The General Department of Taxation has spoken to the press and public on contents related to Circular 40/2021 of the Ministry of Finance.

Regulations on haircuts, shampoo, karaoke, discotheques and massage serives
subject to tax payment have been valid since 2015. Photo: Internet.

Regulations on haircuts, shampoo, karaoke, massage, discotheques, billiards subject to tax payment have been applied

Recently, the media has raised contents related to Circular 40/2021 guiding Value Added Tax (VAT), Personal Income Tax (PIT) and tax management for business households and individuals issued by the Ministry of Finance.

From August 1, 2021, a 5 percent VAT and 2 percent PIT will be imposed on services such as haircuts, shampoo, karaoke, discotheques, billiards and other services.

Circular 40 stipulates that from August 1, 2021, a 5 percent VAT and 2 percent PIT will be imposed on services such accommodation, post offices, brokerage, legal consultancy, and tax and customs administrative procedures services, the General Department of Taxation said.

The General Department said that according to the provisions of Point 2, Appendix 01 – List of business lines for calculating VAT, PIT as a percentage of turnover for business individuals, issued together with Circular 92 dated June 15, 2015 of the Ministry of Finance, the 5% VAT and 2% PIT apply to households and individuals doing business in services such as sauna, massage, karaoke, internet, tailoring, laundry, hair cutting have been applied since 2015. Currently, Circular 40 does not amend this content.

If these household businesses have been notified on the flat tax rate by the tax authority from the beginning of the year, or have stopped or a suspended operations or decreased revenue due to the Covid-19 pandemic, the Tax authority will adjust the revenue and flat tax rate.

The Circular 40/2021 specifies that the Tax authorities will adjust the revenue and flat tax rate if household businesses have stopped or suspended operations at the request of state management agencies without requiring business households to carry out many administrative procedures as previously prescribed in Circular 92/2015.

Revenue from house lease of VND100 million/year or less not subject to tax payment

The General Department of Taxation cited Circular 40/2021 of the Ministry of Finance as saying that have revenue from property rentals in 12 months of VND100 million or less, are not subject to tax payment.

These new regulations aim to specify the tax assessment for house rentals, ensure fairness and resolve problems that have not been clearly guided previously.

In addition, those landlords whose rental and other businesses bring about total revenue of less than VND100 million a year will not have to pay tax.