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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: 13/2001/TT-BTC
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Hanoi, March 08,
2001
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CIRCULAR
GUIDING
THE IMPLEMENTATION OF TAX PROVISIONS FOR VARIOUS INVESTMENT FORMS UNDER THE LAW
ON FOREIGN INVESTMENT IN VIETNAM
Pursuant to the Law on Foreign Investment in
Vietnam, passed on November 12, 1996 by the National Assembly of the Socialist
Republic of Vietnam; and the Law Amending and Supplementing a Number of
Articles of the Law on Foreign Investment in Vietnam, passed on June 9, 2000 by
the National Assembly of the Socialist Republic of Vietnam;
Pursuant to the current tax laws and ordinances of the Socialist Republic of
Vietnam; as well as the Governments decrees detailing the implementation of tax
laws and ordinances;
Pursuant to the Governments Decree No.24/2000/ND-CP of July 31, 2000
detailing the implementation of the Law on Foreign Investment in Vietnam;
Pursuant to the Governments Decree No.36/CP of April 24, 1997 promulgating
the Regulation on industrial parks, export-processing zones and hi-tech parks;
Pursuant to the Governments Decree No.62/CP of August 15, 1998 promulgating
the Regulation on Build-Operate-Transfer (BOT) Contracts,
Build-Transfer-Operate (BTO) Contracts and Build-Transfer (BT) Contracts
applicable to foreign investment in Vietnam, and Decree No.02/1999/ND-CP of
January 27, 1999 amending and supplementing a number of Articles of Decree
No.62/CP;
The Finance Ministry hereby guides the implementation of tax provisions for
various investment forms under the Law on Foreign Investment in Vietnam as
follows:
Part I
GENERAL
PROVISIONS
1. This Circular shall apply to the following
subjects:
- Joint-venture enterprises and enterprises
with 100% foreign capital, which are established under the Law on Foreign
Investment in Vietnam (hereinafter called foreign-invested enterprises for
short).
- Joint-venture banks between Vietnamese
banks and foreign banks, which are licensed by the State bodies managing
foreign investment under the Law on Foreign Investment in Vietnam.
- Foreign-invested insurance enterprises and
insurance brokerage enterprises, which are established and operating under the
Law on Foreign Investment in Vietnam and the Law on Insurance Business.
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- Foreign parties to business cooperation
contracts (hereinafter referred to as foreign business cooperation parties)
under the Law on Foreign Investment in Vietnam.
- BOT, BTO and BT enterprises established
under the Law on Foreign Investment in Vietnam. In cases where operation
regulations of enterprises issued by the Government or the BOT, BTO or BT
contracts already approved by the Government contain provisions on tax
obligations other than this Circulars guidance, such provisions shall apply.
All the above-mentioned subjects shall,
depending on each specific context, be called enterprises for short.
Tax obligations of subjects conducting oil
and gas prospection, exploration and exploitation in Vietnam under the
Petroleum Law shall comply with separate guidance.
2. A number of definitions:
-"Tax calculation year" is the calendar year
starting on January 1st and ending on December 31 every year. In
cases where enterprises are allowed by the Finance Ministry to apply a fiscal
year other than the calendar year, the tax calculation year shall be that
fiscal year.
- "The first year with profit in
business" is the first fiscal year when an enterprise earns profit,
without offsetting losses transferred from the previous years.
- "Market price-free transaction
contracts" are the transaction or trading contracts affected by
abnormal commercial relationships such as the relationships between associated
enterprises, which are bound together by set or imposed conditions other than
those set among independent enterprises.
Enterprises shall be considered associated
enterprises when:
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(ii) Two enterprises are subject to the
direct or indirect management or control by another enterprise or both
enterprises are contributed with capital by another enterprise.
Part II
GUIDANCE
FOR THE IMPLEMENTATION OF TAX PROVISIONS
I. ENTERPRISE INCOME
TAX
1. Taxable objects:
All income amounts earned from any economic
activity of enterprises shall be subject to enterprise income tax.
2. Taxpayers:
Enterprises shall be the payers of enterprise
income tax.
In cases where a foreign organization or
individual simultaneously invests in different business cooperation contracts,
the enterprise income tax shall be calculated separately for each business
cooperation contract (including cases where foreign companies set up general
executive offices in Vietnam).
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Taxable income in
the tax calculation year
=
Turnover for
calculation of taxable income in the tax calculation year
-
Total reasonable
and valid expenses in the tax calculation year
+
Other incomes
When determining taxable incomes, enterprises
may offset losses of previous years as prescribed in Article 55 of the
Governments Decree No. 24/2000/ND-CP of July 31, 2000 detailing the
implementation of the Law on Foreign Investment in Vietnam.
As for foreign business cooperation parties,
they may carry forward losses incurred in the fiscal year of 2000 to the
subsequent year for each business cooperation contract. For foreign business
cooperation parties that apply a fiscal year other than the calendar year, if
their 1999-2000 fiscal year ends before July 1, 2000 while losses still arise,
such losses of the 1999-2000 fiscal year shall not be carried forward to the
subsequent years.
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Example: In 2000 enterprise A suffered from a
loss of USD 500,000. It is expected that as from 2001, enterprise A starts to
earn profit of USD 150,000, then USD 200,000 in 2002, USD 300,000 in 2003, USD
400,000 in 2004 and USD 550,000 in 2005. According to the provisions of its
investment license, enterprise A shall be exempt from enterprise income tax for
2 years.
As a result, according to the provisions of
Article 48, Decree No.24/2000/ND-CP, enterprise A shall be exempt from
enterprise income tax for 2 years of 2001 and 2002 (2001 is the first year with
profit in business). Enterprise A may opt for the transfer of its loss in the
year 2000 to the years from 2003 to 2005 so as to enjoy the whole tax exemption
for 2 years. The year to which its loss will be transferred shall be decided
and registered by enterprise A itself (it may transfer the total loss amount of
the year 2000 to the year 2005 or divide evenly such loss for the transfer
thereof within 3 years from 2003 to 2005).
a/ Turnover for calculation of taxable income
in the tax calculation year:
The turnover for calculation of taxable
income of an enterprise is the whole proceeds from the sale of goods and
provision of services (without value added tax) and other revenues of the
enterprise in the tax calculation year.
In a number of specific cases, the turnover
for calculation of taxable income shall be determined as follows:
* For goods sold by the mode of installment
payment, it is the turnover of the sold goods calculated according to the lump-sum
payment selling price, excluding the deferred payment interest.
* For asset-leasing activities such as the
lease of houses, offices or infrastructure, it is the rent amount to be
collected in each period according to the leasing contract. In cases where the
rent is collected in advance for many years, the turnover for calculation of
taxable income in each year shall be determined as equal to the advance rent
amount divided evenly to the number of years with advance collection.
* For goods or services used for exchange, as
donations or gifts, it is calculated according to the selling prices of
products, goods or services of the same or equivalent type on the market at the
time they are exchanged, donated or presented.
