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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.
74/2006/TT-BTC
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Hanoi,
August 16, 2006
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CIRCULAR
GUIDING THE TAX EXEMPTION FOR FISHING AND MAKING OF
UNPROCESSED SALT AND THE TAX REDUCTION FOR BUSINESS ESTABLISHMENTS EMPLOYING
ETHNIC MINORITY LABORERS FROM 2006 THROUGH 2010
Pursuant to Resolution No.
47/2005/QH11 of November 1, 2005, of the XIth National Assembly, the 8th session, on the 2006 state budget estimates;
Pursuant to the Government’s Resolution No. 01/2006/NQ-CP of January 16, 2006,
on major solutions to directing and administering the implementation of the
2006 socio-economic plan and state budget;
Pursuant to the Government’s Decree No. 77/2003/ND-CP of July 1, 2003, defining
the functions, tasks, powers and organizational structure of the Ministry of
Finance;
Based on the Prime Minister’s directions in the Government Office’s Official
Letter No. 3321/VPCP-KTTH of June 22, 2006,
The Ministry of Finance hereby guides the exemption from license tax, natural
resource tax and enterprise income tax on fishing and making of unprocessed
salt and the reduction of enterprise income tax for business establishments
employing ethnic minority laborers from 2006 through 2010 as follows:
I. EXEMPTION
FROM LICENSE TAX, NATURAL RESOURCE TAX AND ENTERPRISE
INCOME TAX ON FISHING AND MAKING OF UNPROCESSED SALT
1. Subjects and scopes of tax
exemption
1.1. Entities eligible for tax
exemption
Organizations and individuals
(referred to as business establishments for short) engaged in fishing or making
unprocessed salt shall be eligible for exemption from license tax, natural
resource tax and enterprise income tax under the guidance in this Circular,
including:
- Enterprises established and
making business registration under the Enterprise Law, the State Enterprise
Law, the Investment Law, and the Law on Foreign Investment in Vietnam;
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- Individuals, households and
cooperative members performing jobs assigned by cooperatives and paying license
tax according to Point 2, Section I of the Finance Ministry’s Circular No.
96/2002/TT-BTC of October 24, 2002, guiding the implementation of the
Government’s Decree No. 75/2002/ND-CP of August 30, 2002, on the adjustment of
license tax rates.
1.2. Scope of tax exemption
- Fishing eligible for tax
exemption shall only be exploitation of natural products from the sea (both
onshore and offshore), excluding exploitation of freshwater resources;
aquaculture; service activities in support of fishing (supply of fishing gear,
freshwater, ice water, petrol and oil); trading in and processing of marine
products.
- Making of unprocessed salt
eligible for tax exemption shall only be making of salt from seawater,
excluding salt trading or processing of salt into refined salt products (such
as iodized salt, fine salt, etc.).
2. Taxes to be exempted
2.1. License tax
From 2006 through 2010, business
establishments engaged in fishing and making of unprocessed salt shall be
eligible for license tax exemption.
Where a business establishment
engaged in fishing or making of unprocessed salt carries out other business
activities but has only one business license, it shall also enjoy license tax
exemption.
Where a business establishment
has many dependent units (branches or shops) which pay their own license tax,
license tax shall be exempted only for the unit directly engaged in fishing and
making of unprocessed salt.
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From 2006 through 2010, business
establishments engaged in fishing or making of unprocessed salt, regardless of
their operation scale and location, shall enjoy natural resource tax exemption.
2.3. Enterprise
income tax
From 2006 through 2010, business
establishments shall be eligible for enterprise income tax exemption for
fishing and making of unprocessed salt. Business establishments which carry out
different production and business activities shall separately account the
income from fishing and that from making of unprocessed salt for use as a basis
for enterprise income tax exemption.
