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THE MINISTRY
OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No. 59/1998/TT-BTC
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Hanoi, May 12,
1998
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CIRCULAR
SUPPLEMENTING
CIRCULAR No.95/1997/TT-BTC OF DECEMBER 29, 1997 OF THE MINISTRY OF FINANCE
GUIDING AND INTERPRETING THE CONTENTS OF THE PROVISIONS OF THE DOUBLE TAXATION
AVOIDANCE AGREEMENTS ALREADY CONCLUDED BETWEEN VIETNAM AND OTHER COUNTRIES AND
ENFORCED IN VIETNAM
Pursuant
to the double taxation avoidance agreement between Vietnam and Belarus which
came into force from December 26, 1997 and the double taxation avoidance
agreement between Vietnam and Czech which came into force from February 3,
1998;
Pursuant to Circular No.95/1998/TT-BTC of December 29, 1997 of the Ministry of
Finance guiding and explaining the contents of the provisions of the double
taxation avoidance agreements already signed between Vietnam and other
countries and enforced in Vietnam;
For the implementation of the two above-mentioned double taxation avoidance
agreements, the Ministry of Finance hereby guides the supplements to its
Circular No. 95/1997/TT-BTC of December 29, 1997 as follows:
1.
The provisions of the double taxation avoidance agreement between Vietnam and
Belarus shall be implemented under the guidance in Circular No.95/1997/TT-BTC
of the Ministry of Finance. In cases where the agreement between the Government
of the Socialist Republic of Vietnam and the Government of the Republic of
Belarus on avoidance of double taxation and prevention of tax evasion regarding
taxes on income and property contains provisions not yet guided elsewhere in
Circular No.95/1997/TT-BTC or provisions different from the provisions of the
above-mentioned Circular, the specific provisions on the agreement between
Vietnam and Belarus in Appendix No. XXIV attached to this Circular shall apply.
2. The provisions of the double taxation
avoidance agreement between Vietnam and Czech shall be implemented under the
guidance in Circular No.95/1997/TT-BTC of the Ministry of Finance. In cases
where the agreement between the Government of the Socialist Republic of Vietnam
and the Government of the Republic of Czech on avoidance of double taxation and
prevention of tax evasion regarding taxes on income and property contains
provisions not yet guided elsewhere in Circular No.95/1997/TT-BTC or provisions
different from the provisions of the above-mentioned Circular, the specific
provisions on the agreement between Vietnam and Czech in Appendix No. XXV
attached to this Circular shall apply.
This Circular takes effect from the date of its
signing.
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APPENDIX NO. XXIV
THE AGREEMENT
BETWEEN VIETNAM AND BELARUS
(attached to Circular No.59/1998/TT-BTC
of May 12, 1998 of the Ministry of Finance supplementing Circular No.
95/1997/TT-BTC of December 29, 1997 of the Ministry of Finance)
Notwithstanding the provisions of Circular
No.95/1997/TT-BTC of December 29, 1997 of the Ministry of Finance, the
following provisions shall apply to the implementation of the agreement between
the Government of the Socialist Republic of Vietnam and the Government of the
Republic of Belarus on avoidance of double taxation and prevention of tax
evasion regarding taxes on income and property which came into force from
December 26, 1997 and shall apply to various taxes in Vietnam from January 1st,
1998:
1.
Permanent establishment:
(i) Under this Agreement, Paragraph a, Point
3.2, Clause 3, Section I of the Circular is replaced with the following
provision:
a) Such enterprise has in Vietnam: an executive
head office, branch(es), office(s) (including Vietnam-based trade
representative offices of foreign traders in case of authorization to sign
commercial contracts), factory(ies), manufacturing workshop(s), mine(s), oil or
gas well(s), natural resource exploiting location(s), place for sale of goods
or property belonging to the enterprise, or equipment and means used for the
exploration of natural resources.