* For products for internal use, it is the
production costs of such products.
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* For credit activities, it is the loan
interest amounts that must be collected in the tax calculation year.
* For insurance and reinsurance business
activities, it is the collectible insurance premium principals, expertise
agency charge, reinsurance charge, reinsurance commissions and other revenues.
* For business cooperation contracts in form
of product sharing, it is the proceeds from the sale of products, which shall
be calculated as follows:
+ If the shared products are sold on the
Vietnamese market, the turnover shall be determined according to the selling
prices of such products on the Vietnamese market.
+ If the shared products are exported to
foreign countries, the turnover shall be determined according to the FOB prices
at the Vietnamese border gates.
When determining tax obligations of foreign
business cooperation parties, if the business cooperation parties fail to
provide the products selling prices or the sale of products fails to comply
with the market price-based trading transaction principles, the turnover shall
be determined according to the principles prescribed in Section IV, Part III of
this Circular.
b/ Reasonable expenses in the tax calculation
year:
The expenses related to the generation of
taxable income in the tax calculation year of an enterprise, regardless of the
applicable accounting regime, shall be determined to include the following:
b1. Depreciation expense and expense for the
repair of fixed assets used for production, business and/or provision of
services. The fixed asset depreciation rate shall be determined on the basis of
such assets use duration registered by the enterprise itself with the tax
authority directly managing it on the principle of straight-line depreciation
in accordance with the provisions of the Finance Ministers Decision No.
166/1999/QD-BTC of December 30, 1999.
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b3. Salaries, wages, remuneration and
payments of salary and wage nature; mid-shift meal expenses and allowances as
well as subsidies paid to Vietnamese and foreign laborers on the basis of labor
contracts or collective labor agreements in compliance with the labor legislation
applicable to enterprises, which are established and operating under the Law on
Foreign Investment in Vietnam.
b4. Expenses for scientific and technological
research; innovations; environmental protection; maintenance of storehouses,
buildings, fire prevention and fight; education, training and health care,
including expenses in outward support of health care and education, such as
contributions to study promotion funds, assistance for schools of handicapped,
homeless and supportless pupils.
b5. Expenses for services purchased from
outside:
- Expenses for power, water, telephone,
stationery, audit hiring, printing of documents.
- Liability or property insurance premiums
according to insurance policies signed with Vietnamese insurance enterprises or
other insurance enterprises licensed to lawfully operate in Vietnam.
- Expenses for hiring the overhaul of fixed
assets in order to restore their capacity shall be accounted into production
and business costs in the year. If an overhaul-expense amount is too large, the
concerned enterprise may make a plan on the distribution thereof to the
following years. For particular fixed assets requiring regular repair, the
enterprise is entitled to make an advance deduction of the overhaul expense
from the production and business costs on the basis of its overhaul expense
estimate. If the advance deduction is lower than the actual overhaul expense,
the enterprise may additionally account the difference into its expenses; if
the advance deduction is higher than the actual overhaul expense, the expenses
shall be accounted with decrease in the year.
- The rentals of houses and land for head
offices or workshops. In cases where the house- and/or land-renting enterprises
pay in advance the rentals for many years, these rentals shall be distributed
to each year according to the number of years with the advance payment.
- The rentals of fixed assets (machinery,
equipment and facilities), which shall be accounted into the production and/or
business costs according to the amounts actually paid under renting contracts.
In cases where the fixed asset rental is paid in lump-sum for many years, such
rental shall be gradually accounted into the production and/or business costs
according to the number of years during which the fixed assets are used.
- Expenses for the procurement of or payment
for, technical documents, services or techniques; expenses for copyright and
technology transfer; expenses for the use of objects of industrial property
such as patents or trademarks under the technology transfer contracts or
license contracts already approved by the Ministry of Science, Technology and
Environment or the competent agencies.
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b6. Payments for female laborers as
prescribed by law; expenses for labor safety, safeguarding of business
establishments; remittances to the funds for social and health insurance for
laborers, which fall within the enterprises obligations, or to the trade union
operation fund according to the prescribed regime.
b7. Loan interests within the limit of the
ceiling lending interest rate announced by the State Bank of Vietnam for
domestic loans; banking fees and loan interest rates paid under credit
contracts already approved by the State Bank for foreign loans. If a credit
contract has not yet been approved by the State Bank, the interest rate and fee
shall be determined according to the actual payments in accordance with the
provisions of the credit contract but must not exceed the highest lending
interest rate of the State commercial credit institutions.
For joint-venture banks, they are reasonable
interest rates and discounts paid for deposits, loans or other financial
instruments.
All expenses for interests on loans related
to the contribution of legal capital or charter capital (for banking
activities) shall not be accounted into the reasonable and valid expenses when
determining the taxable profit.
b8. Reserves for the decrease of prices of
unsold goods, bad debts or decrease of securities prices at enterprises shall
comply with the guidance of the Finance Ministry.
b9. Severance allowance for laborers according
to the current regime.
b10. Expenses related to the operation of the
Managing Board (for example: expenses for meetings of the Managing Board) of a
joint-venture enterprise in compliance with the joint ventures charter or
resolution of the Managing Board.
b11. Expenses directly related to the
circulation and sale of products or provision of services such as expenses for
goods preservation and packing, loading and unloading, transportation,
storehouse and store-yard rent, product or goods warranty.
b12. Expenses for advertisement, marketing,
sale promotion, guest reception, festive occasions, transactions, external
relations and conferences as well as other expenses, which must not exceed the
restricted levels prescribed below:
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- For trading, food and drink catering and
service business activities, they must not exceed 7%, for the first 2 years
after the enterprises establishment, then 5%, for the subsequent years, of the
total amount of expenses prescribed in Clauses of from b1 to b11 above
(excluding the cost prices of the sold goods).
- For enterprises in such branches as
production and trading of electricity, gas, oil refinement, petrol and oil
trading, post and telecommunications as well as aviation, they must not exceed
5%, for the first 2 years after the enterprises establishment, then 3%, for the
subsequent years, of the total amount of expenses prescribed in Clauses of from
b1 to b11 above (excluding the cost prices of the sold goods for trading
activities).
In some particular cases where these expenses
should be restricted to levels higher than the above-mentioned ones, they must
be approved in writing by the Finance Ministry, but must not exceed 7% of the
total amount of expenses prescribed in Clauses b1 to b11 above.
b13. Contributions to Vietnamese
organizations for charity or humanitarian purposes such as contributions to
overcoming consequences of natural calamities, accidents; contributions to the
funds in support of heroic Vietnamese mothers, families of fallen combatants and
people with meritorious services to the revolution, disabled people, homeless
and supportless people and funds for social disease prevention and fight.
b14. Payable taxes, charges and fees of tax
nature, which are related to production activities, goods trading and/or
services provision but do not include: value added tax (VAT), enterprise income
tax and tax on income transferred abroad.
