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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. 39/TC-TCT
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Hanoi, June 26,
1997
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CIRCULAR
PROVIDING GUIDANCE FOR THE IMPLEMENTATION OF DECREE No.05-CP
OF JANUARY 20, 1995 AND DECREE No.30-CP OF APRIL 05, 1997, OF THE GOVERNMENT
REGULATING IN DETAIL THE IMPLEMENTATION OF THE ORDINANCE ON INCOME TAX ON
HIGH-INCOME EARNERS
Pursuant to the Ordinance
(amended) on Income Tax on High-Income Earners approved by the Standing Committee
of the National Assembly on May 19, 1994;
Pursuant to the Ordinance Amending a Number of Articles of the Ordinance on
Income Tax on High-Income Earners approved by the Standing Committee of the
National Assembly on February 6, 1997;
Pursuant to Decree No.05-CP of January 20, 1995 and Decree No.30-CP of April 5,
1997 of the Government stipulating in detail the implementation of the
Ordinance on Income Tax on High-Income Earners;
The Ministry of Finance hereby provides guidance for their implementation as
follows:
I - SCOPE OF
REGULATION
1. Subjects of
income tax:
The income-tax payers stipulated
in Article 1 of Decree No.05-CP of January 20, 1995, of the Government
stipulating in detail the implementation of the Ordinance on Income Tax on
High-Income Earners (income tax for short), include:
1.1- Vietnamese citizens who are
in Vietnam or travel on business or work abroad and generate incomes;
1.2- Other individuals who are
not Vietnamese citizens but have settled indefinitely in Vietnam;
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- Foreigners who work in Vietnam
at enterprises, economic, cultural, social organizations of Vietnam or foreign
countries, at representative offices, branches of foreign companies;
individuals who are doing business on their own;
- Foreigners who are not present
in Vietnam but earning income generated in Vietnam through technology transfer,
copyright emoluments.
2. Taxable
incomes:
The taxable incomes defined in
Item 1 of Article 2 of Decree No.05-CP of January 20, 1995 and Item 1 of
Article 1 of Decree No.30-CP of April 5, 1997 of the Government, comprise both
regular and irregular incomes.
2.1- The regular incomes
include:
2.1.1- Earnings are in the forms
of salary, wage, fee; including over-time salary, night shift salary, 13th
month salary (if any), allowances, instead of salary, from the social insurance
funds; allowances for lunch and meal between two work shifts;
2.1.2- All forms of monthly,
quarterly, yearly bonus and bonuses on the occasion of the national holidays,
New Year Days... provided by any source;
2.1.3- The income generated by
participation in business associations, executive boards, managing boards,
business boards;
2.1.4- Individuals stable income
as indicated in Article 1 of Decree No.05-CP of January 20, 1995, through
participation in production and business activities, all kinds of services that
are not taxable, including the individuals income from services in all fields,
such as designs, architecture, consultancy services of long-term contracts,
vocational training, teaching, examination coaching, cultural and art
performances...
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2.2- The irregular incomes
include:
2.2.1 Incomes as presents or
gifts in kind sent by organizations, individuals abroad to individuals in Vietnam
through income paying organizations such as Post Office or people who
voluntarily bring them into Vietnam. The receivers are Vietnamese individuals,
foreigners, owners or representatives of private businesses. For presents or
gifts in kind which have been declared in the Customs declarations in filling
the entry procedures, they are not taxable incomes.
2.2.2- Incomes generated by
technology transfers in each contract:
- Transfer of ownership of or
right to use industrial property such as inventions, industrial designs,
models, useful solutions, logos, trade-marks...
- Transfer of technical secrets,
technology projects, know-how process, designs or design models, formulas,
sketches, maps, tables, indexes, technical data or other technical expertise
and knowledge through sales or transfers (with or without equipment).
- Implementation of the
following supportive and consultancy services:
+ Research, analysis,
opportunity assessment, pre-feasibility and feasibility studies of investment
projects and technology innovation;
+ Technical support, technology
options, instructions on equipment installation, trial operations of
technologies;
+ Consultancy on technology
management, organization and operation of technology process and production;
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+ Provision of services of
collecting, analyzing and supplying information on markets, technology, legal
matters, natural resources and environment;
- Transfer of the use of and the
right to use industrial, trading or scientific equipment (excluding simple
imports of equipment and raw materials...).
