Personal income tax on affiliate marketing activities on E-Commerce platforms

1. What is Affiliate Marketing?

Affiliate marketing is a model where products or services of a supplier are promoted through online links. When an order is successfully delivered or personal information is filled out to register for a service, the affiliate marketer receives a commission.

When an individual refers and shares a purchase link or when users click to purchase or register for a service, the affiliate marketer will earn a commission from the business or e-commerce platform.

2. Taxable Income from Affiliate Marketing

As previously mentioned in TPM’s article “Affiliate Marketing and Tax Policy,” the tax obligations for affiliate marketers depend on whether they have registered as a business or sole proprietorship.

For individuals who do not register as a business or sole proprietorship: Income from affiliate marketing commissions is considered income from wages and must be taxed according to regulations for employees. Specifically, according to Point c, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013, by the Ministry of Finance, commissions received under various forms are considered wage income.

3. PIT Withholding

According to Article 25 of Circular No. 111/2013/TT-BTC, e-commerce platforms or businesses paying commissions to resident individuals who do not have employment contracts or have contracts shorter than three (3) months and earn commissions of 2,000,000 VND or more per transaction must withhold PIT at a rate of 10% before payment.

4. PIT Finalization for Affiliate Marketers

Resident individuals performing affiliate marketing without an employment contract or with contracts shorter than three (3) months must finalize their PIT directly with the Tax Authority, except in cases where:

• The amount of additional tax owed after finalization is 50,000 VND or less.
• The tax owed is less than the pre-paid tax without requesting a refund or offset against the next tax period.

4.1. PIT Finalization Documents

• PIT Finalization Declaration Form No. 02/QTT-TNCN as per Appendix II of Circular No. 80/2021/TT-BTC dated September 29, 2021.
• Supplementary Form for Dependents’ Deduction, Form No. 02-1/BK-QTT-TNCN as per Appendix II of Circular No. 80/2021/TT-BTC.
• Copies (or photocopies of original documents) of documents proving tax withheld and pre-paid within the year, and any foreign tax paid (if applicable).
  • If the paying organization has ceased operations and did not issue a withholding certificate, the tax authority will use its database to process the tax finalization without requiring the withholding certificate.
  • If the paying organization uses electronic PIT withholding certificates, the taxpayer should use printed copies converted from the electronic certificates provided by the organization.
• Copy of Tax Withholding Certificate (indicating the tax declaration for which it was issued) from the income payer or bank statement for foreign taxes with a declaration from the taxpayer if the foreign tax authority does not issue a confirmation.
• Copies of receipts for contributions to charitable, humanitarian, and educational funds (if applicable).
• Documentation of payments made by foreign entities or organizations in cases where income is received from international organizations, embassies, consulates, or foreign entities.
• Documents proving dependents as per Point g, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC (amended by Article 1 of Circular No. 79/2022/TT-BTC). If dependents are directly supported by the taxpayer, confirmation from the local People’s Committee is required as per Form No. 07/XB-NPT-TNCN in Appendix II of Circular No. 80/2021/TT-BTC.

4.2. PIT Finalization Deadline

The deadline for submitting the PIT finalization declaration is the last day of the fourth month following the end of the calendar year. If a refund is due but the finalization is delayed, penalties for late filing will not apply.

If the finalization deadline falls on a holiday, it is extended to the next working day according to the Civil Code.

4.3. Where to Submit PIT Finalization

Residents without an employment contract, with contracts shorter than three (3) months, or service contracts with income subject to 10% withholding, should submit their PIT finalization documents to the tax authority where they reside.

Understanding and complying with personal income tax regulations for affiliate marketing on e-commerce platforms is essential for participants.

Additionally, the Etax Mobile application is a useful tool that assists taxpayers in checking and completing their tax obligations conveniently and quickly. Here is a guide to using the Etax Mobile application.

Etax Mobile Application for Individuals and Sole Proprietorships

1. Benefits of Etax Mobile

The Etax Mobile electronic tax application, available on smartphones, allows individuals and sole proprietorships to interact with the tax authority, check tax obligations, and complete tax duties quickly and accurately. This minimizes administrative procedures, saves costs, and reduces travel time, enabling better management of personal tasks.

2. Features Supported by Etax Mobile

• Check tax obligations including agricultural land tax, non-agricultural land tax, personal income tax, business tax and fees, late payment fees, vehicle registration fees, etc.
• Electronic tax payments through links to bank payment applications.
• Check notifications: processing notifications, vehicle registration fees.
• Check records: tax declarations, tax finalizations, tax registrations, vehicle registration fees.
• Other features include: checking dependent information, finalization information, fixed tax accounts, personal income tax calculation tool, tax authority addresses, news, etc.

3. Instructions for Installing and Registering Etax Mobile

• Download and install the Etax Mobile application on smartphones using iOS or Android.
• Register an electronic tax transaction account on Etax Mobile or the Electronic Tax website (thuedientu.gdt.gov.vn), then visit the tax authority with identification documents to verify the account or register for electronic identification level 2.

We hope this guide helps individuals and organizations fulfill their tax obligations effectively.

For any further inquiries, please contact TPM through the Website: tpm.com.vn or Hotline 028 3505 1800 for the quickest assistance.

References:

• Official letter No. 1540/CTĐLA-TTHT by the Tax Department of Dak Lak Province on personal income tax for affiliate marketing on e-commerce platforms.
• Circular No. 111/2013/TT-BTC dated August 15, 2013, by the Ministry of Finance.
• Circular No. 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.