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THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No:
05-CP
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Hanoi,
January 20, 1995
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DECREE
DETAILING THE IMPLEMENTATION OF THE ORDINANCE ON INCOME TAX
LEVIED ON HIGH INCOME EARNERS
THE GOVERNMENT
Pursuant to the Law on
Organization of the Government on the 30th of September 1992;
Pursuant to the Ordinance on Income Tax Levied on High Income Earners (amended)
passed by the Standing Committee of the National Assembly on the 19th of May
1994;
At the proposal of the Minister of Finance,
DECREES:
Chapter I
SCOPE OF APPLICATION
Article 1.-
As stipulated at Article 1 of the Ordinance on the Law on Income Tax Levied on
High Income Earners (hereunder called income tax) all income earners have to
pay income tax. These are:
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2. Other individuals residing in
Vietnam who are not nationals of Vietnam but have settled indefinitively in
Vietnam;
3. Foreigners working in
Vietnam, including non residents with incomes generated in Vietnam.
Article 2.-
The taxable incomes include both regular and irregular incomes, except the
incomes stipulated at Article 4 of this Decree.
1. The regular incomes include:
- Incomes in the form of
salaries, wages and remunerations.
- Incomes in the form of
subsidies for house rent, and electricity and water bills. House rent is based
on the real subsidies, but this must not exceed 15% of the income from wages,
salaries or remunerations.
- Bonuses in cash and in kind
from various sources.
- Other incomes generated by the
participation in business organizations or managerial boards...
- Individual incomes generated
by the participation in production, business and service activities outside the
taxable incomes, such as consultancy services according to long-term contracts,
job instruction, class giving, teaching of pre-exams courses, cultural and art
performances.
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- Incomes in the form of
presents and gifts in cash or in kind sent by organizations and individuals
abroad to individuals in Vietnam in all forms.
- Incomes from technological
transfer according to each contract, comprising: transfer of ownership right or
the right to use industrial property: transfer through the sale and purchase or
supply of technical secrets, technological plans, trade marks...; the execution
of services of technological consultancy and support, transfer of the use of or
the right to use industrial, commercial or scientific equipment.
- Incomes from the payment of
copyright over literary and art works.
- Incomes from the designing of
construction techniques, industrial technical designs, and other services.
- Lottery wins.
Article 3.-
For the time being, the income tax shall not be levied on the incomes from the
interests of bank deposits, saving deposits, bank-issued bonds,
government-issued bonds, time bonds.
Article 4.-
Non-taxable incomes:
1. The following incomes are
regulated by the Vietnamese State when they are generated in Vietnam:
- Night work allowance (excluding
third-shift wage);
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- Area allowance, attraction
allowance, special allowance for a number of offshore islands and border areas;
- Seniority allowances for the
armed forces;
- Specialty allowances for a
number of occupations, like forensic medicine and surgery;
- Allowances for civil servants,
and other allowances derived from the State budget; allowances for veterans who
took part in the revolutionary activities prior to 1945;
- Mission allowances;
- Allowances for the meals in a
number of special occupations;
- Social allowances for the
beneficiaries of social relief policies;
- Severance allowances for State
officials and employees;
- Allowances for the transfer to
a production establishment by decision of the State;
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- Reward for technical
innovations and inventions, international prizes, and national prizes organized
or recognized by the Vietnam State;
- Cash award accompanying titles
conferred by the State, such as Professor, People's Teacher, Labor Hero, Hero
of the People's Armed Forces...
2. Profit gained by the head of
household in individual businesses already subject to profit tax under the
Profit Tax (their income shall not be accounted for in the expenditures while
calculating the taxable profits).
3. Regular incomes of foreigners
residing in Vietnam for less than 30 days within 12 consecutive months counting
from the date of their arrival in Vietnam.
Chapter II
BASES FOR TAX
CALCULATION AND TAX BRACKET
Article 5.-
The bases for calculating the income tax are the taxable income and the tax
rate.
Article 6.-
The taxable regular income is the total average income of a month in a year for
an individual, as stipulated at Item 1, Article 2 of this Decree. More
concretely:
1. For Vietnamese citizens
living in the country or on mission or working abroad, and other individuals
having settled in Vietnam, this income is the total income for a year divided
to 12 months (solar calendar).