- In case the present or gift is
the technology transfer of industrial ownership as stipulated in Point 2.2.2,
the individual who receives that present or gift does not have to pay the
irregular income tax.
2.2.3- Incomes from copyright of
cultural or artistic works.
2.2.4- Incomes from constructional
technical designs, industrial technical designs and other services like
consultancy service, training service, brokerage, from marketing bonus or
commission...
2.2.5- Incomes from scientific
activities such as workshops, researches of all-level topics.
2.2.6- Lottery prizes organized
by the Government and marketing lottery in all forms.
3. Income tax
on interests of bank deposits, savings, interests of Government bonds, bills
and share, is temporarily not collected as stipulated in Article 3 of Decree
No.05-CP.
4. Incomes not
taxable stipulated in Article 4 of Decree No.05-CP:
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- Allowances for night working
shift (excluding 3rd work shift)
- Allowances for toxity, danger
for careers and jobs of which the environments are polluted or dangerous such
as mine pits; offshore drill; working on high places of suspension; direct
contact with poisonous substances, gas and dust; places with radio-active,
radiation above permitted levels;
- Zonal allowances, incentive
allowances, special allowances for remote areas, severe climate zones, new
economic zones, offshore islands, border areas with difficult circumstances,
excluding allowances for foreigners working in areas far from their homelands;
- Seniority allowances for the
armed forces: the Vietnam Peoples Army, professionals of the Peoples Amy, the
Peoples Security Force and the Peoples Police;
- Special allowance for certain
jobs such as forensic medicine, surgery;
- Allowance for public servants
and other allowances provided by the State Budget, privilegial allowance for
persons who took part in revolutionary activities prior to 1945;
- Traveling expenses for
official business trips consisting of fares, house rents and per diem. In case
of the traveling expenses that are contracted, only the above mentioned
expenses are deducted;
- Free meals for some jobs,
special jobs, meals served on spot (excluding allowances in cash);
- Social allowances to persons
who are entitled to privileged social treatment, such as war invalids, sick
soldiers, fallen heroes families, people with meritorious services to the
Revolution; aid for unexpected difficulties, allowances for solving social
evils;
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- Allowance for people assigned
to the production establishments in line with regulations of the State,
including one-time allowances for foreigners to reside in Vietnam;
- Insurance in money from
indemnities for life and property;
- Bonus for technical
innovations, inventions, international and national prizes organized and
recognized by the Vietnamese State (excluding bonuses donated by other
organizations and individuals);
- Rewards attached to titles
granted by the State such as: Vietnam Hero Mothers, Hero or Heroine of the
Peoples Armed Forces, Labor Hero, Professor, Peoples Teacher, Elite Teacher,
Peoples Artist, Elite Artist...
4.2- Net interests of the heads
of family in private businesses taxable under the Profit Tax Law (their incomes
are not included in expenses when determining taxable expenses);
4.3- Regular incomes of
foreigners staying in Vietnam for less than 30 days during 12 consecutive
months.
II- BASIS FOR
TAX CALCULATION
The basis for income tax
calculation are taxable incomes.
1. With regard to regular
incomes:
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1.1.1- For Vietnamese citizens
who live in Vietnam or go on official trips, work abroad, other individuals
residing in Vietnam: to take the total income of the year, including income earned
abroad, to be divided into 12 months (calendar year).
1.1.2- For foreigners who reside
in Vietnam upward of 183 days, the total income generated in the year,
including income generated in Vietnam and abroad, this average shall be the
total divided by 12 months. In case the monthly average income abroad is lower
than in Vietnam but cannot be verified, the monthly average income in Vietnam
shall be taken as basis for tax calculation for the period they stay abroad.
1.1.3- For foreigners staying in
Vietnam from 30 days to 182 days, the taxable income is the total income
generated in Vietnam in that period.
1.2- Tax rate of regular incomes
shall comply with Item 2 of Article 10 of the Ordinance on Income Taxes and
Item 3 of Article 1 of the Ordinance Amending a Number of Articles of the
Ordinance on Income Tax on High-Income Earners, Items 2, 3, 4 of Article 7 of
Decree No.05-CP and Item 2 of Article 1 of Decree No.30-CP.
