"I only share product links and receive tens of millions of Vietnamese dong in commissions monthly from e-commerce platforms. Do I need to declare and pay taxes?" This is a common question among affiliate marketers as income from digital platforms such as: Facebook, YouTube, TikTok, and Shopee, continues to grow.

Under current regulations, individuals and business households earning income from affiliate marketing must declare these commissions to determine their tax obligations.

Individuals whose annual revenue from these activities exceeds one billion Vietnamese dong (VND) will pay a 7% tax. This comprises a 2% personal income tax and a 5% value-added tax (VAT), as this income is categorized as service business revenue.

If an individual does not register as a business or for tax purposes, affiliate commissions are considered income from wages or salaries. In such cases, this income is subject to a progressive tax schedule, with rates reaching up to 35%.

Many people assume affiliate commissions are either business income or wages. However, a representative from the Tax Department noted that tax authorities do not classify income based on job titles (Affiliate, KOL, KOC, streamer). Instead, they rely on the nature of the contract, the transaction, the organizational method, and the business registration status.

Nguyen Thi Lan Anh, Head of the Legal Department at the General Department of Taxation (Ministry of Finance), stated that individuals who independently organize, register a business, proactively provide services, and bear their own responsibilities are considered to be engaged in business activities. Conversely, those working for an organization or another individual under a contract are deemed to earn income from wages or salaries.

According to her, selling products on e-commerce platforms or social media does not alter the fundamental nature of the activity. Taxpayers must consolidate revenue from all channels and correctly classify it by industry to apply the appropriate tax. Individuals working as affiliates, KOLs, KOCs, or freelancers who operate independently and regularly should register as business households and for tax purposes. They also need to maintain complete contracts, payment documents, and records proving the nature of their transactions.

The Tax Department also clarified that the 10% withheld by platforms before paying affiliate marketers is only a provisional withholding at the source, not the final tax obligation. During final tax settlement, the tax authorities will use the provided records, documents, and the nature of the transactions to accurately determine the final tax amount owed or to be refunded.

Cash transaction at a bank. Photo: Giang Huy

Individuals who both sell products online and receive affiliate commissions generate two types of taxable revenue. Income from online sales is subject to a 0,5% personal income tax, while affiliate commission revenue is taxed at 2%.

According to Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consultants' Association, when determining the one billion VND tax-exempt revenue threshold, business households can combine all their revenue and choose which income streams to include first for optimization.

Cuc suggested that taxpayers should prioritize including affiliate commission revenue (taxed at 2%) within the one billion VND threshold first to optimize their tax burden. Any remaining portion of the threshold can then be filled with online sales revenue (taxed at 0,5%).

For any revenue exceeding one billion Vietnamese dong, taxpayers must account for it separately according to each type of activity. At that point, specific tax rates will apply to each industry group.

For example, a business household has 700 million Vietnamese dong in sales revenue and 500 million Vietnamese dong in affiliate commissions for the year. The total revenue for this household is 1,2 billion Vietnamese dong, exceeding the tax-exempt threshold by 200 million Vietnamese dong.

Accordingly, the taxpayer can prioritize allocating 500 million Vietnamese dong of affiliate revenue and 500 million Vietnamese dong of sales revenue to the one billion Vietnamese dong exemption threshold. The remaining 200 million Vietnamese dong, which is sales revenue, will only be subject to a 0,5% tax rate, instead of 2% if it were affiliate income.

Phuong Dung