enterprises, household businesses only need to maintain seven simple types of ledgers, but absolute accuracy in data is required to calculate tax obligations.
Below are the types of records that business households using the declaration method must maintain in full to provide explanations to the tax authorities during periodic or surprise inspections:
List of 7 types of mandatory accounting ledgers
The record-keeping for filing taxes for household businesses must adhere to the principles of continuity and timeliness. The types of records include:
- Cash journal.
- Bank deposit book.
- Detailed ledger of revenue from the sale of goods and services.
- Detailed register of materials, tools, and goods.
- Register for tracking the fulfillment of tax obligations to the State budget.
- Register for tracking the payment of salaries and related contributions.
- Detailed ledger of investment and acquisition of fixed assets (if any).
Notes on input and output documents
When filing taxes for household businesses, all purchase and sale transactions must have valid invoices and supporting documents. For retail businesses, separating expenses and collecting invoices from suppliers is a crucial factor in accurately determining the tax amount. personal income tax and VAT must pay.
How to calculate and file taxes for household businesses.
Household business tax is calculated as a percentage of actual revenue generated. Unlike businesses that tax based on profit, household businesses pay tax according to the fixed tax bracket for each specific business sector.
Understanding the industry code helps business households apply the correct tax schedule, avoiding overpayment or underpayment that could lead to tax arrears and late payment penalties from the tax authorities.
Tax rate schedule applicable to business household tax declarations.
Based on Appendix I issued with Circular 40/2021/TT-BTC, the tax rates are specifically classified as follows:
| Occupational groups | VAT | Personal Income Tax | Total |
| Distribution and supply of goods | 1% | 0.5% | 1.5% |
| Services, construction without materials contract | 5% | 2% | 7% |
| Production, transportation, and services related to goods. | 3% | 1.5% | 4.5% |
| Other business activities | 2% | 1% | 3% |
Formula for determining the amount of tax payable
|
VAT payable = Taxable revenue x VAT rate Personal income tax payable = Taxable income x Personal income tax rate |
In this context, taxable revenue when filing tax returns for household businesses includes all sales revenue, processing fees, commissions, and service fees generated during the reporting period (including any subsidies, surcharges, or additional fees, if applicable).
Common bottlenecks and errors encountered when filing taxes for household businesses.
At a workshop organized by the Tax Department, many business owners expressed concerns about managing cash flow and invoices. The failure to separate personal and business bank accounts is a leading legal risk faced by many business owners.
Below are typical mistakes that MAN – Master Accountant Network frequently helps clients correct when they begin filing business tax returns in practice.
Risks from not issuing electronic invoices in a timely manner.
Businesses operating under the declaration method are required to use electronic invoices with tax authority codes. A common mistake is consolidating orders at the end of the day before issuing a final invoice, which may violate the regulations on invoice timing as stipulated in Decree 123.
Mistakes in declaring revenue from e-commerce.
With the boom in e-commerce platforms, household businesses often overlook their actual revenue. Tax authorities now have data linkage tools, making it easier to severely penalize those who underreport revenue in their tax returns.
The issue of reasonable costs when calculating taxes.
Even though taxes are paid based on a percentage of revenue, retaining input invoices remains extremely important. This serves as proof of the origin of goods, helping businesses avoid risks related to smuggled goods, counterfeit goods, or unwarranted accusations of commercial fraud.
Solutions to overcome difficulties in tax declaration for household businesses.
To effectively file taxes for household businesses, business owners need to proactively embrace digital transformation and enhance their management capabilities. Using accounting software integrated with digital signatures and electronic invoices is an optimal solution that saves time and ensures accuracy.
Furthermore, hiring a tax agent or joining a professional network like MAN – Master Accountant Network will help homeowners focus on their business with peace of mind. We support standardizing processes from document preparation to tax return filing.
Applying technology in managing tax declarations for household businesses.
Currently, there are many accounting software programs specifically designed for sole proprietorships with simple interfaces. These tools help automate bookkeeping from invoice data, minimizing human errors in the process of filing periodic tax returns for sole proprietorships.
Advice from tax and accounting experts
The tax authorities regularly organize training sessions, both in-person and online. Businesses should take advantage of these channels to stay updated on the latest tax policies, especially regulations on tax exemptions and reductions during the country's economic recovery phases.
Conclude
Filing tax returns for household businesses is an inevitable trend in the modernization of tax management in Vietnam. Complying with regulations helps household businesses build credibility with partners and serves as a foundation for future transformation into a corporate model. To avoid legal risks, household business owners need to acquire knowledge or seek support from professional agencies.
If you encounter any difficulties with your business's accounting records or tax returns, contact MAN – Master Accountant Network immediately. We provide comprehensive auditing services., tax accounting and risk consulting, helping businesses optimize their tax obligations and achieve sustainable development. MAN is committed to delivering practical value and absolute reliability to all customers.
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Frequently Asked Questions about Tax Filing for Household Businesses
No. Household businesses with annual revenue of 100 million VND or less are exempt from VAT and personal income tax, and usually apply the lump-sum method or are not required to file tax returns regularly.
Household businesses can manage their own accounting records if they are familiar with the regulations in Circular 88. However, if the process is complex, you should use professional services to ensure the accuracy of your household business tax declarations.
The law does not yet have direct penalties. However, when inspecting tax declarations of household businesses, if the income is not clearly separated, the tax authorities have the right to determine revenue based on the total cash flow in the individual's account, causing significant disadvantage to the household owner.
For monthly declarations, the deadline is the 20th of the following month. For quarterly declarations, the deadline is the last day of the first month of the following quarter, counting from the end of that quarter. Do household businesses with annual revenue under 100 million VND need to file tax returns?
Can I do the accounting myself, or am I required to hire an accountant?
Is there a penalty for not separating bank accounts?
What is the deadline for filing tax returns?