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3. For foreigners staying in
Vietnam from 30 to 182 days, the taxable income is the income generated in
Vietnam.
Article 7.-
Following are the tax rates for the regular incomes:
1. For Vietnamese citizens in
the country and other individuals having settled in Vietnam, the tax rate is
the partially progressional rate, stipulated at Item 1 of Article 10 of the
Ordinance on Income Tax. After payment of the tax at this rate, if the
remaining income exceeds 5,000,000 Vietnamese Dong/month, they have to pay a
supplementary 30% of the excess amount.
2. For Vietnamese citizens
having incomes generated inside the country and outside the country, the
taxable income in the tax year shall be the total income inside the country and
outside the country divided to 12 months, and the tax rate shall correspond to
the rate stipulated at Item 1 and Item 2 of Article 10 of the Ordinance on
Income Tax.
3. For foreigners residing in
Vietnam for 183 days and more, and Vietnamese citizens working or on mission
abroad, the tax rate shall be the partially progressional rate stipulated at
Item 2 of Article 10 of the Ordinance on Income Tax.
4. For foreigners staying in
Vietnam from 30 to 182 days, the uniform tax rate is stipulated at Item 2 of
Article 10 of the Ordinance on Income Tax, representing 10% of the total
income.
Article 8.-
The taxable irregular income is the income of each individual at each generation
of income, as stipulated at Item 2 of Article 2 of this Decree.
Incomes from presents and gifts
are taxed on the receivers, including the owners of private businesses.
Taxable incomes from the
transfer of technology, construction techniques and industrial technical
designs, are calculated according to the value of each contract, irrespective
of the times of payment.
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Article
10.- All incomes in foreign currencies or in kind shall be converted into
Vietnamese currency for tax calculation. The gifts and presents in kind are
priced at the average rate on the local market at the time of the income
generation. For the presents and gifts in kind sent from abroad, the taxable
income is their import value priced at the time the presents are received.
Foreign currencies and gold are valued at the selling price announced by the
Bank at the time of income generation. In case the present is in a foreign
currency for which no formal exchange rate has been announced by the Bank, it
shall be converted into US dollars before being converted into Vietnamese Dong.
Chapter III
DECLARATION OF TAX
RETURNS-PAYMENT OF TAX
Article
11.- Payment of income tax shall conform to the principle of deduction
right at the source of income. The organization or individual that pays the
income, or the labor management agency (hereafter called mandated collecting
organization) has the duty to deduct the tax before disbursing the income.
- In case an individual works at
different times in different places, his/her income tax shall be deducted at
the source of the income, and all the incomes must be declared for a final
account at the end of the year at the latest working place in the year.
- In case an individual works in
the same period of the year in many places and takes his/her income from many
places, he/she must combine these incomes and declare them for tax payment at
the place where he/she gets the highest income, or which is most convenient for
the collection.
- In case an individual derives
his/her income from the participation in business associations or managerial
boards, or other regular incomes besides the income at his main working place,
he/she must declare his/her other incomes together with the income from the
main working place, in order to pay tax according to the regulations.
- In case the incomes deriving
from consultancy or training services, or from scientific workshops, seminars
are not deducted from the income at the source, the income recipients must make
the tax declaration, and pay the tax to the local tax agency in the locality of
his working place.
Article
12.- Declaration of tax returns for regular incomes: The income tax on
regular incomes is levied on the average monthly income during the tax year,
and shall be declared for advance payment based on real income per month.
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2. For foreigners:
- If they stay in Vietnam for
from 30 to 182 days, their income tax shall be calculated according to the tax
rate stipulated at Item 3 of Article 10 of the Ordinance on Income Tax.
- It they stay in Vietnam for
183 days and more, they shall declare their tax returns according to the
partial progressional tax rate stipulated at Item 2 of Article 10 of the
Ordinance on Income Tax.
- The stay of a foreigner in
Vietnam is the 12 consecutive months of the first tax year. The following years
are determined according to the solar calendar, the arrival and departure days
being calculated as one day.