Particularly for enterprises engaged in the
production and/or trading of goods not subject to VAT or enterprises paying VAT
by the direct method, the expenses used for taxable income calculation shall
cover also the VAT amount in the input goods and/or services buying prices.
All the above-mentioned expenses must be
evidenced by valid vouchers; any expense amount without vouchers or with
invalid vouchers must not be accounted into the expenses when determining
income liable to enterprise income tax. Enterprises must not account into their
expenses fines and expenses which are not related to their turnovers and
taxable incomes, such as expenses for capital construction investment and
expenses covered by other funding sources. Enterprises established and
operating in Vietnam under the Law on Foreign Investment in Vietnam must not
allocate the management expenses of their parent companies overseas.
c/ Other incomes:
Other incomes of enterprises include:
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c2. Foreign currency purchase and sale
difference, securities purchase and sale difference; exchange rate difference
under the guidance of the Finance Ministry.
c3. Income earned from the right to own and
use the enterprises assets, including income from the asset assignment or
liquidation. In cases where the enterprises assets are lost or damaged due to
subjective causes, those losses related to such assets must not be accounted
into other incomes and the wrongdoers must be identified to make compensations
for the losses according to the prescribed regime.
c4. Income earned from the recovery of bad
debts which have already been written off from accounting books, or payable
debts, of which the creditors cannot be identified; incomes omitted then
discovered from the production and/or business activities in the previous
years.
c5. The year-end credit balance of the
advance deductions for expenses, which have not been wholly spent in the year.
c6. Incomes earned from activities related to
the joint-venture participation or stock investment of an enterprise in other
enterprises.
Incomes earned from overseas business
activities shall be accounted into other incomes to determine the taxable
income.
In cases where the income tax on such income
amounts has been paid overseas, an enterprise shall have to determine the
pre-income tax income amount earned overseas in order to calculate income tax
thereon according to the Law on Enterprise Income Tax in Vietnam. When
determining the payable income tax amount, the enterprise may subtract the
income tax amounts already paid overseas but the subtracted tax amount must not
exceed the income tax amount calculated according to the Law on Enterprise
Income Tax for such incomes.
All incomes earned after the payment of
enterprise income tax from joint-venture or cooperation activities with
domestic enterprises shall not be accounted into other incomes when determining
taxable income.
c7. Other incomes related to business but not
accounted into turnover, including the customers bonuses, fines on the
violation of contracts, incomes from the sale of discarded materials and faulty
products (after deducting sale expenses), gifts in cash presented by
organizations and/or individuals to enterprises.
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For foreign parties to business cooperation,
in cases where their business licenses stipulate that they shall pay tax in
form of packages payment over the sale turnover, the determination of the
taxable income as well as the declaration of tax payment shall be effected
according to the provisions of such licenses.
In cases where a foreign party to business
cooperation signs a business cooperation contract with a Vietnamese party by
the profit-sharing mode and one party is responsible for the common cost-accounting
or both parties jointly set up a coordination board for the common
cost-accounting, the responsible business cooperation party or the coordination
board shall have to declare and pay taxes arising in the business process, make
cost-accounting, determine taxable income according to the above guidance and
share taxable income according to the contract. Where loss is incurred under
the contract, its annual loss amount shall also be shared among concerned
parties and the foreign party may transfer its loss to the taxable incomes of
the subsequent years for deduction. After receiving its income, the foreign
party shall make self-declaration and pay enterprise income tax to the local
tax authority.
4. Determination of
payable tax amount:
Payable enterprise
income tax amount in the tax calculation year
=
Taxable income
x
Enterprise income
tax rate
of which:
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- The enterprise income tax rate is specified
in the investment license. Where the investment license does not specify the
enterprise income tax rate, the enterprise income tax rate of 25% shall apply.
In the course of operation, if a
foreign-invested enterprise or a foreign party to business cooperation fails to
meet criteria to enjoy preferential enterprise income tax rates and enterprise
income tax exemption or reduction as prescribed in Articles 46 and 48 of the
Governments Decree No. 24/2000/ND-CP of July 31, 2000, such enterprise shall
not be entitled to the preferences. The tax authority directly managing tax
collection from the enterprise shall base itself on the conditions for
entitlement to enterprise income tax preferences which the enterprise actually
meets every year to determine the preferential enterprise income tax rate and
settle the enterprise income tax according to that rate, and at the same time
report such to the Finance Ministry and the investment licensing body.
For enterprises granted investment licenses
before August 1, 2000, if they meet the conditions for preferential enterprise
income tax rate and enterprise income tax exemption or reduction prescribed in
Articles 46 and 48 of the Governments Decree No. 24/2000/ND-CP of July 31,
2000, they may submit applications to the investment licensing bodies,
requesting the adjustment of their investment licenses. Such enterprises shall
enjoy preferences for the remaining period after their adjusted licenses take
effect.
5. Procedures for
registration, declaration and payment of enterprise income tax:
a/ Registration of enterprise income tax:
Enterprises shall have to register enterprise
income tax at the time of VAT payment registration with the tax authorities
directly managing them. Enterprises shall register the enterprise income tax
payment at the tax authorities of the localities where they are headquartered.
b/ Declaration of enterprise income tax:
Not later than the 25th of the
first month of each fiscal year at the latest, enterprises shall have to
declare and submit declarations of tax amounts temporarily paid for the whole
year to the tax authorities of the localities where they are headquartered. The
basis for declaration shall be the enterprises production and business results
of the previous fiscal year and their business prospects in the following year.
After receiving the declarations, the tax
authorities shall verify and determine the tax amounts temporarily paid for the
whole year and notify the enterprises of the tax amounts to be temporarily paid
in each quarter. In cases where the enterprises fail to declare or declare
unclear basis for determination of the tax amounts to be temporarily paid for
the whole year, the tax authorities shall have the right to fix such tax
amounts.
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c/ Payment of enterprise income tax:
Enterprises shall temporarily pay enterprise
income tax once every 3 months, starting from the first day of the tax
calculation year. The temporary tax payment shall be made according to the tax
payment notices of the tax authorities and by the last day of each quarter at
the latest. At the end of the tax calculation year or upon the termination of
the contracts, the settlement shall be made according to actual figures.
For business cooperation contracts with a
term of under 1 year, the enterprise income tax shall be paid in 2 periods: the
first payment shall be temporarily made by the middle of the contractual term
and the tax settlement shall be effected upon the expiry of the contracts
according to actual figures.
d/ Settlement of enterprise income tax:
The settlement of enterprise income tax shall
be made annually according to the provisions in Part III of this Circular.
6. Reimbursement of
enterprise income tax as the result of reinvestment:
a/ Foreign investors, who have fully made
legal capital contributions under their investment licenses and used other
lawful revenues from investment activities in Vietnam for reinvestment in the
new or underway projects for 3 years or more, shall be refunded part or whole
of the enterprise income tax amounts they have already paid for the reinvested
incomes as prescribed in Article 51 of the Governments Decree No. 24/2000/ND-CP
of July 31, 2000.
