This circular guides the collection of taxes from individuals acting as agents such as insurance, postal services, lottery, cosmetics, and pharmaceuticals. Individuals who register for business pay corporate income tax (TNDN), while those who do not register pay personal income tax according to a progressive rate schedule or have 10% temporarily withheld starting January 1, 2005.
Đối tượng áp dụng
Agents and entities paying commissions to these individuals
Các điểm cốt lõi
- Registered individuals pay corporate income tax (TNDN) in accordance with Circular No. 88/2004/TT-BTC.
- Unregistered individuals receiving commission income over VND 500,000 are subject to a 10% withholding at source (Article 3 of the Circular).
- If an individual signs contracts with multiple entities and receives commissions over VND 500,000 each time, a 10% tax must be temporarily withheld.
- Entities paying commissions have the responsibility to withhold taxes and pay on behalf of individuals in accordance with Circular No. 81/2004/TT-BTC.
- These provisions begin to apply from January 1, 2005.
🌐 Tác động xã hội từ văn bản này
- Individuals earning higher income will be subject to tax according to a progressive rate schedule, reducing the burden on those with lower incomes.
- Withholding taxes at source helps ensure state revenue and prevent tax evasion.
- Unregistered individuals acting as agents are affected by the requirement to have 10% temporarily withheld from their commissions.
❓ Câu hỏi thường gặp
Do individuals acting as agents need to register for business?
If an individual registers for business, they pay corporate income tax (TNDN); if not registered, commission income over VND 500,000 is subject to personal income tax according to a progressive rate schedule or has 10% temporarily withheld.
What responsibilities do entities paying commissions have?
Entities must withhold taxes and pay on behalf of individuals in accordance with Circular No. 81/2004/TT-BTC.
What is the withholding tax rate?
A temporary withholding of 10% from commission income over VND 500,000 each time it is received.
When does this provision apply?
Starting January 1, 2005.
Is an annual tax settlement required?
At year-end, individuals and entities paying income have the responsibility to settle taxes according to the guidance in Circular No. 81/2004/TT-BTC.
Toàn văn
LETTER
OF THE MINISTRY OF FINANCE NUMBER 13692/TC-TCT DATED NOVEMBER 23, 2004
REGARDING INCOME TAX FOR INDIVIDUALS ENGAGED AS AGENTS
Dear: Provincial Tax Departments
The Ministry of Finance has received recommendations regarding the taxation of individuals engaged in agency activities such as insurance agents, postal agents, lottery agents, cosmetic agents, pharmaceutical agents, etc. Regarding this matter, the Ministry of Finance provides its opinion as follows:
Pursuant to the Law on Corporate Income Tax (CIT), the Ordinance on Personal Income Tax for High-Income Individuals and related guiding documents, the Ministry of Finance guides the taxation of commissions from agency services provided by individuals as follows:
1. Agents who have registered their business operations shall pay CIT according to the provisions set forth in Circular No. 88/2004/TT-BTC amending and supplementing Circular No. 128/2003/TT-BTC dated December 22, 2003 of the Ministry of Finance guiding the implementation of Decree No. 164/2003/NĐ-CP dated December 22, 2003 of the Government detailing the implementation of the Law on Corporate Income Tax. The procedures and formalities for business registration shall be carried out as prescribed in Decree No. 109/2004/NĐ-CP dated April 2, 2004 of the Government regarding business registration (Chapter V - Business Registration for Individual Households).
2. Agents who have not registered their business operations shall pay personal income tax according to the Ordinance on Personal Income Tax for High-Income Individuals as follows:
An individual who enters into a stable agency contract (without a fixed term) with one principal entity shall be subject to progressive taxation based on Circular No. 81/2004/TT-BTC dated August 13, 2004 of the Ministry of Finance if their income reaches taxable levels. The principal entity paying commissions has the responsibility to withhold tax, declare and pay taxes on behalf of the individual according to the provisions set forth in Circular No. 81/2004/TT-BTC.
An individual who enters into agency contracts with multiple principal entities or works at one place but also engages in additional agency work shall have their income from commissions exceeding VND 500,000 subject to a temporary withholding of 10%. Principal entities paying agent commissions are responsible for temporarily withholding tax before payment according to Circular No. 81/2004/TT-BTC and remitting it to the State Budget. At year-end, both individual agents and principal entities must settle their personal income taxes according to the provisions set forth in Circular No. 81/2004/TT-BTC.
This regulation shall take effect from January 1, 2005. For commissions paid before January 1, 2005, agents shall continue to pay personal income tax through withholding at source with a rate of 5% until December 31, 2004.
The Provincial Tax Departments are required to closely cooperate with entities paying agent commissions to implement the collection of personal income tax as guided above. During implementation, if any difficulties or issues arise, please promptly report them to the Ministry of Finance for study and resolution.
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