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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.
51-TC/TCT
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Hanoi,
July 3, 1993
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CIRCULAR
ON TAXATION OF FOREIGN INVESTMENT IN VIETNAM
Pursuant to the Law on
Foreign Investment in Vietnam dated 29 December 1987, the Law on Amendment to
and Addition of a Number of Articles to the Law on Foreign Investment in
Vietnam dated 30 June 1990, and the Law on Amendment to and Addition of a
Number of Articles to the Law on Foreign Investment in Vietnam dated 23
December 1992 (hereinafter referred to as the Law on Foreign Investment in
Vietnam);
Pursuant to Decree No. 18/CP dated 16 April 1993 of the Government which
provides detailed regulations for the implementation of the Law on Foreign
Investment in Vietnam;
Pursuant to the laws and ordinances on taxation in force in the Socialist
Republic of Vietnam;
The Ministry of Finance issues regulations for the implementation of provisions
relating to taxes which are applicable to enterprises with foreign owned
capital, foreign parties to contractual business co-operation in accordance
with the Law on Foreign Investment in Vietnam as follows:
Part I
SCOPE OF APPLICATION
1. Enterprises with foreign
owned capital are: joint venture enterprises and enterprises with 100% foreign
invested capital established in accordance with the Law on Foreign Investment
in Vietnam, having activities in all fields, including joint venture
enterprises which build up the infra-structures of the special export
processing zones and enterprises which belong to the SEP Zones as stipulated in
the Decree No.322-HDBT dated October 18, 1991 issued by the Council of
Ministers (now called the Government)
2. All joint venture enterprises
which are established on the basis of agreements to which the Government of the
Socialist Republic of Vietnam and the Government of a foreign country are
signatories. In circumstances where the agreement contains provisions on
taxation for the joint venture enterprise which are inconsistent with the
provisions of the Law on Foreign Investment in Vietnam or the provisions of
this Circular, the provisions of the agreement shall prevail.
3. All foreign parties to
contractual business co-operation (hereinafter referred to as foreign
contracting parties) in accordance with the Law on Foreign Investment in
Vietnam.
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- Joint venture enterprises,
enterprises with one hundred (100) per cent foreign owned capital, and foreign
parties to contractual business co-operation who enter into
Build-Operate-Transfer (BOT) contracts, as stipulated in article 55 of Decree
No. 18 CP dated 16 April 1993 of the Government, and therefore fulfill all tax
obligations to the Vietnamese Government in accordance with separate
regulations.
- Foreign contractors, economic
organizations, and individuals who carry on business in Vietnam under
investment forms which are not in accordance with the Law on Foreign Investment
in Vietnam.
Part II
GUIDANCE FOR THE
TAXATION OF ENTERPRISES WITH FOREIGN OWNED CAPITAL AND FOREIGN CONTRACTING
PARTIES
A. PROFITS TAX
1. Taxpayers
Enterprises with foreign owned
capital and foreign contracting parties must pay profit tax on all profits
earned from any authorized economic operations in accordance with the
provisions of the license issued by the State Committee for Co-operation and
Investment.
Where the enterprise with
foreign owned capital conducts an ancillary business (a branch or a subsidiary)
which makes profits, those profits shall be included in the profits of the
enterprise and be subject to profits tax accordingly.
In cases where a foreign
contracting party participates at the same time in several business
co-operation contracts, profits tax shall be calculated separately in respect
of each contract. (Each contract shall be a separate taxable entity).
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Taxable profit of an enterprise
with foreign owned capital is the difference between the total revenue and total
expenditure of the enterprise (being the principal enterprise and its branches,
if any) together with its other additional income earned within the tax year.
Other additional income
includes: rents received from leasing fixed assets (where this is not the main
operation of the business), proceeds from the sale of assets of a liquidation
or transfer of assets, proceeds from transfer of shares, profits earned from
joint venture operations with other economic organizations and profits from
financial dealings such as the difference between interest on deposits in banks
and interest loans from banks, and the difference between prices and rates of
exchange.
Taxable profit of the foreign
contracting party is the difference between its total revenue and total expenditure
resulting from performance of the contract signed with the Vietnamese party.
(a) Revenue
- Revenue of the enterprise with
foreign owned capital or the foreign contracting party comprises of revenue
from the sale of goods or from the provision of services, and other income from
any activity of the enterprise or the foreign party earned within the tax year.
