1. What is Affiliate Marketing?

Affiliate marketing is an online brokerage model where businesses pay partners (individuals or organizations) when they refer customers who purchase products through links on internet platforms and e-commerce sites (Shopee, Lazada, Tiki, etc.). When users or customers click on a product link, service link, or perform purchase or service registration actions, the affiliate marketer receives a commission from the business or e-commerce platform. This is considered a form of brokerage commission.

2. How to Declare Taxes?

Case 1: Individuals engaged in affiliate marketing without registering as sole proprietors or business entities

• According to Point c, Clause 2, Article 3 of Decree No. 65/2013/ND-CP, taxable personal income (PIT) from wages and salaries received from employers includes remuneration such as brokerage commissions, project participation fees, royalties, and other commission fees. Thus, individuals engaged in affiliate marketing on e-commerce platforms receiving commissions must pay PIT as per the law.
  • For non-resident individuals: Organizations or individuals paying taxable income to affiliate marketers must withhold PIT before paying them, calculated by multiplying the taxable income from wages and salaries by a tax rate of 20%.
  • For resident individuals:
    • If the individual does not sign a labor contract or signs a labor contract of less than 3 months: When the organization or individual pays a brokerage commission of 2 million VND or more per payment, they must withhold PIT at a rate of 10% of the income before paying the individual (as per Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC of the Ministry of Finance). If the individual only has income subject to tax withholding at this rate, but their total taxable income after deductions is below the taxable threshold, they can make a commitment (using a form issued with tax management guidance) to the income-paying organization to temporarily not withhold PIT.
    • If the resident individual signs a labor contract of 3 months or more: The income-paying organization or individual withholds PIT according to the progressive tax rate schedule from 5% to 35%, even if the individual signs contracts of 3 months or more at multiple places. In this case, taxable income is calculated with deductions as per Article 9 of Circular No. 111/2013/TT-BTC of the Ministry of Finance, and the family deduction follows Resolution 954/2020/UBTVQH14 of the National Assembly Standing Committee.

Case 2: Individuals engaged in affiliate marketing registering as sole proprietors or business entities

• Principle of tax calculation: According to Circular No. 40/2021/TT-BTC dated June 1, 2021, of the Ministry of Finance, sole proprietors or business entities with annual revenue from production and business activities exceeding 100 million VND must pay value-added tax (VAT) and PIT as per the laws on VAT and PIT. For business entities formed by a group of individuals or households, the revenue threshold of 100 million VND per year to determine VAT and PIT liability is calculated for one representative of the group.
  • Basis for tax calculation: According to Article 10 of Circular No. 40/2021/TT-BTC, the basis for tax calculation for sole proprietors or business entities is taxable revenue and the tax rate applied to that revenue. Taxable revenue for VAT and PIT includes all commissions earned during the tax period, including bonuses and other support, regardless of whether the money has been received or not. The tax rate includes a VAT rate of 5% and a PIT rate of 2%, detailed for each sector as guided in Appendix I issued with Circular No. 40/2021/TT-BTC.

Conclusion:

Individuals engaged in affiliate marketing need to understand the legal tax provisions to choose whether to register as a business entity or not, ensuring full compliance with tax obligations when operating in this field. For any issues during implementation, contact TPM Tax Agent at Hotline (+84) 28 3505 1800 for support and advice on tax declaration for affiliate marketing activities on e-commerce platforms.

Legal basis:

• Circular No. 40/2021/TT-BTC;
• Circular No. 111/2013/TT-BTC;
• Decree No. 65/2013/ND-CP;
• Reference to Official Letter No. 1241/CTCBA-TTHT regarding PIT for affiliate marketing activities on e-commerce platforms.

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