PERSONAL INCOME TAX FOR FREELANCERS & SMALL BUSINESSES: HOW MUCH INCOME DO YOU NEED TO PAY TAX?
- Vinex Official
- Apr 17, 2025
- 2 min read
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/
Comments