- In cases where a business
co-operation contract is in the form of product sharing, revenue, for the
purposes of calculation of profits tax, is calculated by multiplying the
quantity of product received by the average market price for products of like
quality at the time of receipt. The tax office shall determine the average
market price.
(b) Expenditure
- The allowable expenditure of
the enterprise with foreign owned capital or foreign contracting party,
regardless of the difference in accounting standards, is determined as follows
and includes:
- Costs of raw and other
materials and energy required for the manufacture of principal products and by-products
or for the provision of services.
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- Depreciation of fixed assets
used in the manufacturing operation. The rate of depreciation of fixed assets
must be in accordance with the rates stipulated in Circular No. 31 TC/TCDN
dated 15 July 1992 of the Ministry of Finance. In the event that the
enterprise or foreign contracting party depreciates fixed assets at a rate
which is higher than the rates stipulated in Circular 31 TC/TCDN, the written
approval of the Ministry of Finance must be obtained.
- Costs of the acquisition or of
the right to use any technical documents, patents or license and costs of
technical services.
- Management expenses of the enterprise
including: administrative expenses, maintenance expenses for buildings and
research facilities, expenses for labour safety and environmental protection,
awards for discoveries and inventions, recruitment and training expenses, and
expenses for fire prevention and safety.
- Taxes paid or imposts in the
nature of taxation.
- Interest payments on loans,
provided that the interest rates of these loans are reasonable.
- Expenditure which relates
directly to the sale of products or the provision of services such as
maintenance, packaging, and advertising.
- Payments to social security
funds for employees which, according to the provisions of article 46 of Decree
No. 233-HDBT dated 22 June 1990, is an obligation of the enterprise.
- Insurance premiums for the
assets of the enterprise.
- Losses brought forward from
previous years. Joint venture enterprises and enterprises with one hundred
(100) per cent foreign owned capital are permitted to bring forward losses of
any financial year to set off against the profits of the following five years.
Once the enterprise discover the loss it can immediately bring forward that
loss to the following year.
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All expenditure claimed must be
supported by suitable documentary evidence and, regardless of what the
expenditure is, the taxable entity must have the suitable documentary evidence
before the expenditure can be used for the purpose of calculating taxable
profit.
The enterprise or foreign
contracting party shall not be permitted to treat the following as allowable
expenditure for the purpose of calculating taxable profit:
- Expenditure on materials and
energy used for purposes such as lending or sale, disposal and exchange of
property or gifts which is not related to the earning of taxable profits.
- Depreciation of fixed assets
in excess of the standard rates stipulated by the Ministry of Finance, or
depreciation of fixed assets which have already been fully depreciated.
- Loss of any assets or
materials, as result of theft, natural disasters, and unidentified causes; bad
debts.
- Loss as a result of disruption
of production, regardless of its cause.
- Losses which have been paid
out by insurance companies.
- Payments which the enterprise
has the responsibility to pay such as damages paid as a result of a breach of
economic contract, fines paid in respect of breaches of the law, and penalties
for late repayment of a loan.
- Interest paid by investors on
loans used for the purpose of contribution to the prescribed capital of the
enterprise or the amount in the nature of interest paid by a Vietnamese
investor to the State of Vietnam which provided capital to the Vietnamese party
for contribution to the prescribed capital of the enterprise.
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- Losses resulting from the sale
or transfer of shares.
3. Determining
the amount of profits tax payable
The profits tax to be paid shall
be the amount of taxable profits earned within the tax year multiplied by the
profits tax rate stipulated in the license issued by the State Committee for
Co-operation and Investment to the enterprise or the foreign contracting party.
The tax year shall be the
financial year used by the enterprise with foreign owned capital or foreign
contracting party in preparation of its accounts.
4. Procedures
for payment of profits tax
The profits tax shall be
collected on a provisional basis every three months according to the
declaration submitted at the end of the previous tax year or, where the
contract has been terminated, profits tax shall be collected according to the
actual results of the business at that time.
Profits tax, in respect of
business co-operation contracts the duration of which are less than one year,
shall be collected in two installments, the first to be collected provisionally
halfway through the contract and the second upon its expiry, adjusted according
to the actual results of the business at that time.
