Recently, many media reports have highlighted the personal income tax (PIT) implications for individuals participating in affiliate marketing on e-commerce platforms. These individuals receive commissions from promoting products or services through an affiliate marketing platform.

As e-commerce platforms become increasingly popular, affiliate marketing has become an effective way for brands and advertisers to reach customers through user-generated creative content. To help organizations and individuals involved in affiliate marketing understand the tax policies, this article outlines key points related to tax regulations.

References:

• Official Letter No. 1241/CTCBA-TTHT from Cao Bằng Tax Department regarding PIT for affiliate marketing on e-commerce platforms.
• Official Letter No. 1540/CTĐLA-TTHT from Đắk Lắk Tax Department regarding PIT for affiliate marketing on e-commerce platforms.
• Circular No. 111/2013/TT-BTC dated August 15, 2013, from the Ministry of Finance.
• Circular No. 80/2021/TT-BTC dated September 29, 2021, from the Ministry of Finance.
• Resolution No. 954/2020/UBTVQH14 from the Standing Committee of the National Assembly.

1. Tax Obligations for Affiliate Marketers Not Registered as Business Entities:

Individuals engaged in affiliate marketing who do not register as business entities or sole proprietors are subject to PIT on income from wages and salaries:

• According to Point c, Clause 2, Article 3 of Decree No. 65/2013/ND-CP: Taxable PIT income from wages and salaries includes commissions from brokerage, participation in projects, royalties, and other remuneration. Therefore, individuals earning affiliate commissions must pay PIT as per legal regulations.
• For non-resident individuals: The entity paying the taxable income must withhold PIT at a rate of 20% before disbursing the income.
• For resident individuals:
  • If the individual does not sign an employment contract or signs one for less than 3 months: When the organization pays commissions of 2 million VND or more per instance, it must withhold PIT at a rate of 10% before payment (as per Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC). If the individual’s total taxable income is below the taxable threshold after deducting personal allowances, they can provide a commitment (according to the form specified in the tax management guidelines) to the payer, who may temporarily refrain from withholding PIT.
  • If the individual signs an employment contract of 3 months or longer: The organization must withhold PIT according to a progressive tax table with rates ranging from 5% to 35%, even if the individual has contracts at multiple places. In this case, taxable income will include deductions as specified in Article 9 of Circular No. 111/2013/TT-BTC, with personal deductions following Resolution No. 954/2020/UBTVQH14 from the Standing Committee of the National Assembly.

2. Tax Obligations for Affiliate Marketers Registered as Business Entities:

Individuals who register as business entities or sole proprietors are subject to business income tax:

• Tax Calculation Principles: According to Circular No. 40/2021/TT-BTC dated June 1, 2021, businesses or sole proprietors with annual revenues exceeding 100 million VND must pay VAT and PIT. For groups or households, the 100 million VND threshold applies to one representative for the entire group or household for the year.
• Tax Basis: As per Article 10 of Circular No. 40/2021/TT-BTC, the tax basis for business entities and sole proprietors includes all commission income earned during the tax period, including any bonuses or support, regardless of whether the income has been received.
  The tax rates are detailed in Appendix I of Circular No. 40/2021/TT-BTC: VAT rate is 5%, and PIT rate is 2%.

Conclusion: The PIT obligations for affiliate marketers depend on whether they are registered as business entities:

• For individuals not registered as business entities: Affiliate income is considered wage income, and PIT rates range from 5% to 35%, depending on total annual income.
• For individuals registered as business entities: Affiliate income is considered business income, with VAT at 5% and PIT at 2% based on revenue.

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