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Etsy is a popular e-commerce platform attracting many Vietnamese sellers. However, navigating tax obligations when selling on Etsy can be confusing. This guide provides a detailed explanation of tax declaration and payment procedures for Vietnamese Etsy sellers.
Have you ever wondered, “Do I need to pay taxes on Etsy sales?” or “How are Etsy sales taxes calculated?” The answer is YES, you are obligated to pay taxes once your revenue reaches a certain threshold. So, what is this threshold, and what preparations are necessary? Let’s delve into the details.
Individual Business Households and Tax Obligations
When selling on Etsy in Vietnam, you typically register as an Individual Business Household. This common structure suits small businesses with fewer than 10 employees and a Vietnamese citizen owner aged 18 or older.
Tax Exemption Condition: Annual revenue under 100 million VND. If your Etsy revenue falls below this limit, you are exempt from paying taxes.
Tax Rates for Revenue Above 100 Million VND: Tax rates are based on annual revenue and divided into specific tiers. You need to thoroughly understand these tax brackets to accurately calculate your tax liability.
Calculating Etsy Sales Taxes
Taxes on Etsy sales generally include two types:
- Value Added Tax (VAT): 1% of revenue.
- Personal Income Tax: 0.5% of revenue.
Example: If your 2023 Etsy revenue is 1 billion VND, your tax calculation would be:
- VAT: 1 billion x 1% = 10 million VND.
- Personal Income Tax: 1 billion x 0.5% = 5 million VND.
Total Tax Payable: 10 million + 5 million = 15 million VND (equivalent to 1.5% of revenue).
Tax Declaration and Payment Procedures
To declare and pay taxes, the shop owner (the registered business owner) must visit the local tax authority to complete the necessary procedures. Ensure you have all required documents and proof of Etsy income. Consult the tax authority’s website or seek advice from a tax lawyer for further information.
Tax Optimization and Financial Management
Understanding tax regulations and implementing effective financial management will streamline your Etsy business. Maintain meticulous records of invoices and documents related to income and expenses to facilitate tax declaration.
Conclusion
Paying taxes is a civic duty for all business owners. A clear understanding of Etsy sales tax regulations will help you avoid legal issues and foster sustainable business growth. Thoroughly research the information and prepare all necessary documentation to ensure your Etsy operations comply with the law. Start your successful Etsy journey today!