The enterprise with foreign
owned capital or foreign contracting party shall, no later than five days after
the end of the tax payment period referred to above, make a profits tax
declaration in the form of Form No. 1 attached to this Circular and submit it
to the local tax office where the head managing office of the enterprise or
foreign contracting party is located in Vietnam and the local tax office shall
examine the declaration, calculate the amount of profits tax, and give notice
to the enterprise or foreign contracting party of the amount to be paid. In
the event that the enterprise or foreign contracting party fails to submit a
profits tax declaration within the prescribed time limit the local tax office
shall have the power to determine the amount of profits tax to be paid on an
interim basis, give notice of profits tax to be paid, and penalize the late
submission of the declaration.
No later than five days after
the date of receipt of the notice of profits tax to be paid, the enterprise
with foreign owned capital or the foreign contracting party shall pay in full
the amount stated in the notice to the State Treasury office nominated by the
tax office.
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5. Refund of
profits tax for reinvestment
(a) Any foreign economic
organization which, or individual who, uses its or his share of profit for
reinvestment in Vietnam, for a period of more than three years, shall be given
a refund by the Ministry of Finance for profits tax paid on the amount
reinvested.
The refund shall not be paid
where the foreign party to an enterprise with foreign owned capital has not yet
contributed, in full, its contribution to the prescribed capital as stated in
the license issued by the State Committee for Co-operation and Investment.
(b) The amount of profits tax to
be refunded in respect of reinvested profit shall be calculated as follows:
Th
=
L
x S
100%
- S
Where:
Th : is the amount of profits
tax to be refunded.
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S : is the profits tax rate
stated in the license.
(c) Procedures for refund of
profits tax for reinvestment:
To receive a refund for profits
tax paid in respect of reinvested profits, foreign economic organizations or
individuals shall provide the following documents to the local collecting tax
office where its head managing office is located:
- decision approving the
reinvestment issued by the State Committee for Co-operation and Investment;
- declaration in the form of
Form No. 2 attached to this Circular stating the reinvested profit.
Upon receipt of the above
documents, the tax office shall proceed to examine them and calculate the
profits tax amount to be refunded and forward the application and relevant
documents to the Ministry of Finance (Department of Budget) which shall make
the refund to the reinvestor.
B.
WITHHOLDING TAX
1. Taxable profit and taxpayers
subject to withholding tax
Profits earned by foreign
economic organizations or individuals as the result of investing capital in any
of the forms stipulated in the Law on Foreign Investment in Vietnam including
tax refunded on the amount of profits reinvested shall, when transferred out of
Vietnam, be subject to payment of withholding tax.
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2. Determining the amount of tax
payable
The amount of withholding tax to
be determined shall be equal to the profit amount proposed to be transferred
abroad, multiplied by the withholding tax rate stipulated in the license issued
by the State Committee for Co-operation and Investment.
Where a foreign economic
organization or individual transfers its profits abroad in the form of finished
products or goods, they shall not only be liable for payment of export duty but
also for payment of an amount of withholding tax which is the result of
multiplying the following: the quantity of products exported; the FOB price
stated in the contract; and the withholding tax rate. Where no such contract
is available or the contract does not stipulate a selling price, the price
shall be the average FOB price of that particular class of goods in the market
determined by the tax office as at the date on which the products were
exported.
3. Procedure for payment of
withholding tax
Withholding tax shall be
collected in respect of each transfer.
Whenever transferring profits
abroad, the foreign economic organization or individual shall make a
declaration to the tax office which office deals directly with the profits tax
collection of the business establishment in which the foreign economic
organization or individual has invested capital. The declaration shall be in
the form of Form No. 3 attached to this Circular.
Within two business days of
receipt of such a declaration, the tax office shall examine it, calculate the
withholding tax payable, and give notice to the tax payer of the withholding
tax to be paid.
Upon receipt of such a notice
from the tax office, the foreign economic organization or individual shall pay
the withholding tax at the office of the State Treasury nominated by the tax
office, and the State Treasury shall issue to the tax payer a withholding tax
receipt stating the amount of withholding tax paid and the transfers in respect
of which it was paid.