Where it is impossible to
account separately the income from fishing and that from making of unprocessed
salt, the income from the activity eligible for tax exemption shall be
determined based on the proportion of the turnover of such activity to the
total turnover of the business establishment, specifically as follows:
Tax-exempt income from fishing or making unprocessed
salt
=
The business establishment’s total income
subject to enterprise income tax in the tax period
x
Turnover from fishing or making unprocessed
salt
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For business establishments
which carry out all activities from fishing to processing of marine products or
from making unprocessed salt to processing of salt into other products such as
soup base, the tax-exempt income from fishing or making of unprocessed salt
shall be determined based on the proportion of the production cost in such
activity to the total reasonable expense of the business establishment,
specifically as follows:
Tax-exempt income from fishing or making
unprocessed salt
=
The business establishment’s total income
subject to enterprise income tax in the tax period
x
Production cost of fishing or making
unprocessed salt
The business establishment’s total reasonable
expense in the tax period
3. Tax exemption procedures
3.1. For individuals and
households engaged in fishing or making unprocessed salt
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3.2. For organizations engaged
in fishing or making of unprocessed salt
Annually, organizations shall
determine by themselves to be-exempted amounts of license tax, natural resource
tax and enterprise income tax and declare them with tax authorities according
to current regulations. Business establishments which carry out different
activities or carry out business activities simultaneously in different stages
shall determine by themselves to be-exempted enterprise income tax amounts on
fishing or making of unprocessed salt according to Appendix No. 1A to this
Circular (not printed herein) and enclose them with declarations on
self-finalization of enterprise income tax.
II.
ENTERPRISE INCOME TAX REDUCTION FOR BUSINESS ESTABLISHMENTS EMPLOYING ETHNIC
MINORITY LABORERS
1. Subjects and principles of
tax reduction
Business establishments which
fully meet the conditions set in Clause 2, Section II of this Circular shall be
eligible for enterprise income tax reduction, including enterprise set up and
making business registration under the Enterprise Law, the State Enterprise Law,
the Investment Law, and the Law on Foreign Investment in Vietnam; cooperatives
set up and making business registration under the Cooperative Law; and
individual business households.
State-owned agricultural and
forestry enterprises which employ ethnic minority laborers lawfully residing in
the Central Highlands provinces and enjoy state budget supports for
job-training activities under the Prime Minister’s Decision No. 231/2005/QD-TTg
of September 22, 2005, shall not be eligible for enterprise income tax
reduction under this Circular, except where they apply forms of training ethnic
minority laborers other than the job-training forms for which the state budget
supports have been provided.
Expenses on job training for
ethnic minority laborers which arise in the period from 2006 through 2010,
shall be considered expenses paid for the state budget, which business
establishments shall not account as reasonable expenses but shall deduct them
from payable enterprise income tax amounts in each tax period. Where in the tax
periods from 2006 through 2010, business establishments do not have any payable
enterprise income tax amounts or cannot fully deduct the actual expenses on job
training for ethnic minority laborers, they may transfer the remainder for
deduction from the payable enterprise income tax amounts in subsequent tax
periods until such expenses are fully deducted.
2. Conditions for tax reduction
To enjoy enterprise income tax
reduction, business establishments must fully satisfy the following three
conditions:
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- Paying expenses on job
training for ethnic minority laborers;
- Making accounting books,
invoices and documents according to regulations.
Ethnic minority people are those
of all ethnic groups (other than Kinh) and live in the Vietnamese territory.
Ethnic minority shall be determined based on the laborers’ identity papers
(copies of identity cards with the certification of business establishments) or
their personal details included in the laborers’ dossiers, enclosed with labor
contracts or collective labor agreements.
3. Bases for determination of to
be-reduced tax amounts and tax reduction procedures
3.1. Bases for determination of
to be-reduced enterprise income tax amounts
To be-reduced enterprise income
tax amounts shall be expenses actually paid for job training for ethnic
minority laborers, including:
i/ Training fee paid to training
establishments, remuneration paid to teachers or professional instructors;
ii/ Expense for the purchase of
books, documents and learning facilities suitable to job-training courses;
iii/ Wages or cost-of-living
allowances paid to laborers in the learning duration;
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v/ Expenses for organizing
job-training courses such as rents of training places and teaching aids.
