Individual Traders Retailing Pork After Basic Processing: Determining VAT and PIT Rates
RegHub explainer by New MarketerLast updated:
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.
The Ministry of Finance provided a general-principle response to an individual who buys live pigs, separates them into cuts (meat, bones, offal) and sells them retail. The activity falls under the category of distribution and supply of goods, so the VAT flat rate is 1% of revenue, per Article 12(2) of the VAT Law and Appendix I of Circular 69/2025/TT-BTC. For personal income tax (PIT), the applicable rate is 0.5% of revenue for distribution and supply of goods, per Article 10 of the PIT Law No. 04/2007/QH12 (as amended by Clause 4, Article 2 of Law No. 71/2014/QH13) and Appendix I of Circular 40/2021/TT-BTC. The Ministry noted that, as no specific dossier was provided, this guidance is based on general principles only; the questioner should verify against actual circumstances and consult the directly managing tax authority for specific guidance.
Question
An individual business owner buys a live pig, separates it into cuts (meat, bones, offal) and sells them retail. The question is whether this constitutes "basic processing" (sơ chế thông thường) under Article 4 of Decree 181/2025/ND-CP, and whether the VAT rate is 1.5% or 4.5%.
Official guidance
VAT:
Under Article 12(2) of the VAT Law, flat-rate VAT percentages (direct method on revenue) are:
- Distribution and supply of goods: 1%
- Services or construction without supply of materials: 5%
- Manufacturing, transport, services tied to goods, construction with supply of materials: 3%
- Other business activities: 2%
Appendix I, item 1(a) of Circular 69/2025/TT-BTC specifies that "wholesale and retail sale of all types of goods (excluding agency goods sold at fixed price for commission)" applies a VAT rate of 1%.
Personal income tax (PIT):
Under Article 10 of PIT Law No. 04/2007/QH12 (as amended by Clause 4, Article 2 of Law No. 71/2014/QH13), PIT rates for individual business owners are:
- Distribution and supply of goods: 0.5%
- Services or construction without supply of materials: 2%
- Manufacturing, transport, services tied to goods, construction with supply of materials: 1.5%
- Other business activities: 1%
Appendix I, item 1(a) of Circular 40/2021/TT-BTC specifies that "wholesale and retail sale of all types of goods (excluding agency goods sold at fixed price for commission)" applies a PIT rate of 0.5%.
The Ministry noted that, since no specific dossier was provided, this guidance is based on general principles only, and the questioner should consult the directly managing tax authority for specific guidance based on actual circumstances.
Action points
- Determine whether your activity is classified as goods distribution or manufacturing based on actual operations.
- Apply VAT at 1% and PIT at 0.5% if the activity is confirmed as wholesale/retail sale of goods.
- Contact the directly managing tax authority to confirm the business category classification based on your actual dossier.