C. EXPORT
DUTY AND IMPORT DUTY
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1. Exemption from and reduction
of export and import duty
In addition to the cases of
exemption from, and reduction of, export and import duty provided for in the
Law on Export and Import Duties, enterprises with foreign owned capital and
foreign contracting parties shall also be considered for exemption from, or
reduction of, duty in accordance with article 35 of the Law on Foreign
Investment in Vietnam and article 76 of Decree No. 18-CP dated 16 April 1993 of
the Government. When importing goods exempted from duty in accordance with the
above, an enterprise with foreign owned capital and foreign contracting party
shall carry out the formalities for duty exemption with the Ministry of Finance
in accordance with the following provisions:
(a) For cases of duty exemption
stipulated in article 76 of Decree No. 18-CP dated 16 April 1993 of the
Government:
- Whenever an enterprise with
foreign owned capital and foreign contracting party import goods which are,
according to article 76 of Decree No. 18-CP dated 16 April 1993, exempted from
duty, they must, within thirty (30) days as from the date of receipt of the tax
notice of the customs office or within ten (10) days as from the date the
customs office completes its inspection of the consignment of imports, carry
out the procedures for exemption from duty with the Ministry of Finance
(General Department of Taxation). The application file for the exemption from
duty shall include:
- Application requesting the
exemption from duty for a particular consignment submitted by the enterprise
with foreign owned capital or foreign contracting party to the Ministry of
Finance.
- Official letter issued by the
Ministry of Commerce, permitting foreign invested capital enterprises or
foreign contracting parties to import materials or goods under the tax
exemption cases as stipulated at Article 76 of the Decree No. 18/CP dated April
16, 1993 and stating clearly the items, quantity, types and value of the
free-duty imported goods.
- Licences for goods export
import in respect of each time of import / export granted by the Ministry of
Commerce.
- Customs declaration on export
- import goods in relation to the incoming goods that have been checked by the
Customs office.
+ No later than 3 days from the
date of receipt of application for exemptions from export-import duties, the
General Tax Department shall issue an official letter to the enterprises or
foreign contracting parties either to confirm duty-exemption or to notify the
reason why the enterprises or foreign contracting parties cannot be considered
for duty exemption so that the latter can assess the import duty to be paid of
the incoming goods with the Customs Office.
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Hanoi:
General Department of Tax,
10 Phan Huy Chu.
Ho Chi Minh City:
Representative office of the
General Department of Tax,
138 Nguyen Thi Minh Khai.
(b) For cases of export and
import duty exemptions stipulated in the Law on Export and Import Duties and in
article 35 of the Law on Foreign Investment, the procedures for making an
application shall be in accordance with the guidance provisions of Circular No.
8 TC/TCT dated 31 March 1992 of the Ministry of Finance.
4. Declaration and collection of
export and import duty
All exported and imported
commodities of enterprises with foreign owned capital or foreign contracting
party which are exempted from payment of duty as stated above shall, if sold or
otherwise disposed of in Vietnam, be subject to approval of the Ministry of
Commerce and the payment of import duty.
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Any import duty to be imposed on
exempted goods shall be determined on the basis of a number of factors
including the rate of duty, the rate of exchange, and the dutiable value at the
time of sale or disposal in accordance with the provisions of the Law on Export
and Import Duties. The dutiable value shall be determined in accordance with
the List of Minimum Dutiable Value promulgated by the Ministry of Finance at
the time of sale or disposal.
In the event that the goods are
permitted to be sold or disposed of are in fact fixed assets, the value of
which has been depreciated, their value for the purposes of the calculation of
any tax to be paid shall be their actual sale price as evidenced by lawful
receipt and all relevant documentation.
Tax offices shall be responsible
for the inspection of the usage of exports and imports exempted from duty and
where the tax office discovers that an enterprise with foreign owned capital or
foreign contracting party has sold, or otherwise disposed of any exempted
commodity, the tax office and customs office shall collect the outstanding duty
and deal with the breach in accordance with the provisions of the law.
D. TURNOVER
TAX, SPECIAL SALES TAX
1. Where enterprises with
foreign owned capital and foreign contracting parties wish to sell their
products and goods in the Vietnamese market, or provide services in Vietnam,
they shall pay turnover tax or special sales tax in accordance with the Law on
Turnover Tax or Law on Special Sales Tax.