(ii) Under this Agreement, Paragraph d, Point
2.3, Clause 2, Section I of the Circular is replaced with the following
provision:
d) Such enterprise has in Vietnam a broker, a
general commission agent or any other agent, if such agent devotes all its
activities to the enterprise (dependent agent).
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(iv) Under this Agreement, Paragraph a, Point
3.3, Clause 3, Section I of the Circular shall be replaced with the following
provision:
a. Such enterprise uses facilities only for the
purposes of storage, display or delivery of goods or property belonging to the
enterprise.
2. Income
from business activities
Under this Agreement, no profit shall be
attributed to a permanent establishment of a Belarussian enterprise in Vietnam
if such permanent establishment merely purchases goods or property for the
enterprise.
3. Income
from dividends:
According to Clause 2, Article 10 of this
Agreement, the maximum tax rate mentioned in Point 5.2, Clause 5, Section II of
the Circular shall be 15% of the total amount of dividends.
4. Income
from loan interests:
4.1. According to Clause 2, Article 11 of this
Agreement, the maximum tax rate stated in Point 5.2, Clause 5, Section II of
the Circular shall be 10% of the total amount of loan interests.
4.2. In cases where Vietnam levies income tax on
loan interests paid by Vietnamese organizations or individuals to foreign
residents, the loan interests paid to the National Bank of Belarus shall be
exempt from tax in Vietnam.
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According to Clause 2, Article 12 of this
Agreement, the maximum tax rate stated in Point 7.2, Clause 7, Section II of
the Circular shall be 15% of the total amount of royalties.
6. Income
from independent professional activities:
According to Clause 3, Article 14 of this
Agreement, the term "fixed base" means a fixed place such as an
office or a room or any place where an individual may regularly undertake some
or all independent personal service activities.
7. Income
from pensions:
According to Clause 2, Article 18 of this
Agreement, payments received by in individual being a resident of Belarus from
various social insurance forms in accordance with the provisions of Vietnamese
laws shall be taxed only in Vietnam.
8. Income
of students and apprentices:
Under this Agreement, Paragraph b, Clause 15.2,
Section II of the Circular shall be replaced with the following provision:
For allowances, scholarships or remuneration not
mentioned in Paragraph a, Clause 15.2, Section II of the Circular, the students
or apprentices mentioned in Clause 15.2, Section II of the Circular shall,
throughout their study or training period in Vietnam, be entitled to the
provisions on tax exemption or reduction like thoss applicable to residents of
Vietnam.
9. Other
income:
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17.1. Article 22 stipulates the taxation of
other income not yet mentioned in other articles of the Agreement.
17.2. According to Article 22, in cases where a
resident of Belarus has other income sources derived from Vietnam as mentioned
in Point 17.1, he/she shall have to pay tax in Vietnam in accordance with the
provisions of the taxation legislation of Vietnam.
APPENDIX NO. XXV
THE AGREEMENT
BETWEEN VIETNAM AND CZECH
(attached to Circular No.59/1998/TT-BTC
of May 12, 1998 of the Ministry of Finance supplementing Circular
No.95/1997/TT-BTC of December 29, 1997 of the Ministry of Finance)
Notwithstanding the provisions of Circular
No.95/1997/TT-BTC of December 29, 1997 of the Ministry of Finance, the
following guiding provisions shall apply to the implementation of the agreement
between the Government of the Socialist Republic of Vietnam and the Government
of the Republic of Czech on avoidance of double taxation and prevention of tax
evasion regarding taxes on income and property which took effect from February
3, 1998 and shall apply to various taxes in Vietnam from January 1st, 1999:
1.
Permanent establishment:
(i) Under this Agreement, Paragraph a, Point
3.2, Clause 3, Section I of the Circular is replaced with the following
provision:
a) Such enterprise has in Vietnam: an executive
head office, branch(es), an office(s) (including Vietnam-based trade
representative office(s) of foreign traders in case of authorization to sign
commercial contracts), factory(ies), manufacturing workshop(s), mine(s), oil or
gas well(s), quarry(ies), natural resource exploration or exploration place(s).