Where foreign investors reinvest in projects
licensed before November 23, 1996, the enterprise income tax reimbursement
levels shall be as follows:
- 100%, if invested in projects subject to
the enterprise income tax rate of up to 14%.
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- 50%, if invested in projects subject to the
enterprise income tax rate of from 21% to under 25%.
b/ The enterprise income tax amount to be
reimbursed for the reinvested profit shall be determined as follows:
T =
L
x S x t
100% - S
Of which:
T: is the income tax amount to be reimbursed.
L: is the after-enterprise income tax profit
amount used for reinvestment.
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t: is the percentage of enterprise income tax
to be reimbursed.
c/ Procedures for reimbursement of enterprise
income tax on reinvested profits:
In order to get the enterprise income tax
amount that the enterprise has already paid for the reinvested profit, the
concerned foreign investor or authorized person shall have to produce all the
following documents to the provincial/municipal Tax Department of the locality
where the enterprise with reinvested profit is headquartered:
- A written request or application for the
reimbursement of enterprise income tax as the result of reinvestment, which
clearly states the reasons for reinvestment and the foreign investors
commitment to use his/her profit for reinvestment for 3 years or more.
- The declaration for income tax
reimbursement as the result of reinvestment.
- The investment license or readjusted
investment license or written approval issued by the investment licensing body
(the copy with certification stamp of the enterprise), which clearly stipulates
that the investor is permitted to use his/her profit for reinvestment.
- A written certification of the foreign
partys full legal capital contribution by the Managing Board, for joint-venture
enterprises; of the foreign investors commitment on the full contribution of
legal capital or capital for the performance of the business cooperation
contract (together with certification by an auditing organization), for
enterprises with 100% foreign capital and foreign business cooperation parties.
- The vouchers (copies with the enterprises
certification stamp) evidencing tax payment by the enterprise and the State
Treasurys certification of the tax amount already paid by the enterprise.
After fully receiving the above-mentioned
documents, within 15 working days, the provincial/municipal Tax Department
shall inspect and determine the enterprise income tax amount already paid by
the enterprise and calculate the enterprise income tax amount to be reimbursed
to the foreign investor, then send the dossier to the Finance Ministry (the
General Department of Tax). Within 15 working days after fully receiving the
dossier, the Finance Ministry shall consider and issue decision on tax
reimbursement for the investor.
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* In cases where the enterprise income tax
has been reimbursed to foreign investors, who fail to make the reinvestment thereof,
such foreign investors shall have to repay to the budget the reimbursed
enterprise income tax amounts, including the interests thereon, which shall be
calculated as from the time the foreign investors receive the reimbursed
enterprise income tax amounts till the time they fully return such amounts to
the budget (according to the bank deposit interest rates), and shall be handled
according to law.
II. TAX ON PROFITS
TRANSFERRED ABROAD
1. Taxable object:
Profits earned by foreign economic
organizations or individuals from capital investment in any forms prescribed in
the Law on Foreign Investment in Vietnam (including the income tax amounts
reimbursed for the reinvested income and income earned from the capital
transfer), when being transferred out of the Vietnamese territory or retained
outside Vietnam, shall all be subject to this tax.
Cases where foreign parties use the shared
profit to pay debts for the parent companies or to cover expenses of the
Vietnam-based representative offices of their parent companies shall all be
considered the transfer of profits abroad and such foreign parties shall have
to pay tax thereon.
Foreign economic organizations or individuals
having profits transferred abroad shall have to declare and pay tax on the
profit transferred abroad.
2. Determination of
the payable tax amount:
The payable amount of tax on the transferred
profits abroad shall be determined as equal to the profit amount transferred
abroad or considered being transferred abroad, or the profit amount retained by
the investor outside the Vietnamese territory, multiplied (x) by the profit
transfer tax rate stipulated in the investment license. Where the granted
investment license does not specify the tax rate for the profit transferred
abroad, such tax rate shall comply with the provisions in Article 50 of the
Governments Decree No. 24/2000/ND-CP of July 31, 2000.
For cases where investment licenses which had
been granted before August 1, 2000, specify the tax rates for the profits
transferred abroad higher than that stipulated in Article 50 of the Governments
Decree No. 24/2000/ND-CP of July 31, 2000, the concerned investors or
enterprises shall submit their applications to the investment licensing bodies
for the readjustment of their investment licenses. Pending the official
readjustment, if such investors transfer profit abroad they shall have to send
applications to the provincial/municipal Tax Departments, clearly stating the
conditions for entitlement to the new tax rate, and declare, pay tax at the new
tax rate. The new tax rate for the profits transferred abroad shall apply to
profits transferred abroad by the investors as from July 1, 2000.
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- Tax on the profit transferred abroad shall
be collected upon each transfer of profit abroad. Particularly for cases where
investors retain their profit outside Vietnam, pay debts for their parent
companies or cover expenses for the latters offices in Vietnam, the tax
declaration, payment and collection shall be made on the monthly basis.
- Before transferring profit abroad or no
later than the 5th of the following month for cases where the profit
is used for purposes deemed to be the transfer of profit abroad or the
retention of profit outside the Vietnamese territory, the concerned foreign
economic organizations or individuals shall have to make and submit tax
declarations to the tax authorities directly managing the enterprises, where
such economic organizations or individuals have invested capital in, and at the
same time, pay the declared tax amount to the State Treasury.
- Within 5 working days after receiving the
tax declarations, the tax authorities shall examine them and, if detecting any
errors therein, issue notices on the payable tax amounts to the foreign
investors. The foreign investors shall have to pay the outstanding tax amounts
into the State Treasury according to the tax authorities notices. In cases
where an investor fails to submit the tax declaration within the prescribed
time limit, the tax authority may fix the tax amount to be temporarily paid,
issue a tax notice and impose a fine on the delayed tax declaration.
The State Treasury shall hand over to the
taxpayer a copy of the profit transfer tax payment voucher so that the latter
fills in the procedures for the transfer of profit abroad.
- Annually, within 90 days at most after the
end of the fiscal year, foreign investors shall have to report to the tax
authorities directly managing enterprises on their shared profits, the use
thereof and the payment of tax on the profit transferred abroad in the previous
years. Such reports shall be submitted to the tax authorities together with the
annual tax settlement reports of enterprises.
- In cases where in the annual enterprise
income tax declaration already submitted to the tax authority (according to the
provisions at Point 5b, Section I, Part II of this Circular), it is expected
that the enterprise will earn profit and the investors agree to share its
profit quarterly or biannually (as decided in writing by the enterprises
Managing Board), the foreign investors may, periodically and right in the year,
temporarily transfer abroad the shared profits arising in the fiscal year and
have to declare the payment of tax on the profits transferred abroad for each
time of profit transfer. The shared profit amount temporarily transferred
abroad must not exceed 70% of the profit amount which may be shared to a
foreign investor and shall be determined on the basis of the quarterly,
biannual and annual financial reports of the enterprise.