2. With regard to irregular
incomes.
2.1- Taxable irregular incomes
are earnings of individuals according to Item 1 of Article 1 of Decree No.30-CP
of April 05, 1997, concretely:
Income in presents or gifts sent
to Vietnam from abroad, which are valued each time.
Incomes generated by technology
transfers, constructional technical designs, industrial technical designs which
are accounted for in each contract value, not depending on the numbers of
payment.
2.2- Tax rate of irregular
incomes shall comply with the stipulations of Article 12 of the Ordinance on
Income Taxes, Article 9 of Decree No.05-CP.
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1.
Organization and management of tax collection:
Article 11 of Decree No.05-CP
stipulates: Collection of income taxes shall comply with the principle of
deducting income at the source. Income paying organizations, individuals or
labor managing agencies (called delegated collection organization) shall have
to deduct income tax at the source to pay to the State Budget prior to paying
incomes to individuals.
In other cases, the tax agency
is responsible for directly collecting income taxes.
The delegated collection
organizations include:
- Organizations, individuals
paying salary, wages, bonus, fees and other incomes of a salary or wage
character;
- Agencies managing, recruiting,
brokering or supplying labor in Vietnam;
- Agencies managing, recruiting,
sending people to work abroad: Ministries, branches, enterprises...
- Diplomatic agencies,
representative organizations of Vietnam�s
agencies and businesses in foreign countries;
- Goods inspection
organizations, returning presents, gifts sent to Vietnam from abroad such as:
entry Customs, Post Office, organizations, individuals providing services of
transporting presents and gifts in kind;
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- Organizations and individuals
paying for technology transfers or copyright;
- Organizations paying lottery
prizes;
- Organizations and individuals
paying for services and consultancy;
- Contractors;
In case the managing agency does
not directly pay income, but whose function is to manage, control and supervise
activities of taxable organizations and individuals, it shall be also
considered as a delegated collection organization if it can ensure timely and
concentrated collection of income tax;
The delegated collection
organization is entitled to get a remuneration proportional to the income taxes
it has collected in order to use for covering expenses in tax collection,
payments and rewarding those with meritorious accomplishments in organizing tax
collections and payments. The rate of remuneration shall be as follows:
- 0,5% (five per thousand) of
the collected income tax on regular incomes.
- 1% (one per cent) of the
collected income tax on irregular incomes and the taxes collected through
foreign contractors.
2. Tax
registration - declaration:
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2.2- The delegated collection
organizations must register the income tax collection of their units with the
local tax agency where they register license tax payment (in case the delegated
collection organizations do not have to pay license taxes, they must register
with the tax agency in the locality where their offices are located).
2.3- Individuals earning taxable
incomes which are not yet deducted for tax payment at the source, are
responsible for registration with the tax agency at the locality where they are
working in order to receive the tax registration forms and income tax
declarations for individuals.
3. Tax
payment and balance sheet.
3.1- With regard to regular
incomes:
3.1.1- Tax payment.
Income taxes must be calculated
for a whole year but temporarily paid according to the real income every month.
Based on the real income payment
of each month, the delegated collection organizations shall deduct the taxable
income and make a sum-up table to declare the number of income earners, real
income and income taxes that must be paid for each one, the total amount of
income taxes that must be paid to the State budget minus the fees they are
entitled to in accordance with Point 1, Section III of this Circular. Income
taxes must be paid once a month not later than the 15th day of the following
month.
Foreigners who come to Vietnam
shall not have to pay income tax if their stays are registered in advance as
less than 30 days. If the stays are from 30 days to under 183 days, they must
pay income tax based on their total income; if the stay is upward of 183 days,
they must temporarily pay income tax every month based on their monthly real
income and on a partial progressional basis as stipulated in Item 2 of Article
10 of the Ordinance on Income Tax; if their lengths of stay are not determined
in advance, they must pay a temporary 10% pending the formal payment of the
income tax at the year-end.
Individuals who pay income taxes
directly to the tax agency, not through the delegated collection organizations,
must monthly come to the tax agency where they have registered in order to
submit the tax declaration forms, receive the tax notices and directly pay
their income taxes.