2. The basis upon which the
amount and rate of any turnover tax or special sales tax are to be calculated,
and the cases of exemption from, or reduction of tax shall be determined in
accordance with the provisions of the Law on Turnover Tax, the Law on Special
Sales Tax, and any decrees or circulars which regulate the implementation of
these laws.
3. Procedures for tax payment
In relation to each month, the
enterprise with foreign owned capital or foreign contracting party shall no
later than within the first five days of each subsequent month, duly complete
and submit to the tax office a declaration of any turnover tax or special sales
tax for the previous month. (Such declaration shall be in Form No. 5 attached
hereto).
Where the enterprise has
subsidiaries, those subsidiaries must submit declarations and pay turnover tax
to the tax office of the particular locality where they are located.
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Within five days of the date of
receipt of such declaration of the enterprise with foreign owned capital or
foreign contracting party (or any ancillary businesses), the tax office shall
examine, calculate and provide to it a notice of the amount of tax to be paid.
The enterprise with foreign
owned capital or foreign contracting party shall within five days of the
receipt of that notice, pay in full the amount specified in the notice to the
office of the State Treasury nominated by the tax office.
E. ROYALTIES
1. In accordance with the
provisions of the Ordinance on Royalties dated 30 March 1990, enterprises with
foreign owned capital or foreign contracting parties which exploit any of the
natural resources of Vietnam shall pay royalties.
2. The specific rate of royalty,
in respect of each circumstance, shall be considered and determined by the
Ministry of Finance and State Committee for Co-operation and Investment, based
on the conditions of the exploitation, the quality of the particular resource,
transport and exploitation expenses, and by taking into account accepted
international practices. A specific rate applicable to each project shall then
be in accordance with the provisions of the tariff in Decree No. 6-HDBT dated 7
January 1991.
The quantity of natural
resources exploited and the value for the purpose of calculating royalties
shall be determined in accordance with the provisions of the Ordinance on
Royalties and Decree No. 6-HDBT dated 7 January 1991.
3. Declaration and payment of
royalties
Within five days prior to the
commencement of operations, incorporation, or dissolution, enterprises with
foreign owned capital or foreign contracting parties must register the operation
for the exploitation of natural resources with the tax office directly
responsible for the collection of tax. (The registration shall be in
accordance with Form 6 attached hereto).
In relation to each month, the
enterprise with foreign owned capital or foreign party shall, within the first
five days of each subsequent month, submit to the tax office a declaration of
any royalties (in accordance with Form 7 attached hereto). Upon receipt of such
declaration, the tax office shall examine, calculate and notify the enterprise
or foreign contracting party of the amount of tax to be paid. The enterprise
or foreign contracting party shall within five days of the receipt of that
notice, pay in full the amount specified in the notice to the office of the State
Treasury nominated by the tax office.
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Other types of tax applicable
to, and other financial obligations of, enterprises with foreign owned capital
and foreign contracting parties shall be regulated by the provisions of the
relevant laws currently in force of the Socialist Republic of Vietnam.
Part III
CURRENCY IN WHICH TAX IS
TO BE PAID AND CALCULATION OF TAX TO BE COLLECTED IN ACCORDANCE WITH THE GROUPS
OF THE BUDGET
A. CURRENCY
IN WHICH TAX IS TO BE PAID
Enterprises with foreign owned
capital or foreign contracting parties which are liable for payment of tax
pursuant to Part II of this Circular shall make payment in either Vietnamese
currency or in a foreign currency approved by the Ministry of Finance.
Any conversion from foreign
currency into Vietnamese currency and vice versa shall take place in accordance
with the foreign exchange rates published by the Foreign Trade Bank of Vietnam
at the time when such payment are made.
B.
CALCULATION OF TAX TO BE COLLECTED IN ACCORDANCE WITH THE CURRENT BUDGET
The income accruing to the State
Revenue as a result of taxes collected from the enterprise with foreign owned
capital or foreign contracting party shall be calculated into chapter 16 of the
current budget.
Depending on each particular
type of tax levied, its actual collection shall be designated to one of the
following sections and calculated accordingly:
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Withholding tax: Section 2, with
suitable type, category, class.
Export duty: Section 4
Import duty: Section 5
Turnover tax: Section 18, with
suitable type, category, class.
Special sales tax: Section 17,
with suitable type, category, class.
