What is affiliate marketing? Do affiliates pay taxes? Instructions for self-determining personal income tax online when doing affiliate marketing
What is Affiliate Marketing?
Affiliate marketing is a form of online brokerage in which businesses pay partners (individuals or organizations) when they refer customers to buy products through links on the internet platform, such as Shopee affiliate links, Lazada affiliate links…
When a user or customer clicks on a product or service link or makes a purchase or registers for a service, the individual or organization that does the marketing link will receive a commission from the business.
This creates a win-win situation for both parties, the business can increase sales without having to spend upfront on advertising, while the partners can earn income from recommending that product or service.
Individuals and organizations doing affiliate marketing are usually TikTokers, Youtubers or other content creators with a certain number of viewers.
Do affiliates pay taxes? What taxes do they have to pay?
As fdiinvietnam.com mentioned above, when customers click on product or service links or make purchases or register for services, the affiliate marketer will receive a commission from the business that the individual is cooperating with.
According to Point c Clause 2 Article 2 Circular No. 111/2013/TT-BTC, remuneration received in the form of brokerage commission is an income from salary and wages that employees receive from employers. This amount is considered as income subject to personal income tax.
Therefore, individuals, regardless of whether they do affiliate marketing for any business or e-commerce platform (Shopee, Lazada, TikTok…), if they incur commission fees of VND 2,000,000/time or more, must pay personal income tax.
>> See more: Do online sales have to pay tax?
Instructions for online personal income tax settlement when doing affiliate marketing
1. Regulations on personal income tax for individuals doing affiliate marketing
Pursuant to Circular 111/2013/TT-BTC, affiliate marketers are responsible for declaring and paying personal income tax on commission fees received.
Normally, the company that pays the brokerage commission will temporarily deduct 10% personal income tax and pay it to the tax authority before paying the affiliate marketer for income from 2,000,000 VND/month. In case this commission is less than 2,000,000 VND/month, the company will usually not deduct it.
At the end of the year, individuals will have to re-calculate taxes on these incomes. Depending on their income level, individuals may be refunded personal income tax or have to pay additional tax.
2. Instructions for individuals to self-settle personal income tax online when doing affiliate marketing
Individuals doing affiliate marketing can self-declare and finalize personal income tax at the end of the year according to the instructions below from fdiinvietnam.com:
Step 1: Log in to the Vietnam Tax page (or register if you do not have an account)
Step 2: Declare and pay personal income tax
At this step, there will be 2 cases: declaring directly on the Vietnam Tax page and declaring on the HTKK software. And no matter which way you choose to declare and settle your tax, you still have to submit the declaration on the Vietnam Tax page. Specifically as follows:
➤ Case 1 – Declare personal income tax online on Vietnam Tax website:
- Select “Tax settlement”;
- Select “Declare online”;
- Select “Declaration and tax settlement authority (3.3)”;
- Continue with step 3.
➤ Case 2 – Personal income tax has been declared on HTKK software
In case you have declared and exported XML file on HTKK software, follow these steps:
- Select “Submit settlement declaration”;
- Select “Declaration and tax settlement authority (3.3)”;
- Select “XML data file”;
- Enter the confirmation code and select “Submit declaration”;
- Continue with step 4.
>> See details: How to make a personal income tax finalization declaration on HTKK software.
➤ Select tax declaration and settlement agency:
- The system automatically updates information of individual taxpayers;
- Select form 02/QTT-TNCN – Personal income tax finalization declaration (TT80/2021);
- Select tax settlement agency: Select the corresponding case of the individual taxpayer. The system will then automatically update the settlement agency for the individual;
- Select tax settlement case;
- Select declaration type:
- Select “Official Declaration” if submitting for the first time;
- Select “Supplementary declaration” if submitting adjusted or supplemented documents as required by the tax authority;
- Select the tax settlement year and click “Continue”.