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3.1.2.1- Principles of tax
statement
Tax statement on regular incomes
is made according to the calendar year. At the end of the year or after the end
of contracts in the year, individuals must declare their income tax as
stipulated below:
- To sum up all sources of
income in the year, calculate the income taxes that must be paid according to
the income tax statement and submit the statement to the delegated collection
organization or the tax agency (in case the individuals pay income tax directly
to the tax agency). The deadline for submitting the statement is January 30 of
the following year or not later than 20 days after the end of a contract. The
delegated collection organization or the tax agency must examine, calculate the
income tax that must be paid on the basis of the individuals income tax
declaration form, compare it with the already paid income tax in order to
determine the shortfall that must be paid or the overcharge that shall be
returned, and draw the overall income tax balance. The delegated collection
organizations or individuals paying income tax directly to tax agencies must
work with the tax agency to draw the income tax balance not later than February
28 of the next year or 30 days after the end of the contracts.
- In case the individuals work
at many places in different periods of time in the year, the taxable monthly
income must be deducted to pay the tax at the source and by the end of the year
their income taxes must be declared at the place where they last work in the
year.
- In case the individuals
concurrently work and earn incomes in many places at the same time in the year,
they must sum up, declare their income tax at the place where they acquire the
largest income or at the most convenient place.
- In case the individuals earn
their income in the year by participating in enterprise associations, Managing
Board or other regular income separated from income gained at the place of
their official work, they must sum up, declare their income together with the
income gained at the place they officially work in order to pay their income
tax as prescribed.
3.1.2.2- Tax statements of
Vietnamese, other individuals residing in Vietnam.
- Individuals who work only in
Vietnam in the tax year shall sum up, declare their total regular income in the
Calendar Year divided into 12 months to calculate the average taxable income.
Basing on the monthly average income and Tax Index stipulated in Item 3 of
Article 1 of the Ordinance Amending a Number of Articles of the Ordinance on
Income Tax on High-Income Earners, they shall calculate their income tax to be
paid for the whole year, compare it with the monthly already paid income taxes,
determine the income tax shortfall that must be paid (or the excess that shall
be returned).
- In case the individual is
assigned to go abroad on short-term study tour, official trips for given
periods of the year and receiving only per diem for traveling, food,
accommodations, these incomes need not to be declared and are not taxable
incomes.
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+ During the time in Vietnam,
the monthly average incomes are estimated according to the Tax Index stipulated
in Item 3 of Article 1 of the Ordinance Amending a Number of Articles of the
Ordinance on Income Tax on High-Income Earners.
+ During the time abroad, the
monthly average taxable incomes are estimated according to the Tax Index
stipulated in Item 2 of Article 10 of the Ordinance on Income Tax.
- Individuals going on official
business or working abroad for the whole year shall sum up, declare the total
income of the year and divide them into 12 months to calculate the taxable
monthly average income and determine their income taxes based on the Tax Index
stipulated in Item 2 of Article 10 of the Ordinance on Income Tax.
In case the individuals have
already paid income tax abroad with vouchers supplied by these countries, there
may be deduction of the paid tax but this should not exceed the amount of taxes
to be paid according to the Tax Index of Vietnam. In case these countries have
signed agreements on avoidance of double taxation with Vietnam, the
stipulations by these agreements shall apply.
The delegated collection
organizations or tax agencies shall examine the declaration form, determine the
income tax that must be paid in line with the above-mentioned regulations,
compare them to vouchers of income tax payment abroad in order to collect the
difference (if any).
3.1.2.3- Tax statements of
foreigners.
Income tax balances applied to
foreigners regular income are declared, drawn on the basis of the periods of
residence. Individuals have to declare the accurately the number of days they
will stay in Vietnam and their taxable income so that the stays and income
taxes that must be paid can be estimated. The stay in the first year of income
tax payment is determined by totaling all the days to stay in Vietnam within 12
consecutive months beginning from the day of arrival; after the first year of
income tax payment, it is determined by the Calendar Year and the day of
arrival and departure are counted as one day. In case the individuals are considered
residents of the last year, the stay in the following year shall also be
included in the period of residence.