Example 1: In 2006 Enterprise A
had an enterprise income tax-liable turnover of VND 20,000 million; the
reasonable expense is VND 18,000 million (excluding the expense on job training
for ethnic minority laborers). In the year, Enterprise A employed ethnic
minority laborers and paid VND 160 million for job training for such laborers.
The enterprise’s business activities are subject to enterprise income tax at
the rate of 28%. Enterprise A shall enjoy enterprise income tax reduction
thanks to receiving and providing job training for ethnic minority laborers as
follows:
+ Taxable income in the year:
VND 20,000 million - VND 18,000 million = VND 2,000 million
+ Payable enterprise income tax
amount under regulations (excluding the to be-reduced amount): VND 2,000
million x 28% = VND 560 million
+ The to be-reduced enterprise
income tax amount in proportion to the actual expense on job training for
ethnic minority laborers shall be VND 160 million. Enterprise A shall pay an
enterprise income tax amount of VND 560 million - VND 160 million = VND 400
million.
For job training courses
participated by laborers other than ethnic minority people, business
establishments shall only enjoy tax reduction in proportion to the actual
expense for ethnic minority laborers. Where business establishments cannot
separately account the job-training expense for these laborers, tax reduction
shall be based on the percentage (%) between the number of ethnic minority
laborers and the total number of participants in job-training courses.
Example 2: In 2006 Enterprise B
paid VND 600 million on job training for 120 newly employed laborers, including
80 ethnic minority laborers. Therefore, the job-training expense for ethnic
minority laborers, which serves as a basis for determination of the to
be-reduced enterprise income tax amount, shall be VND 400 million {VND 600
million x 80/120}.
3.2. Tax reduction procedures
Annually, basing themselves on
job-training demands, business establishments shall project the job-training
funds for ethnic minority laborers and the job-training expenses not yet fully
deducted from previous periods’ payable tax amounts and register with their
managing tax authorities enterprise income tax amounts projected to be reduced,
enclosed with enterprise income tax declarations (made according to Form No.
02A/TNDN promulgated together with the Finance Ministry’s Circular No.
128/2003/TT-BTC of December 22, 2003) or the lists of quarterly payable
enterprise income tax amounts (made according to Form No. 03-TNDN-TKTN
promulgated together with the Finance Ministry’s Circular No. 127/2003/TT-BTC),
for business establishments which make tax self-assessment.
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III.
ORGANIZATION OF IMPLEMENTATION
1. Tax authorities at all levels
shall consider and inspect entities eligible for tax exemption under this
Circular in order not to collect license tax, natural resource tax and
enterprise income tax from 2006 through 2010.
2. Where business establishments
engaged in fishing or making unprocessed salt had remitted license tax, natural
resource tax and enterprise income tax into the state budget before the
issuance of this Circular, tax authorities shall refund the paid tax amounts to
them. Tax refund procedures shall comply with the Finance Ministry’s Circular
No. 68/2001/TT-BTC of August 24, 2001, guiding the refund of amounts remitted
into the state budget.
3. Organizations and individuals
conducting offshore fishing eligible for natural resource tax exemption or
reduction under Point 3, Section IV of the Finance Ministry’s Circular No.
153/1998/TT-BTC of November 26, 1998, guiding the implementation of the
Government’s Decree No. 68/1998/ND-CP of September 3, 1998, which details the
implementation of the Ordinance on Natural Resource Tax (amended) may opt for
tax exemption under this Circular’s guidance through 2010 or under Circular No.
153/1998/TT-BTC. Where by the end of 2010 business establishments are still
eligible for natural resource tax exemption under Circular No. 153/1998/TT-BTC,
they shall continue to enjoy natural resource tax exemption or reduction for
the remaining duration.
4. By June 1 every year (from
2007 on), provincial/municipal Tax Departments shall report the tax exemption
for fishing and making of unprocessed salt and the reduction of enterprise
income tax with respect to job training for ethnic minority laborers to the
Finance Ministry (the General Department of Taxation and the Tax Policy
Department) and People’s Committees of the same level for synthesis and report
to the Government.
