PERSONAL INCOME TAX FOR FREELANCERS & SMALL BUSINESSES: HOW MUCH INCOME DO YOU NEED TO PAY TAX?
How much income must freelancers and small businesses report for personal income tax? Learn the latest tax regulations according to Circular 40/2021/TT-BTC and Personal Income Tax Law. Avoid penalties by filing correctly.
1. Income Threshold for Personal Income Tax
According to Circular 40/2021/TT-BTC and the Personal Income Tax Law:
▪️ For individual businesses and household businesses:
Annual revenue ≥ 100 million VND → must file and pay tax.
Fixed-rate tax applied based on the industry (not progressive tax rates).
▪️ For freelancers:
Each time receiving income from 2 million VND or more, the payer will deduct 10% personal income tax at source.
Tax deduction applies even if total income is below 100 million VND/year.
📍 Note:The 10% is a temporary tax deduction. If total income after deductions is below the taxable threshold, you can file a tax return to get a refund.
2. How to Calculate Personal Income Tax for Freelancers Who Do Not File Simplified Tax
Freelancers who do not register a business → tax calculated according to progressive tax rates.
General formula:
Tax Payable = (Total Income – Tax-exempt – Deductions) × Tax Rate
▪️ Deductions include:
Personal deduction: 11 million VND/month
Dependent deduction: 4.4 million VND/person/month
Mandatory insurance contributions (if applicable)
▪️ Progressive tax rates:
Taxable Income per Month | Tax Rate |
Up to 5 million VND | 5% |
From 5 – 10 million VND | 10% |
From 10 – 18 million VND | 15% |
From 18 – 32 million VND | 20% |
From 32 – 52 million VND | 25% |
From 52 – 80 million VND | 30% |
Over 80 million VND | 35% |
📍 Note:Registering for a tax code and filing annually helps reduce your tax significantly due to full application of exemptions and deductions.
3. Key Notes for Individual Businesses & Freelancers
You must file taxes even without a contract, if there is income.
Receiving transfers with labels like “payment,” “service” → may attract tax authorities' scrutiny.
If 10% is already deducted at source, you still need to file a tax return at the end of the year.
Not registering a tax code → no access to deductions.
Failing to file taxes even with income above the threshold → penalties of up to 25 million VND (according to Decree 125/2020/ND-CP).
📩 Not Sure if You Need to Pay Tax?
Contact Vinex for accurate legal advice – cost-saving solutions.
We assist you with tax code registration, filing, and annual returns – helping freelancers & small businesses focus on their work, worry-free from legal risks.
Source: https://lawnet.vn/
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