- For foreigners residing in
Vietnam from 30 days to 182 days in the year of income tax payment: it is
required that the total income generated in Vietnam must be declared and the
income tax to be paid are uniformly fixed at 10% as prescribed. In case the
number of days present in Vietnam is less than 183 days of the year of income
tax payment because the job requires repeated entries and exits to and out of
Vietnam in the period of two years and more, the income tax indexes are the
ones applied to residence subjects and their income taxes must be paid in
accordance with the number of months present in Vietnam. Each month shall
comprise 30 days.
- For foreigners residing in
Vietnam from 183 days and more in the year of income tax payment: it is
required that the total income generated in Vietnam and abroad in the year of tax
payment must be declared, divided into 12 months to determine the monthly
average income and income tax must be estimated, paid in line with the
stipulations of Item 2 of Article 10 of the Ordinance on Income Taxes. In case
the monthly average income abroad is less than that in Vietnam and can not be
verified, the monthly average income in Vietnam is taken as basis for
determining the income tax to be paid for the period abroad. In case the time
to depart Vietnam definitively is fixed in the year of tax payment, the income
taxes are calculated up to the month of departure from Vietnam.
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3.1.2.4- Income tax payment and
settlement.
- The delegated collection
organizations must work with the tax agency to draw the balance sheet of the
income tax to be collected or already collected of each individual; of the
income tax that must be paid or has been already paid to the budget of their
units in line with Point 3.1.2.1 of Section III above, be responsible for
remitting to the State budget and tax payers within 15 days from the day of
drawing the income tax balance sheet. If the individuals income tax that must
be paid is more than that already paid every month, the delegated collection
organizations must continue to deduct, collect the individuals income to pay
for the shortfall and remit to the State budget within 15 days after drawing
the income tax balance sheet. In case the monthly income tax that has been paid
is more than that to be paid in the whole year, the excess tax must be returned
by deducting income taxes of the next period but it must be examined and
verified by the tax agency.
- For individuals paying income
taxes directly to the Tax Department, the shortfall must be paid within 15 days
after receipt of the tax agencys notice. In case the income tax that has been
already paid is more than that must be paid, the excess shall be returned by
deducting the income tax of the next period, and if no income tax must be paid
in the next period, the tax agency shall return the excess to the tax payer.
3.2- For irregular incomes
Taxes on irregular incomes are
paid each time of earning income. The delegated collection organization
provides income earners declaration forms in order to declare their taxable
incomes and estimate the income tax, deduct the income for tax payment before
paying back the income. Income tax balancing between tax payers and the
delegated collection organizations is implemented right on the declaration
forms. The irregular income earners whose income are not deducted at the source
must receive the declaration forms, pay tax to the tax agency in the locality
where they are officially working. The balance between the tax payer and the
tax agency is implemented right on the individual declaration forms.
- Every month, the delegated
collection organization must make tables listing the number of people, amounts
of income, tax money collected by deducting, fees they are entitled to, taxes
that must be paid to the States Budget, repay the surcharge and tax shortfall.
The delegated collection organization must pay the deficit to the State Budget
within 15 days after the day of payment; in case the income tax is paid in
excess, the excess shall be returned by deducting from income tax that must be
paid to the State budget next time.
- For income in kind, the
delegated collection organizations must collect the tax before paying income.
- For the income that the
earners are not present such as money benefited from technology transfers, copy
right..., the delegated collection organization, instead of the earner, must
declare the income, deduct the income to pay income tax to the State budget
before paying the income and notify the tax payer.
- People who help bring presents
and gifts from abroad into Vietnam, must declare those income and pay income
tax instead of the receiver.
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IV- RESPONSIBILITIES
OF ORGANIZATIONS, INDIVIDUALS IN COLLECTING AND PAYING INCOME TAX
1. Responsibilities of
individuals earning taxable incomes:
Individuals earning taxable
incomes must register and declare their taxable incomes through the delegated
collection organization or directly to the tax agency in line with instructions
in Section III.2. Section III.3 of this Circular. Tax paying individuals are
accountable before Law for the accurating and truthfulness of the data
declared.
If he/she fails to register or
to declare, or if he/she declares falsely or fails to pay or unduly pays income
tax, the income earner shall be handled according to Article 21 of the
Ordinance on Income Tax. Those who evade paying large amount of tax or relapse
in the violation or evade tax with large amounts shall be investigated for
penal responsibility in line with law. For foreigners, their exit visas can be
revoked or postponed if they do not fulfill their obligation of income tax
payment in Vietnam as prescribed in Item 2 of Article 7 of the Ordinance on
Exit, Entry, Residence and Traveling of Foreigners in Vietnam.