Article
13.- Tax returns declaration for irregular incomes:
The income tax for irregular
incomes shall be paid for each income generation.
The organization or individual
paying the income has the duty to deduct the tax before paying the income
(including the income of individuals living abroad transferring technology into
Vietnam). The individuals who carry presents or gifts must make the tax return
declarations and pay the income tax on behalf of the recipients.
Article
14.- The tax payer must voluntarily make a full account of his incomes, pay
the tax fully and on time, and make the tax accounts as prescribed by Ministry
of Finance.
Article
15.- The Ministry of Finance shall organize the collection of the income
tax, has the responsibility to direct, guide, check and inspect the mandated
organizations to collect the individual income tax, according to the modalities
of deduction of the income tax right at their sources, before the incomes are
paid to the earners.
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Article
16.- The organizations entrusted with the collection of income tax must
take the initiative in registering declaration, deducting and remitting the tax
to the State budget. They have the responsibility:
- To guide the earner of taxable
incomes to declare his/her income, receive the tax declaration form, draw up
the inventory for tax calculation, add up the incomes, and forward to the tax
agency the list of payers of income tax, the amount of tax to be paid...
- To keep the books and
documents related to the tax declaration, tax calculation and payment, and
carry out the regime of reporting to the tax agency.
- To calculate the tax, deduct
the tax, calculate the right remuneration, and remit the tax to the State
budget.
- To issue a receipt to the tax
payer.
Article
17.- The organizations in charge of the management and paying incomes to
foreigners have the responsibility to provide them guidance and help them to
fill the procedures of paying income tax before filling the procedure of exit
visas to them. All foreigners having taxable incomes have the duty to declare
to the income-paying agency or the tax agency the taxable incomes, and the
length of their stays in Vietnam. Thirty days at the latest after their arrival
in Vietnam, they have to pay fully their income tax before leaving Vietnam.
Chapter IV
TAX REDUCTION AND
EXEMPTION
Article
18.- The following cases are eligible for reduction or exemption of income
tax:
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2. The Prime Minister may order
exemption or reduction of income tax in a number of cases related to economic,
political or social interests of the nation.
The Ministry of Finance shall
define the procedures for exemption or reduction of income tax stipulated at
this Article.
Chapter V
IMPLEMENTATION PROVISIONS
Article
19.- Violations of the Ordinance on Income Tax shall be dealt with
according to Article 21, Article 22, Article 23 and Article 24 of the Ordinance
on Income Tax. Those credited with meritorious deeds in discovering violations
of the Ordinance on Income Tax or who help the tax agency to recover the evaded
tax, shall receive a reward up to 10% of the recovered amount which is remitted
to State Budget, as prescribed by the Ministry of Finance.
Article
20.- The incomes on which separate commitments have been made with regard
to taxation and tax exemption, shall be subject to the clauses of the
international documents and treaties which Vietnam has signed or acceded to.
Article
21.- This Decree takes effect as from the 1st of June 1994, and replaces
Decree No.119-HDBT on the 17th of April, 1991, of the Council of Ministers (now
the Government), Decree No.16-CP on the 23rd of March, 1993, of the Government;
Item 4, Article 7 of Decree No.370-HDBT on the 9th of November, 1991 of the
Council of Ministers (now the Government) concerning the obligatory
contribution to the State budget by the persons sent to work for a given term
abroad.
All the regulations on income
tax and supplementary collections after payment of income tax issued prior to
the 1st of June 1994 are no longer valid.
The agencies in charge of
management, training and selection of laborers are entitled to deduct not more
than 8% of the income of the laborers to cover the managerial training or
selection expenditures. This expenditure shall be managed and used in
accordance with the financial regulations in force.
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Article
22.- The Ministers, the Heads of the ministerial-level agencies, the Heads
of the agencies attached to the Government, the Presidents of the People's
Committees of the provinces and cities directly under the Central Government
shall, according to their functions, tasks and powers, organize the
implementation of this Decree.
ON
BEHALF OF THE GOVERNMENT
FOR THE PRIME MINISTER
DEPUTY PRIME MINISTER
Phan Van Khai