Royalties: Section 20, with
suitable type, category, class.
Trade license tax: Section 16,
with suitable type, category, class.
Individual income tax: Section
25
Rentals in relation to land,
water and sea surface: Section 23, with suitable type, category, class.
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Part IV
ASSESSMENTS OF TAXATION
LIABILITY
At the end of each financial
year or upon expiry of the operation or dissolution (in accordance with the Law
on Foreign Investment in Vietnam) of the enterprise with foreign owned capital
or foreign contracting party, the tax office shall assess the amount of tax due
and payable (hereinafter referred to as the tax assessment) by enterprises or
foreign contracting parties in accordance with the following provisions.
A. ASSESSMENT
OF ANNUAL TAX
Within a period of three months
as of the end of each financial year, enterprises with foreign owned capital
and foreign contracting parties shall submit their audited statements of
account to a tax office. The tax office shall then assess the tax payable as
follows:
1. Determination of the total
tax liability for the year: based on the statements of account and other
relevant accounting documents, the tax office shall examine these and calculate
the exact total amount to be paid in respect of each separate type of tax for
the entire financial year. These figures shall be compared with those
contained in the tax declarations submitted that year in order to determine the
accuracy of those declarations.
2. Determination of the total
amount of tax already paid during the year: based on the tax declarations
submitted and receipts of tax paid, the tax office shall determine the amount
of tax previously paid by the enterprise or foreign contracting party during
the year in respect of each separate type of tax.
3. Determination of tax which
has been underpaid or overpaid during the year and action to be taken in the
event of breach: based on the results determined in 1 and 2 referred to above,
the tax office shall determine any amounts of tax which have been underpaid or
overpaid in the financial year in respect of each separate type of tax. The
enterprise shall be refunded any tax which has been overpaid or alternatively,
shall receive a credit in respect of that amount against the tax otherwise
payable by it in the following year. In respect of underpaid tax, the tax
office shall determine the cause of underpayment, order that the owing amount
be collected and if the underpayment is due to the fault of the enterprise or
foreign contracting party, it may also impose the appropriate penalty.
When assessing the annual tax
payable, the tax office shall not be permitted to set off the overpaid tax of
one type against underpaid tax of another type.
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Upon the termination of any
business co-operation contract or the expiry or dissolution of any enterprise
with foreign owned capital in accordance with the Law on Foreign Investment in
Vietnam, the tax office shall immediately carry out the following:
1. Determine the annual taxation
liability in accordance with the procedures referred to in Part A above; and
2. Define the rights and
obligations of each party to the joint venture enterprise and business
co-operation contract or of foreign economic organizations or individuals
belonging to enterprises with one hundred (100) per cent foreign owned capital
to third parties
The principal aspects of this
task are:
- To examine the report of the
liquidation committee of the enterprise concerned on the overall liabilities of
the enterprise or contracting parties at the time operation ceased, the
possible sources of repayment of those liabilities, and the specific
responsibility of the investors for them. To control and provide guidance in
the payment of liabilities in accordance with the order of priority.
- To ascertain the current
invested capital of the investors recorded in the accounts of the enterprise,
including all capital in cash, fixed assets, materials and commodities, and to
confirm to the foreign investors that their invested capital may be transferred
abroad.
To determine the profit and
loss, and the rights and responsibilities of the investors in relation to any
such profits and losses; and
To determine the profit payable
to each foreign investor for the purposes of transfer abroad, and to calculate,
determine, collect and immediately pay to the State Treasury the withholding
tax payable on such profit, except where the foreign investor is able to
demonstrate by way of relevant documentation that such profit will not be
transferred abroad due to any of the following reasons:
- the profit is to be used for
the purposes of reinvestment in Vietnam as approved by the State Committee for
Co-operation and Investment;
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- the profit is to be used in
Vietnam for some other unspecified purpose.
C. METHOD OF
TAX ASSESSMENT
Prior to preparing an annual tax
assessment or a tax assessment upon the termination of operation or dissolution
of an enterprise with foreign owned capital or foreign contracting party, the
tax office shall issue a decision regarding a taxation examination and
assessment of the accounts of the enterprise. This decision shall be sent, in
writing, to the director of the enterprise or representative of the foreign
contracting party or liquidation committee at least three days prior to the
date of commencement of the examination.