The enterprise and foreign investor shall
have to send (within 25 days after the end of the previous fiscal year) a
document to the tax authority directly managing them, requesting the temporary
transfer of profit, together with the declaration of the temporary payment of
the annual enterprise income tax. The contents of the written request include:
i) The estimate of the profit amount to be
earned in the fiscal year, specifically for each quarter and each half of the
year;
ii) The estimate of the profit amount to be
shared to investors.
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iv) The resolution of the enterprises
Managing Board on the plan to share profits to investors in the fiscal year
(attached with the written request).
On the basis of the enterprises and foreign
investors above requests, the tax authority shall conduct inspection and guide
foreign investor to effect the temporary transfer of profit abroad and collect
tax thereon according to the current tax legislation and under the guidance in
this Circular.
- Where the foreign investor has paid tax on
the profit transferred abroad but has, in fact, not transferred profit abroad
or has used the profit for purposes not being considered the transfer of profit
abroad, such foreign investor shall be refunded with the already paid tax
amount. A dossier of application for reimbursement of the already paid tax
amount shall include:
i) A written request for the reimbursement of
the already paid tax amount, which must clearly state the reasons for the tax
reimbursement; the name, address and account number of the foreign investor
requesting the reimbursement of the already paid tax amount.
ii) A list of the paid tax amount attached
with vouchers (copies) on money payment to the treasury and the State Treasurys
certification of the already paid tax amount (clearly stating the chapter,
category, clause and grade to which the tax has been paid as provided for in
the State budgets contents).
iii) The certification by the bank managing
the foreign investors deposit money of the non-transfer of profit amount which
has already been declared for the payment of tax on the profit transferred
abroad by the foreign investor.
The dossier of application for tax
reimbursement shall be submitted to the local tax authority directly managing
tax collection from the enterprise. The tax authority shall examine the dossier
and, if deeming it complete and valid, send it to the Finance Ministry (the
General Department of Tax) so that the latter may consider and issue a decision
to refund the tax to the foreign investor.
Within 15 days after receiving the complete
and valid dossier, the Finance Ministry shall issue a decision on tax
reimbursement for the foreign investor.
III. EXPORT TAX AND
IMPORT TAX
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1. Export and/or
import tax exemption or reduction:
a/ Export tax:
Goods being materials, raw materials,
semi-finished products sold by foreign-invested enterprises and business cooperation
parties to export-processing enterprises for the production and/or processing
of export goods shall be exempt from export tax according to the provisions in
Article 8 of the Prime Ministers Decision No. 53/1999/QD-TTg of March 26, 1999.
Enterprises, when selling goods to
export-processing enterprises, shall only have to make and submit export goods
declarations to the export processing zones customs offices. The customs
offices shall stamp the "duty-free goods" on the export goods declarations
after the goods inspection.
b/ Import tax:
- In addition to the cases of tax exemption
or reduction specified in the Law on Export Tax and Import Tax,
foreign-invested enterprises and business cooperation parties shall also be
entitled to the tax exemption or reduction according to Article 57 of the
Governments Decree No. 24/2000/ND-CP of July 31, 2000.
Basing itself on the investment license,
economic and technical exposition as well as technical design of each project
and the list of the home-made construction materials issued by the Ministry of
Planning and Investment, the Ministry of Trade or the authorized agency shall
consider and approve the list of duty-free import goods for each enterprise.
Basing themselves on the approved lists of
duty-free import goods, the Customs Departments of the provinces and
centrally-run cities shall monitor the goods import by enterprises. Quarterly,
the provincial/municipal Customs Departments shall have to submit to the
Finance Ministry and the General Department of Customs a sum-up report on the
export and import turnover as well as the volumes of the major export and
import goods items of foreign-invested enterprises.
Particularly, the procedures for import tax
exemption for production raw materials of projects on the manufacture of
mechanical, electrical and electronic components and spare parts, projects of
investment in the geographical areas meeting with exceptional socio-economic
difficulties and projects on the list of those particularly encouraged for
investment, shall comply with the Finance Ministrys Circular No. 40/2000/TT-BTC
of May 15, 2000 and Circular No. 117/2000/TT-BTC of December 21, 2000.
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The conditions and procedures for the
temporary non-payment of import tax as well as the determination of the 9
month-plus duration of temporary non-payment of import tax on raw materials and
materials imported for the production of export goods shall comply with the
Finance Ministry’s Circular No. 172/1998/TT-BTC of December 22, 1998 guiding
the implementation of the Law on Export Tax and Import Tax.
- Where enterprises sell their manufactured
products to other enterprises for the direct production of export goods, they
shall be exempt from import tax on the imported raw materials correspondingly
to the volume of those goods as provided for in Article 58 of the Governments
Decree No. 24/2000/ND-CP of July 31, 2000. The import tax exemption shall be
effected as follows:
When importing materials and/or raw materials
for the manufacture of products to be sold to other enterprises for the production
of export goods, an enterprise shall have to fully pay import tax as
prescribed. After the export goods-producing enterprises have already exported
their products, the raw materials-importing enterprise shall fill in the
procedures and submit a dossier to the Finance Ministry, requesting the
reimbursement of import tax on the raw materials imported for manufacturing
products sold to the export goods-producing enterprises. The dossier of
application for tax reimbursement includes:
+ The enterprises written request for tax
reimbursement, with clear calculation and inscription of the amount of import
tax on raw materials to be reimbursed;
+ The norms on the wasted materials and raw
materials for manufacturing products;
+ The import customs declaration and receipt
of the import tax payment for materials and raw materials used for the
manufacture of products;
+ The contracts on the sale of the
enterprises products to other enterprises, which clearly state that the
products shall be used for the manufacture of export goods;
+ The enterprises invoices on goods sale to
the export goods-producing enterprises;
+ The export goods customs declarations
(notarized copies) of the export goods-producing enterprises with certification
by border customs offices of the actually exported goods;
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Basing itself on the above-mentioned
documents, the Finance Ministry shall issue decisions to reimburse the import
tax to the raw materials importing enterprise.
2. Declaration and
retrospective collection of export tax and import tax arrears:
- In cases where export processing
enterprises purchase goods, materials and/or raw materials from the domestic
market and export them to foreign countries instead of putting them into
production and/or processing, they shall have to pay export tax according to
the current Law on Export Tax and Import Tax.
- If the import goods of foreign-invested
enterprises or business cooperation parties, which have been exempt from import
tax as specified in the above-mentioned cases, are used for purposes other than
those approved for import tax exemption or sold on the Vietnamese market, the
Trade Ministrys permission is required and the already exempted import tax
amounts shall be retrospectively collected.
For goods subject to special consumption tax
under the October 28, 1995 Law on Special Consumption Tax and May 28, 1998 Law
No. 05/1998/QH10 on Special Consumption Tax, which had been imported duty-free
before these laws took effect but were used for purposes other than the initial
ones or sold on the Vietnamese market at the time the Law on Special
Consumption Tax is already effective, the concerned foreign-invested
enterprises or business cooperation parties shall, in addition to the payment
of import tax arrears (according to the tax rates currently in force at the
time of retrospective collection), have to pay special consumption tax for the
goods subject thereto.