2. Responsibilities of the
delegated collection organizations, the organizations receiving or hosting
foreigners:
Organizations (the delegated
collection organizations) and individuals paying income for individuals have
the following responsibilities and obligations:
- To declare, register with the
local tax agency the implementation of tax collection of individuals by
deducting income at their units; instruct the income earners to fulfill the
declaration procedure, to fill the declaration forms of income tax.
- Based on the list of tax
payers and the real income payments for them every month to deduct their income
for income tax payments and pay income taxes to the State budget.
- To receive the declaration
forms, verify, compare individuals declared income with the income that must be
paid or has been paid in order to estimate the income taxes, confirm the
declaration forms of tax payers, make a sum-up list of income taxes and send it
to the tax agency.
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- To issue receipts of income
tax collection from tax payers.
- To implement the reporting
regime; balance the income taxes and fees that they are entitled to with the
tax agency and present full documentation related to income taxes when required
by the tax agency.
Organizations receiving, hosting
foreigners who come and work in Vietnam are responsible for guiding foreigners
to fulfill all procedures of paying income taxes before fulfilling the exit
procedures.
3. Responsibilities of the tax
agency:
- To coordinate with
administrative agencies of the State and related agencies in verifying and
requiring organizations (the delegated collection organizations) and
individuals paying income located in the areas under their jurisdiction to
implement registrations, declarations of income tax by way of deduction.
- To guide, verify the delegated
collection organizations in implementing the registration regime, summing up
listings, making estimates of the income taxes, deducting income for tax
payment and paying tax to the State Budget.
- To notify the delegated
collection organizations of income taxes, tax payment and fees that they are
entitled to.
- To organize the implementation
of income tax collections of individuals who directly register at tax agency;
issue receipts, determine income taxes of tax paying subjects and the delegated
collection organizations.
- To impose coercive measures,
recollect income tax, fines for activities violating the Ordinance on Income
Tax, decide rewards for people who help discover violations and recollect
income tax.
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V - TAX
DEDUCTION, TAX EXEMPTION
1. For the cases of tax
deduction and exemption mentioned in Item 1 of Article 20 of the Ordinance on
Income Tax.
Tax payers who meet natural
disasters, war, accidents causing losses of property and income affecting their
living standard, are eligible for tax deduction or exemption in that year,
depending on the extent of the damage. The tax deductions are equal to the
value of damage and taxable income in that year but not exceeding the total
income tax of the whole year.
Procedures of and authorities in
considering tax deduction or exemption:
- Individual tax payers shall
make tax deduction, tax exemption applications certified by the local authority
(the Peoples Committees of commune, village) or by the income paid office, and
send them to the local tax agency at which the income paid office registers; The
tax deduction, tax exemption applications must clarify the reasons, damage
(attached to vouchers to prove), amount of income taxes that must be paid and
amount that is asked to be deducted or exempted;
- The tax agency shall verify,
consider and issue decisions on tax deduction or exemption or propose to the
higher tax agency for making decisions according to the following delegation of
authority:
+ The Director of the Tax
Department decides the tax deduction and exemption of less than 5 million VND
per year;
+ The General Director of the
General Department of Taxation decides tax deduction and exemption ranging from
5 million to 100 million VND per year;
+ The Minister of Finance
decides the tax deduction, tax exemption of more than 100 million VND per year.
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2. With regard to the cases of
tax deduction or tax exemption stipulated in Item 2 of Article 20 of the
Ordinance on Income Tax; Item 2 of Article 18 of Decree No.05-CP.
Organizations, individuals that
have applications sent to the Ministry of Finance for tax deduction and tax
exemption must explain clearly the reasons and the State�s economic, political, social interests related
to tax deduction, tax exemption for the tax payers. The Ministry of Finance
shall check the documents and shall submit them to the Prime Minister for
consideration and decision on concrete cases.
VI - HANDLING
OF VIOLATIONS AND REWARDS
1. Violations of the Ordinance
on Income Tax shall be handled as stipulated in Article 21, Article 22, Article
23 and Article 24 of the Ordinance on Income Tax on High-Income Earners.