Step 3: Fill in the information on the personal income tax finalization declaration form as required displayed on the page as shown below.
After completing the information, click “Complete declaration” to submit the declaration.
Step 4: Send attached documents
Attached appendix includes: contract file and personal income tax deduction certificate.
After successfully downloading the file, click “Continue” ➜ Enter “Verification code” ➜ Click “Continue”.
The system will send an OTP code to the registered phone number. The taxpayer enters the OTP code and clicks “Continue” to complete the process of submitting the personal income tax finalization declaration.
Notification of receipt and processing results will be sent via email or SMS to the taxpayer’s phone number registered with the tax authority.
>> For details, see: Instructions for individuals to self-settle personal income tax online.
—–
In case you are doing affiliate marketing for the first time or have no experience in declaring and settling personal income tax, you can refer to the personal income tax settlement service of fdiinvietnam.com. fdiinvietnam.com will carry out the personal income tax settlement procedure for you within just 6 days, with a package fee of only 800,000 VND.
>> See details: Personal income tax settlement service.
CALL NOW
Popular forms of affiliate marketing commissions Shopee, Lazada, TikTok…
Currently, e-commerce platforms such as Shopee, Lazada, TikTok are where most people participate in making money from affiliate marketing. Each business or platform will have different policies and regulations on affiliate marketing commission rates. Below are 4 popular affiliate marketing models:
1. Commission based on sales (CPA – Cost Per Acquisition)
This is the most widely used form of commission calculation on e-commerce platforms such as Shopee, TikTok, Lazada… With this form, marketers only receive commission when buyers perform a specific action such as purchasing or registering for a service.
2. Commission based on sales (CPS – Cost Per Sale)
In this case, the commission is calculated based on a percentage of the sales that the marketer has generated, meaning that the marketer only receives the commission when the customer has successfully paid for the order.
3. Commission per click (CPC – Cost Per Click)
In this model, marketers receive a commission every time someone clicks on their marketing link. The commission is calculated based on the number of clicks. However, this method has a lot of potential risks of fraud, so it is rarely used.
4. Cost Per Lead (CPA)
With this form, affiliate marketers will receive commissions when customers provide information through links such as filling out forms, doing surveys, etc.
Thus, depending on your strengths and individual needs, you can choose the appropriate form of affiliate marketing commission calculation.
Frequently asked questions about personal income tax declaration when doing affiliate marketing
1. What is affiliate marketing?
Affiliate marketing is a form of online brokerage in which businesses pay partners (who can be individuals or organizations) when they refer customers to buy products through links on the internet platform.
>> See details: What is affiliate marketing?
2. Do individuals doing affiliate marketing have to pay taxes?
Commissions from affiliate marketing are essentially the same as income from salaries and wages, so they are subject to personal income tax like individuals who sign collaborator or seasonal contracts for the company.
>> See details: Do individuals doing affiliate work have to pay taxes?
3. What taxes do Shopee affiliate marketers have to pay?
Individuals participating in affiliate marketing for Shopee or any other e-commerce platform must pay personal income tax.
>> See details: What taxes do individuals doing affiliate marketing have to pay?
4. Does the business pay taxes for affiliate marketers or do individuals have to pay taxes themselves?
Normally, businesses will temporarily deduct 10% personal income tax and pay it to the tax authority before paying affiliate marketers for income from 2,000,000 VND/month. However, at the end of the year, individuals will have to re-finalize taxes on this income.
>> See details: Instructions for settling personal income tax online when doing affiliate marketing.
5. What is the Shopee affiliate commission calculation method?
Commissions on Shopee are calculated in the form of CPA – Cost Per Acquisition (commission based on sales). With this form, marketers will receive commissions when buyers successfully place orders.
>> See details: Affiliate marketing commission forms Shopee, Lazada, TikTok…
Call us at 0978 578 866 (North) – 033 9962 333 (Central) – 0946 724 666 (South) for support.