The result of the taxation
examination shall be recorded in written minutes signed by the duly authorized
representative of the enterprise or foreign contracting party and
representatives of the tax office which is responsible for the examination and
assessment. The tax office concerned shall have the responsibility of sending
to the General Department of Taxation of the Ministry of Finance copies of the
minutes and copies of the accounting report on the enterprise.
Where the enterprise with
foreign owned capital or foreign contracting party does not agree with the
assessment made by the tax office contained in the minutes, it may make
complaint to the General Department of Taxation of the Ministry of Finance. The
enterprise or foreign contracting party however must strictly comply with the
requirements of the assessment issued pending resolution of the complaint.
Part V
RESPONSIBILITIES OF
ENTERPRISES WITH FOREIGN OWNED CAPITAL AND FOREIGN CONTRACTING PARTIES
1. At least five days prior to
the commencement of operation, dissolution, or the making of changes in
relation to products, scope of production or business, or to head managing
office location, enterprises and its ancillary businesses or foreign
contracting parties shall carry out all necessary registration procedures at
the tax office of the province or city where the head managing office is
located (in accordance with Form No. 8 attached).
2. To comply strictly with all
regulations relating to tax declaration while carrying on the process of
manufacturing or business.
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4. To pay tax in full and in
time.
Part VI
POWERS AND DUTIES OF THE
TAX OFFICE
1. To provide tax payers with
the necessary guidance in order that they may register and make declarations in
relation to each type of tax in accordance with the correct regulations.
2. To examine all tax
declarations, books of account, receipts, and other necessary documents to
calculate tax and prepare tax assessments, and to request any tax payer to
explain any unclear matters which relate to the calculation and assessment of
tax.
3. To calculate and provide
notice to the relevant tax payer of any amounts of tax to be paid. The tax
office shall have the power to determine the amount of tax payable in cases
where the tax payer does not submit a tax declaration within the stipulated
time.
4. To prepare the necessary minutes
and deal appropriately with any breaches of the regulations in accordance with
the powers stipulated by law.
5. To be responsible for the
strict implementation of the Law on Taxation, and to ensure that all tax
calculations are carried out faithfully, accurately, and objectively.
Part VII
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1. Any breaches of the
regulations relating to taxation shall be subject to the following penalties:
- Where the regulations in
relation to registration referred to in point 1 of part V of this Circular are
breached, a penalty shall be imposed on the tax payer in accordance with the
Ordinance on Administrative Penalties.
- Where the regulations in
relation to the making of declarations are breached, a fine shall be imposed of
up to one half of one (0.5) per cent of the amount of tax due in respect of the
period for which the breach occurred;
- Where there are incidents of
false declarations and tax avoidance, a fine shall be imposed of five times of
offending amount.
in the case of late payment, a
fine shall be imposed of one fifth of one (0.2) per cent of the delayed amount
for each day on which such delay occurs.
2.The powers to deal with
breaches and complaints are as follows:
Breaches in relation to tax
matters shall be dealt with by the tax office; and complaints of the taxpayers
in relation to tax matters shall be considered and resolved by the tax office.
In the event that the taxpayer disagrees with the resolution it shall have the
right to refer the complaint to a higher tax office or to the Ministry of
Finance, which shall make a final decision. Pending such decision the
complainant shall abide by the existing decision of the tax office.
Part VIII
ORGANIZATION OF
IMPLEMENTATION
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Within each taxation department,
specialized tax collectors shall be responsible for the collection of each type
of taxation levied for which enterprises or foreign contracting parties may be
liable. This specialized management group shall be responsible for the
provision of reports to the General Department of Taxation of the Ministry of
Finance every month, quarter, and year. The reports shall contain information
on the current status of tax collection and other matters which will assist in
the general overseeing by the Ministry of the enterprises and foreign
contracting parties in the localities for which the group are responsible.
This Circular replaces Circular
55 TC/TCT/TT dated 1 October 1991 of the Ministry of Finance. All previous
provisions of the Ministry of Finance which are inconsistent with the
provisions of this Circular are hereby repealed. This Circular shall be of full
force and effect as of 1 August 1993.
FOR
THE MINISTRY OF FINANCE
VICE MINISTER
Phan Van Dinh