- Within 2 working days from the date the
import goods are used for purposes other than the purposes for which they are exempt
from import tax, or for sale, the concerned foreign-invested enterprises or
business cooperation parties shall have to declare with the Customs Departments
of the provinces or cities where enterprises are headquartered or where the
goods are sold or where the import goods declarations are registered. Past the
above time limit, if the enterprises or business cooperation parties fail to
make declaration, they shall be sanctioned for tax evasion according to the
provisions of the Law on Export Tax and Import Tax as well as the Law on
Special Consumption Tax.
- For enterprises manufacturing mechanical,
electric or electronic components and spare parts, projects of investment in
the geographical areas facing exceptional socio-economic difficulties and projects
on the list of those specially encouraged for investment, the already exempted
import tax on raw materials and materials in service of production must be
declared and settled according to the Finance Ministrys Circular No.
40/2000/TT-BTC of May 15, 2000.
Where enterprises which have enjoyed the
special investment encouragement according to the criterion of exporting more
than 80% of products, and the import tax exemption for imported raw materials
for 5 years as prescribed in Article 57 of Decree No. 24/2000/ND-CP,
manufacture products of different types, only those that really achieve the
export percentage of over 80% shall be eligible for the above-mentioned import
tax exemption. For products that the enterprises fail to achieve the export
percentage of more than 80%, they shall only be exempt from import tax on the
raw materials already used for the manufacture of the actually exported
products and have to retrospectively pay the import tax temporarily exempted
for products consumed in Vietnam.
Enterprises investing in geographical areas
facing exceptional socio-economic difficulties but possessing production
establishments in localities outside the list of those facing exceptional
socio-economic difficulties, shall be entitled to import tax exemption for raw
materials under Article 57 of Decree No. 24/2000/ND-CP only for the volume of
raw materials imported for the production at their production establishments
located in the areas facing exceptional socio-economic difficulties.
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IV. TAX ON INCOME
FROM CAPITAL TRANSFER
Foreign investors that transfer their
contributed capital shares in joint-venture enterprises, enterprises with 100%
foreign capital or business cooperation contracts and earn incomes shall have
to pay tax on the incomes from the capital transfer according to the provisions
of this Circular.
1. Enterprise income
tax:
Income earned from capital transfer shall be
subject to enterprise income tax under the Law on Foreign Investment in
Vietnam.
Payable enterprise
income tax
=
Taxable income
x
Enterprise income
tax rate
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Taxable income
=
Transfer price
-
Initial value of
the transferred capital amount
-
Transfer expenses
Of which:
+ The transfer price shall be determined as
the total actual value that the transferor receives under the transfer
contract. In cases where the transfer contract does not specify the payment
price or the tax authority has grounds to determine that the payment price has
not been determined according to the market prices, the tax authority may
examine and fix the payment value of the contract on the basis of reference to
the market prices or prices for sale to the third party and similar transfer
contracts.
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In cases where the subsequent investors
further transfer their contributed capital shares, the initial value of the
transferred capital amount in each subsequent transfer shall be determined
equal to the value of the preceding transfer contract plus the actual value of
any additionally contributed capital (if any) determined on the basis of the
principle mentioned in this Clause.
+ Transfer expenses mean the actual expenses
directly related to the transfer, according to the original vouchers recognized
by the tax authorities. Where the transfer expenses arise overseas, such
original vouchers must be verified by a public notary or an independent
auditing organization of the country where the expenses arise.
Transfer expenses include expenses for the
completion of legal procedures necessary for the transfer; charges and fees
payable at the time of filling in the transfer procedures; expenses for
transactions, negotiations and conclusion of transfer contracts and other
expenses, which are evidenced by valid vouchers.
1.2. Enterprise income tax rate:
The rate of enterprise income tax on income
from capital transfer shall be 25%.
2. Tax on profits
transferred abroad:
Foreign investors who earn profit from
capital transfer, after paying tax on income from capital transfer under the
guidance at Point 1 above, when transferring profit abroad or retaining it
overseas, shall have to pay tax on the transfer of profit abroad. The rates of
the tax on the transfer of profit abroad shall comply with the provisions of
the investment licenses.
In cases where foreign investors have neither
fully contributed legal capital according to their licenses nor continued their
investment but transfer their capital and earn profits therefrom, and transfer
abroad the profits earned from their capital transfer, the rate of tax on the
profits transferred abroad must be determined according to the actual level of
the contributed legal capital at the time of transfer in compliance with the
provisions of Article 50 of Decree No.24/2000/ND-CP.
3. Tax declaration
and payment:
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The capital transferee shall have to deduct
the transferors payable tax amount and remit it to the State budget.
Within 5 working days after the competent
agency approves the capital transfer, the capital transferee shall have to make
and send a tax declaration on capital transfer to the local tax authority
managing the enterprise, which shall be enclosed with the transfer contract,
the decision approving the capital transfer issued by the competent agency, the
certification of the contributed capital and the original vouchers of expenses;
and at the same time, fully pay the payable tax amount to the State Treasury
then send a copy of the tax payment receipt to the body approving the capital
transfer.
Upon detection of any inaccurate declaration
or calculation of the payable tax amount, within 5 working days after receiving
the declaration, the tax authority shall have to notify the taxpayer of the
payable tax amount or request the latter to supply necessary documents in order
to determine the accurate payable tax amount.
3.2. Declaration of the payment of tax on the
profit transferred abroad: shall comply with the guidance at Point 3, Section
II of this Part.
V. OTHER TAXES AND
FINANCIAL OBLIGATIONS
Other taxes and financial obligations such as
value added tax, special consumption tax, excise tax, natural resources tax, as
well as land, water surface and sea surface rentals... applicable to
foreign-invested enterprises and foreign business cooperation parties shall
comply with the provisions of the current legal documents.
Part III
TAX
SETTLEMENT AND INSPECTION OF TAX PAYMENT AT ENTERPRISES
I. ANNUAL TAX
SETTLEMENT
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1. Within 90 days from the end of the fiscal
year, enterprises shall have to submit reports on their production and business
situation, accounting reports already audited by an independent auditing
organization licensed to operate in Vietnam, declarations of enterprise income
tax settlement and reports on the settlement of taxes payable in the year to
the tax authorities of the localities where they are headquartered.
Within 10 working days from the date
prescribed for the submission of the above-said tax settlement reports,
enterprises shall have to pay the outstanding tax amounts according to their
settlement reports to the State budget. Past that time limit, if the
enterprises fail to make the payment, they, apart from having to fully pay the
outstanding tax amounts, shall also have to pay fines for the delayed payment
as prescribed.
Enterprises are not allowed to clear the
overpayment of one tax against the underpayment of another tax when making
their annual tax settlements.
