Sales collaborator commissions: 10% PIT withholding applies as wage/remuneration income
RegHub explainer by New MarketerLast updated:
Based on:111/2013/TT-BTC - Ministry of Finance
This explanation was generated by AI and checked by an automated AI review, not by a human expert. It is not legal, tax or accounting advice and may contain errors. Check the official document before you rely on it.
A company operating in trade and IT services asked the Ministry of Finance how to handle personal income tax (PIT) on commissions and fees paid to sales collaborators. These collaborators only find and refer customers and help negotiate terms; they do not sign contracts in their own name, do not issue invoices, do not collect payment from customers, and do not run an independent business. All contracts, invoices, and revenue belong to the company. The Hanoi Tax Department responded that commissions or fees paid to collaborators who are not business individuals qualify as wage and remuneration income under Point c, Clause 2, Article 2 of Circular 111/2013/TT-BTC. This covers sales agency commissions, brokerage commissions, and other service fees, all of which are subject to PIT. Because the collaborators have no labor contract with the company, under Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC, the company must withhold PIT at a flat rate of 10% on the income before payment, whenever a single payment reaches 2,000,000 VND or more. This is an important compliance point for any business using a collaborator or affiliate-style sales model, since misclassifying these payments can lead to under-withholding, back taxes, and late-payment penalties.
The question
A company operating in trade and IT services for business customers signed collaborator agreements with individuals to support customer development and sales. The collaborators' work includes:
- Finding and referring prospective customers
- Presenting product and service information
- Negotiating commercial terms under the company's sales policy
- Tracking contract signing progress
- Coordinating delivery and service rollout
- Following up on customer receivables
- Receiving and helping resolve customer feedback
The collaborators do not own the products they promote, do not sign contracts with customers in their own name, do not issue invoices, do not collect payment from customers, and do not provide software or services under their own name. All contracts, invoices, and revenue belong to the company. The company pays commissions or fees to collaborators based on a percentage of sales results.
The company asked three questions:
- Is the commission/fee classified as wage or remuneration income?
- Are these collaborators considered "business individuals" under current tax law?
- Is withholding PIT under the rules for wage/remuneration income the correct approach?
Response from the Hanoi Tax Department
Under Point c, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013, taxable income from wages and remuneration includes:
"Remuneration received in forms such as: sales agency commissions, brokerage commissions; payments for participating in scientific and technical research projects; payments for participating in projects and schemes; royalties under regulations on royalty payments; payments for teaching activities; payments for cultural, artistic, and sports performances; advertising service fees; and other service fees and remuneration."
Under Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC on withholding tax for other cases:
"Organizations and individuals paying wages, remuneration, or other payments to resident individuals without a labor contract (as guided in Points c and d, Clause 2, Article 2 of this Circular), or with a labor contract of under three (3) months, where the total payment is two million (2,000,000) VND or more per payment, must withhold tax at a rate of 10% of the income before paying the individual."
Conclusion
Based on the above, where a company pays commissions or fees to collaborators who are not business individuals:
- The payment is classified as wage/remuneration income under PIT law.
- Whenever a single payment reaches 2,000,000 VND or more, the company must withhold PIT at a flat rate of 10% of the income before paying the collaborator.
Businesses with further questions can consult guidance published by the Hanoi Tax Department at http://hanoi.gdt.gov.vn or contact their managing tax authority directly for support.