5. This Circular shall take
effect 15 days after its publication in “CONG BAO.” Any guidance contrary to
this Circular shall hereby be annulled. Any problems arising in the course of
implementation should be reported to the Finance Ministry for study and
additional guidance.
FOR THE
MINISTER OF FINANCE
VICE MINISTER
Truong Chi Trung
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APPENDIX 1A
(To the Declaration of business income tax
self-finalization of … (year))
The business income tax (BIT)
amount to be exempt for the income from fishing or unprocessed-salt making
activities under the provisions Circular No. 74/2006/TT-BTC of August 16, 2006
by the Ministry of Finance (applicable to establishments engaged in different
business lines or conducting business in different stages in a closed cycle)
Name of the business
establishment: …………….
Tax identification number: ………..
1. BIT exemption conditions:
ÿ Carrying out fishing
activities,
ÿ Making unprocessed salt.
2. BIT exemption contents:
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ÿ BIT exemption for income from
unprocessed-salt making activities.
B. Determination of BIT amount
to be exempted
Criteria
Money
amount
3. Determination of the BIT
amount to be exempted in a tax period:
3.1. BIT turnover taxable from
fishing or unprocessed-salt making activities
3.2. Total reasonable expense
for fishing or unprocessed-salt making activities
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3.3. BIT turnover taxable from
fishing or unprocessed-salt making activities
3.4. BIT rate
3.5. BIT amount to be exempted
Note:
- In the sections "BIT
exemption conditions" and " BIT exemption contents", the
business establishment shall mark "x" in the appropriate box ÿ or
leave the box blank if the establishment does not fall into any case.
- Item 3.5 "BIT amount to
be exempted" in this Appendix is taken into account for inclusion in the
item "BIT exempted or reduced in the tax period" (C5) in the
Declaration of BIT self-finalization issued together with the Circular No.
128/2004/TT-BTC of December 27, 2004 by the Ministry of Finance
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APPENDIX 2A
(To the Declaration of business income tax
self-finalization of … (year))
Business income tax
(BIT) shall be reduced for business establishments employing ethnic minority laborers
with respect to the expenses for actually paid vocational training for those
laborers as stipulated in the Finance Ministry's Circular No. 74/2006/TT-BTC of
August 16, 2006
Name of the business
establishment: …………….
Tax identification number: ………..
1. BIT reduction conditions:
ÿ Employing ethnic minority
laborers.
ÿ Paying expense for
vocational training for ethnic minority laborers.
ÿ Observing regulations on accounting books, invoices and documents.
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- Total number of ethnic minority laborers: …… (people).
2. BIT reduction contents:
ÿ BIT shall be reduced with respect to the expenses for vocational training
for ethnic minority laborers.
(The list of expenses for
vocational training for ethnic minority laborers should be presented at the
request of the tax authority)
B. Determination of to
be-reduced BIT amount
Items
Money
amount
3. Expense for vocational
training for ethnic minority laborers, which has not yet been subtracted and
is transferred from the previous tax period
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4.1. Total expense for
vocational training for ethnic minority laborers
4.2. Total BIT income taxable
in the tax period
4.3. BIT rate (%)
4.4. Payable BIT amount
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5. Expense for vocational
training for ethnic minority laborers which has not yet been subtracted and
will be transferred to the subsequent tax period
Note:
- In the sections "BIT
reduction conditions" and "BIT reduction contents", the business
establishment shall mark "x" in the appropriate box ÿ or leave the
box blank if the establishment does not fall into any case.
- Item 4.5 "BIT amount to
be reduced with respect to the expense for vocational training for ethnic
minority laborers" in this Appendix is taken into account for inclusion in
the item "BIT exempted or reduced in the tax period" (C5) in the
Declaration of BIT self-finalization issued together with Circular No.
128/2004/TT-BTC of December 27, 2004 by the Finance of Ministry.