Violations of administrative regulations of the Ordinance on Income Tax are
liable to concrete fines described in Decree No.22-CP of April 17, 1996 of the
Government on Administrative Sanctions in the Field of Tax and Circular
No.45-TC/TCT of August 1, 1996 of the Ministry of Finance providing guidance
for the implementation of Decree No. 22-CP.
For organizations and
individuals that pay income, help bring presents and gifts from abroad into
Vietnam, fail to declare, register or list their taxes, or fail to deduct
income taxes before paying income, therefore causing deficits in individual income
taxes, they must pay compensations for the deficits to the State budget and
shall be fined as stipulated in Article 21 and Article 22 of the Ordinance on
Income Tax. The compensation of deficits and fines shall be taken from the
income of income paying organizations, individuals and not included in the
expenses for determining the taxable revenues.
2. People who contribute to
discovering violations of the Ordinance on Income Tax, help the tax agency to
recollect the tax shall be rewarded as follows:
- Individuals who discover cases
of evading tax payments, notify the tax agency through direct notices, official
notices, letters, applications... clarifying names, addresses of the tax
evading individuals and organizations.
- After receiving notices, the
tax agency must immediately verify and calculate income taxes of the income
paid individuals and organizations, make minutes to confirm taxes evaded and
notices of tax payments together with decisions of fines to require the tax
evading individuals and organizations to pay to a temporary account of the tax
agency.
- Based on the redeemed amount
of tax and fine paid to the temporary account, the tax agency shall decide to
grant rewards to organizations and individuals who help discover the cases and
coordinate with the tax agency. The amount of reward shall not exceed 5% (five
percent) of the redeemed amount of tax paid to the State budget and the reward
to an individual shall not exceed 300,000 VND per case and 900,000 VND per
month.
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VII-
IMPLEMENTATION
1. This Circular becomes
effective from February 18, 1997. As for regular incomes the taxes to be paid
are calculated according to the new tax rate applied to the incomes of
Vietnamese citizens and other individuals residing in Vietnam generated since
February 1997. For the income in presents and money sent from abroad to
Vietnam, individuals who receive money from the income paying organizations and
individuals from February 18, 1997, do not have to pay irregular income taxes;
if the irregular income taxes have been already paid, the tax agency (that
collects income taxes) shall return them by deducting income taxes that must be
paid of the income paying organizations and individuals.
This Circular replaces Circular
No.27-TC/TCT of March 30, 1995 of the Ministry of Finance providing guidance
for the implementation of Decree No.05-CP of January 20, 1995 of the Government
on specific guidance for the implementation of the Ordinance on Income Tax on
High-Income Earners.
2. The agencies which are
assigned to manage, train, recruit laborers are allowed to spend a maximum of
8% of the income of the laborers for management, training and recruitment
activities. This expenditure is managed and used according to the annual plan
and must be balanced by the end of the year as regulated in the current
financial regime. In case the expenditures have not been fully spent, the
remainder must be paid to the State Budget and, at the same time, the rate must
be decreased to a degree suitable to the spending plan of the next year. Except
the expenditure calculated according to the above mentioned rate, all
Ministries, branches and organizations managing and using labors are forbidden
to regulate the income of the laborers in any form.
In case of recommending or
recruiting labors on the basis of delegated power, the expenditure is collected
only once as stipulated in Point 2, Section II, Circular No.19/LDTBXH-TT of
December 31, 1990 of the Ministry of Labor, War Invalids and Social Affairs
providing guidance for the implementation of Decree No.233-HDBT of June 22,
1990 of the Council of Ministers (now the Government) issuing labor regulations
for enterprises with foreign investment.
3. The incomes, that are
committed to separate income taxes and tax exemption, are taxed as regulated in
the international documents and treaties which Vietnam has signed or acceded
to.
4. Tax agencies at all levels are
responsible for publicizing, guiding the tax payers and the income paid
individuals and organizations (the delegated collection organizations) in
strictly implementing the regulations of the Ordinance, Decree and Circular
providing guidance on income taxes.
In the course of implementation
of this Circular, any problems that arise should be timely reported by the
organizations, individuals and localities concerned to the Ministry of Finance
(The General Department of Taxation) for consideration and solution.
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THE
MINISTER OF FINANCE
Nguyen Sinh Hung