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2. Income
from business activities:
Under this Agreement, no profit shall be
attributed to a permanent establishment of a Czech enterprise in Vietnam if
such permanent establishment merely purchases goods or property for the
enterprise.
3.
Profits from international transportation:
(i) Under this Agreement, Paragraph d, Clause 1,
Section I of the Circular is replaced with the following provision:
d) The term "international
transportation":
The term "international
transportation" used in the Agreement to imply the cargo or passenger
transportation by airlines or maritime shipping firms which have actual
executive offices in Vietnam or Czech between a place in one contracting State
and a place in the other contracting State.
For example, a shipping firm has an actual
executive office in Czech transports cargoes and passengers between Hai Phong
port and a port in Hong Kong or a port in Czech, such activity shall be called
international transportation. The term shall not apply to cases where the
above-mentioned Czech shipping firm transports cargoes and passengers between
the Hai Phong port and a port of Ho Chi Minh City (both ports are in Vietnam).
If the actual executive office of the enterprise
is on a ship or a boat then the enterprise shall be regarded as having an
actual executive office in Vietnam if the main port of such ship or such boat
is situated in Vietnam, or if the enterprise has no main port, its actual
executive office shall be in Vietnam if the operator of such ship or such boat
is a resident of Vietnam.
(ii) Under this Agreement, Paragraph a, Point
3.1, Clause 3, Section II of the Circular shall be replaced with the following
provision:
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4. Income
from dividends:
According to Clause 2, Article 10 of this
Agreement, the maximum tax rate mentioned in Point 5.2, Clause 5, Section II of
the Circular shall be 10% of the total amount of dividends.
5. Income
from loan interests:
5.1 According to Clause 2, Article 11 of this
Agreement, the maximum tax rate stated in Point 5.2, Clause 5, Section II of
the Circular shall be 10% of the total amount of loan interests.
5.2. a/ In cases where Vietnam levies income tax
on loan interests paid by Vietnamese organizations or individuals to foreign
residents, the loan interests shall be exempt from tax in Vietnam if:
(i) Such interests are received and actually
enjoyed by the Czech Government, an agency or a local government of Czech; or
(ii) Such interests are received and actually
enjoyed by the Central Bank of Czech;
b/ In cases where Vietnam levies income tax on
loan interests paid by Vietnamese organizations or individuals to foreign
residents, the Government of Vietnam may also consider tax exemption for
interests received and actually enjoyed by any subjects (except for the
subjects mentioned in Points (i) and (ii)) above that are residents of Czech
provided that the business operations from which the debt arises is permitted
by the Government of Vietnam.
6. Income
from copyright royalties:
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7. Income
of artists and athletes:
Under this Agreement Point 12.4, Clause 12,
Section II of the Circular is replaced with the following provision:
12.4. In cases where the artistic or sport
performance by an individual or company being a resident of Czech mainly funded
by a public fund of Czech or if such performance is carried on under a cultural
treaty or agreement between Vietnam and Czech, income derived from the
performance in Vietnam by resident individual or company of Czech shall be
exempt from tax in Vietnam.
8. Income
of students and apprentices:
Under this Agreement, Paragraph b, Clause 15.2,
Section II of the Circular is replaced with the following provision:
For allowances, scholarships or remuneration not
mentioned in Paragraph a, Clause 15.2, Section II of the Circular, the students
or apprentices mentioned in Clause 15.2, Section II of the Circular shall,
throughout their study or training period in Vietnam, be entitled to the
provisions on tax exemption or reduction like those applicable to residents of Vietnam.
9. Income of teachers, professors and
researchers:
The provision of Clause 16, Section I of the
Circular on income of teachers, professors and researchers shall not be applied
in this Agreement.-