2. On the basis of the enterprises business
and production reports as well as financial settlement reports, the Tax
Departments of the provinces and centrally-run cities shall recalculate the
amount of each tax payable by enterprises in the fiscal year, and at the same
time, compare these amounts with those stated in the tax declarations
periodically submitted during the year in order to determine the accuracy of
these declarations and tax settlement reports. Where the enterprises tax
settlement reports are inaccurate, the Tax Departments shall organize the
inspection of tax payment by enterprises.
II. INSPECTION OF TAX
PAYMENT AT ENTERPRISES
In the course of managing tax payment by
enterprises, the provincial/municipal Tax Departments shall have to organize
regular or irregular tax inspections at enterprises when necessary. They shall,
at least once a year, inspect the tax payment by the following subjects:
- Enterprises, which have operated not for
long but suffered losses for 3 or more years in a row.
- Enterprises, which are considered key
points for tax collection
- Enterprises whose tax settlement reports
are inaccurate or unclear, or are not fully inscribed with indexes for the tax
calculation.
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- Enterprises, which see major fluctuation in
their financial situation in the tax calculation year as compared to the
previous years.
Before inspecting a foreign-invested
enterprise or foreign business cooperation party, the tax authority shall have
to issue inspection decision, clearly stating the contents and duration of
inspection. The inspection decision shall be sent to the concerned
foreign-invested enterprise or representative of the foreign business
cooperation party at least 3 working days before the inspection begins. Where
it is necessary to inspect contents other than those stated in the inspection
decision or to prolong the inspection time, the tax authority shall have to
issue an additional inspection decision.
Upon the completion of inspection, the tax
authority shall have to make and send the enterprise an inspection record,
which must be signed by the tax official being the head of the inspection team.
The inspection record must also be sent by the tax authority to the Finance
Ministry (the General Department of Tax) together with the enterprise’ financial report
(copy).
The competent representative of the
enterprise shall have to sign the inspection record. If the enterprise
disagrees with the tax authority’s conclusions on a number of contents, it may
reserve its opinions and inscribe them in the inspection record so as to
complain with the tax authority directly managing the tax collection or further
complain with the General Department of Tax and the Finance Ministry. Pending
the settlement of its complaint, the enterprise or foreign business cooperation
party shall still have to strictly comply with the conclusions of the tax
authority.
III. TAX SETTLEMENT
UPON THE EXPIRY OF OPERATING DURATION OR DISSOLUTION OF ENTERPRISES
Upon the termination of a business
cooperation contract by the parties thereto or the expiry of the operating
duration or dissolution of a foreign-invested enterprise under the Law on
Foreign Investment in Vietnam, within 45 days after the investment licensing
body issues the dissolution decision, the concerned foreign-invested enterprise
shall have to submit its tax settlement report to the tax authority. The tax
authority shall have to immediately proceed with the following jobs:
1. Inspection of the tax settlement report.
2. Determination of interests and
responsibilities of each party to the foreign-invested enterprise or business
cooperation contract. The major contents of this job include:
- Determination of the investors investment
capital amounts currently on the enterprises account(s), including capital in
cash, fixed assets, materials and goods. Certification of the investment
capital amounts, which the foreign investors may transfer abroad.
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- Determination of profits or losses as well
as the rights and responsibilities of the investors, which are related to such
profits or losses. Certification of the income amounts, earned by the foreign
investors, which may be transferred abroad. The amount of tax on the transfer
of income abroad shall be immediately remitted to the State budget, except for
cases where the concerned foreign investors produce vouchers evidencing that
such income is not transferred abroad due to one of the following reasons:
+ It is used for reinvestment in Vietnam
under decision of the investment licensing body.
+ It is used for personal spending needs in
Vietnam, in addition to other incomes already declared.
+ It is used for other purposes in Vietnam.
IV. MEASURES TO
DETERMINE MARKET PRICES IN THE TRANSACTIONS BETWEEN ASSOCIATED ENTERPRISES
To ensure the correct determination of tax
payment obligations of enterprises, during the regular inspection or
examination of tax settlement reports of enterprises, if any price or income ratio
irrationality is detected in the transactions between associated enterprises,
the tax authorities shall apply the following measures to determine the
enterprises’ taxable incomes:
1. Method of comparing market prices:
The tax authorities may use the market prices
of products, goods and/or services to fix the prices of products, goods and/or
services exchanged or traded internally between associated enterprises. The
conditions for the application of the method of comparing market prices are:
(i) There is no difference between the two
compared business operations, which affect the transaction prices such as goods
quality, trademarks, conditions for goods delivery and payment relations.
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Example:
A foreign lubricant company sells to
Vietnam-based joint-venture enterprise A (a joint- venture between such foreign
company and a company in Vietnam) 1,200 liters of lubricant for USD 1,500, to
be paid after 6 months. At the same time, the foreign lubricant company sells
to enterprise B, an independent enterprise in Vietnam, 1,000 liters of
lubricant for USD 1,000, to be paid immediately. Supposing that the 6-month
commercial credit interest rate on the market is 5%, when determining income of
joint-venture enterprise A, the Vietnamese tax authority may re-determine the
contract lubricant price, based on the comparison with the contract with
company B as follows:
Unit price of 1 liter of lubricant with
payment made after 6 months:
USD 1,000 + USD
1,000 x 5%
= USD 1.05/liter
1,000 liter of
lubricant
The price determined for the contract between
joint- venture company A and foreign lubricant company B shall be:
1,200 liters of lubricant x USD 1.05/liter =
USD 1,260
2. Method of using the selling price to
determine the buying price:
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The buying price
=
The selling price
of goods sold to independent enterprises (excluding import tax, if any)
-
The selling price
of goods sold to independent enterprises (excluding import tax, if any)
x
The average gross
profit margin of the trade service
The average gross profit margin of the trade
service may be determined on the basis of the gross profit margin of other
goods purchased by that unit from independent enterprises or the gross profit
margin of other independent trade units. The gross profit margin shall be
determined according to the following formula:
The gross profit margin
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The net turnover
-
The cost price of
goods
x 100%
The net turnover
(The data shall be based on the enterprises
reports on business results).
The method of using the selling price to
determine the buying price shall not apply to the following cases where:
- The goods and products, before being sold,
have already been processed, assembled, transformed or added with more use
value;
- The goods and products, before being sold,
have been affixed with trademarks, trade names of high value on the market.
