Because freelancers are not our employees and we don't pay taxes on payouts, they must declare any income received via Solar Staff by themselves.
To carry on tax accounting in Vietnam for your Solar Staff income, you need to:
Be a tax resident
Register at the tax office
Determine the applicable tax obligations
Tax residence
Vietnam taxes its residents on their worldwide income, while non-residents are taxed on their Vietnamese-sourced income only.
A resident is a person who meets one of the following criteria:
Residing in Vietnam for 183 days or more in either the calendar year or the period of 12 consecutive months from the date of arrival.
Having a permanent residence in Vietnam (including a registered residence that is recorded on the permanent/temporary residence card or a rented house in Vietnam with a lease term of 183 days or more in a tax year in case of foreigners) and unable to prove tax residence in another country.
Vietnam has double taxation agreements with a number of countries (full list), the provisions of which may override the applicable tax residence rules and other provisions of national legislation.
Tax code
Tax code or tax identification number (TIN) is a number assigned to taxpayers by the tax authorities and used for tax reporting, opening of bank accounts, and other purposes such as filling out documents. Individuals receiving taxable income are required to obtain a tax code, which consists of 10 digits (the first 2 digits that indicate the place of issue + 7 digits in ascending order from 0000001 to 9999999 + 1 check digit). Each individual is granted one unique tax code for use during their lifetime.
Taxes and contributions payable by freelancers
In Vietnam, you can set up a sole proprietorship (doanh nghiệp tư nhân / DNTN). Being the owner of one means you are engaged in a trade (needs a permit or license) or a business and have the right to hire employees. To opt for this status, you must have a tax code and register in person or online (learn more). The process takes between 3 and 10 business days. Key requirements:
The sole proprietor must be 18 years. They may not own another sole proprietorship or any other business.
A sole proprietorship is not a legal entity and as such doesn't have a charter.
When it comes to debt and other obligations, all the property the sole proprietor owns as an individual is subject to such liability.
The sole proprietor cannot issue any kind of shares, meaning they're fully responsible for the entirety of their profits.
IMPORTANT! Solar Staff does not have the option to choose a tax status for freelancers based in Vietnam, but you can fill in your tax ID in your account.
Read on for more details on the specific taxes.
PIT on business income (thuế thu nhập) is paid by individuals earning business income above 100 million Vietnamese dong (VND) per calendar year. The tax rate depends on the type of activity:
Type of taxable income | Tax rate, % |
Distribution and supply of goods | 0.5 |
Services, construction without provision of raw materials | 2 |
Production, transport, services attached to goods, construction including provision of raw materials | 1.5 |
Lease of assets | 5 |
Other business operations | 1 |
Deductible expenses include social, health, and unemployment insurance contributions, as well as charitable contributions.
Reporting: Income tax has to be declared on an annual basis, by the end of April of the year following the reporting year (learn more). The tax is payable within the same time frame.
Within 90 days of the end of the annual accounting period, the taxpayer must also submit the following reporting: income statement, balance sheet, cash flow statement, and other relevant statements (learn more).
Value-added tax / VAT (Thuế giá trị gia tăng) applies to goods and services used for production, trading, and consumption in Vietnam (including goods and services purchased from non-residents), with certain exemptions. The 10% "standard" rate applies to activities not specified as not subject to VAT, exempt, or subject to the reduced 0% or 5% rate (the 0% rate applies to exported goods/services, and the 5% rate applies generally to areas of the economy concerned with the provision of essential goods and services, such as technical/scientific services, clean water, teaching aids, books, and so on). The tax is calculated based on one of two methods: credit/deduction method or direct method (learn more).
Taxpayers must file VAT returns and settle tax payments on a monthly basis by the 20th day of the subsequent month or on a quarterly basis by the 30th day of the first month of the following quarter (learn more).
Sole proprietors pay social insurance contributions on a voluntary basis (however, contributions in respect of employee wages are compulsory, learn more here).
Additional information
Comparison between a sole proprietorship and a legal entity (Solar Staff supports only sole proprietorships).
If you receive income in a foreign currency, it must be converted into VND at the average interbank FX rate published by the State Bank of Vietnam on the date of such income.
Income received through Solar Staff is declared based on the Offer Agreement using data from certificates and invoices.
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].