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Example: Enterprise A in Vietnam is an
enterprise with 100% foreign capital invested by foreign company B which
produces liquor. Enterprise A is the sole outlet for company B’s products on the
Vietnamese market. In 1999, enterprise A imported from company B 10,000 liters
of liquor, paid USD 75,000 for import tax and special consumption tax set by
the customs office and sold the whole liquor volume for USD 185,000 as
converted turnover in the year. By the end of 1999, the tax authority
determined the buying price of the liquor of enterprise A as follows:
The net turnover = The sale turnover - The
import tax = USD 185,000 - USD 75,000 = USD 110,000
The selling price
(excluding import tax)
=
USD 110,000
= USD 11/liter
10,000 liters
Supposing that the average gross profit
margin of liquor is 10%
The buying price = USD 11/liter - (USD
11/liter x 10%) = USD 9.9/liter
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In cases where an unit produces and/or
processes semi-finished products and delivers all to an associated enterprise,
without products being sold on the market to determine the comparative price,
the tax authority may base itself on the accounting books and records of the
unit’s expenses to
determine the income of that unit according to the following formula:
The determined
income
=
The total
production cost of all products
x
The average net
income rate of the production branch
The total
production cost of all products delivered in the period
=
The cost price of
goods delivered in the period
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The goods delivery
expenses in the period
+
The general
management expenses in the period
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The average net income rate of the production
branch may be determined on the basis of the data on the net income rates of
other independent production enterprises.
The net income rate shall be determined
according to the following formula:
The net income rate
=
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The cost price of
the sold goods
+
The goods sale
expenses
+
The general
management expenses
(The data shall be based on the enterprises
business results)
Example: Garment enterprise A in Vietnam is a
joint -venture between foreign company B and a Vietnamese company. Garment
enterprise A produces apparel articles under processing contracts and delivers
them all to company B in the foreign country. Presuming that in 1999,
enterprise A delivered to company B 10,000 suits at a set price of USD 10/suit.
Enterprise A’s 1999 accounting
books contain the following data:
The cost price of sold goods:
USD 80,000
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USD 6,000
The general management expenses:
USD 12,000
The total production cost:
USD 98,000
As enterprise A and company B overseas are
the two associated enterprises, the tax authority may fix the taxable income as
follows:
Presuming that the tax authority determines
the average net income rate of the garment industry to be 10%.
The determined income = USD 98,000 x 10%
In cases where price irrationalities are
discovered but there exist no conditions for the application of the
above-mentioned methods, the tax authority should notify such to enterprises so
that the latter may produce the relevant vouchers, and request the enterprises
to make written attestations on the legality of the produced vouchers.
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TAX
PAYMENT CURRENCY AND OTHER GUIDANCES
I. TAX PAYMENT
CURRENCY
Foreign-invested enterprises and joint-venture
business cooperation parties shall pay taxes in Vietnam dong.
Enterprises which are permitted by the
Finance Ministry to use foreign currency(ies) in their cost-accounting and
book-keeping activities, when making tax declaration, shall have to convert
such foreign currency(ies) into Vietnam dong at the time of declaration.
The conversion of a foreign currency into
Vietnam dong or vice versa shall be effected at the actual average purchasing
and selling rates on the inter-bank foreign currency market as announced by the
State Bank of Vietnam on the Nhan Dan (People) daily. For certain days on which
the Nhan Dan daily is not published or published without announcement of the
exchange rate, the exchange rate applicable to the conversion shall be the
preceding days exchange rate.
All budget revenues from foreign-invested
enterprises shall be accounted into the budget index according to current
regulations.
II. RESPONSIBILITIES
OF ENTERPRISES
1. Foreign-invested enterprises shall have to
strictly comply with the procedures of registration for the granting of tax
codes and make tax registration with the tax authorities directly managing them
in accordance with current regulations.
2. Within 5 days after changing their goods
lines for business or relocating their headquarters, enterprises, their
business affiliates or foreign business cooperation parties shall have to fill
in the procedures for tax registration with the tax authorities of the
provinces or cities where they are headquartered.
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4. To produce all accounting books, vouchers
and necessary documents related to the tax calculation and settlement at the
tax authoritys request.
5. To pay taxes in full and on time as
prescribed.
6. To notify the tax authority of the
decision on dissolution or expiry of the projects operating duration, and
submit the final settlement report on time.
III. RESPONSIBILITIES
AND POWERS OF TAX AUTHORITIES
1. To guide taxpayers to make tax
registration and declaration in strict compliance with the prescribed regime.
2. To examine tax declarations, accounting
books and vouchers as well as documents necessary for tax calculation, and
request taxpayers to explain unclear matters related to the tax calculation.
3. To calculate taxes and notify the
taxpayers of the payable tax amounts. To have the right to fix the payable tax
amounts in cases where the taxpayers deliberately fail to make tax declaration
within the prescribed time limit or make incomplete or inaccurate tax
declaration or fail to provide adequate and accurate information related to the
tax calculation, or where the revenues are affected by abnormal financial and
commercial relations between the associated enterprises.
4. To record in writing and handle tax
violations according to their competence prescribed by law.
5. To strictly enforce the tax legislation,
ensuring its truthfulness, accuracy and objectivity.
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7. To certify tax amounts already paid by
foreign investors at the latter’s request.
IV. HANDLING OF
VIOLATIONS AND SETTLEMENT OF COMPLAINTS
1. Violations of tax legislation shall be
sanctioned as follows:
- Failure to strictly comply with the
provisions on tax registration at Point 1, Section II, Part IV of this Circular
shall be sanctioned according to the provisions of the Government’s Decree No. 22/CP of
April 17, 1996 on sanctioning administrative violations in the field of tax.
- Failure to comply with the provisions on
declaration for tax payment shall be fined according to the provisions of the
Ordinance on the Handling of Administrative Violations, the Government’s Decree No. 22/CP of
April 17, 1996 and the current guiding documents.
- False declaration or evasion of taxes shall
be fined up to 5 times the falsely declared or evaded tax amount.
- Delayed tax payment shall be subject to a
fine of 0.1% (one thousandth) of the delayed tax amount for each day of delayed
payment.
2. Competence to handle violations and
complaints:
- Violations of the tax regulations shall be
handled by the tax authorities directly managing tax collection.
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In cases where a complaint is lodged to the
higher-level tax authority and the Finance Ministry, the Finance Ministers
handling decision shall be the final one. Pending the settlement of his/her
complaint by the higher-level tax authority or the Finance Ministry, the
complainant shall still have to strictly comply with the settlement conclusions
of the lower-level tax authority or the General Department of Tax.
V. ORGANIZATION OF
IMPLEMENTATION
The provincial/municipal Tax Departments
shall have to popularize the provisions of this Circular to foreign-invested
enterprises as well as foreign business cooperation parties and guide them in
the implementation thereof.
The provincial/municipal Tax Departments
shall have to arrange sections comprising full-time personnel to manage the
collection of taxes from foreign-invested enterprises and foreign business
cooperation parties. These specialized managerial sections shall have to submit
monthly, quarterly and annual reports to the Finance Ministry (the General
Department of Tax) on the tax collection situation as well as other reports in
service of the general management requirements for foreign-invested enterprises
and foreign business cooperation parties operating in their respective
localities.
This Circular takes effect 15 days after its
signing and replaces the Finance Ministrys Circular No.63/1998/TT-BTC of May
13, 1998 and Circular No.89/1999/TT-BTC of July 16, 1999.
FOR THE FINANCE
MINISTER
VICE MINISTER
Vu Van Ninh
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