THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
78/2001/ND-CP
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Hanoi,
October 23, 2001
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DECREE
DETAILING THE IMPLEMENTATION OF THE ORDINANCE ON INCOME TAX
ON HIGH-INCOME EARNERS
THE GOVERNMENT
Pursuant to the Law on Organization of the
Government of September 30, 1992;
Pursuant to May 19, 2001 Ordinance No.35/2001/PL-UBTVQH10 on Income Tax on
High-Income Earners of the National Assembly’s Standing Committee;
At the proposal of the Finance Minister,
DECREES:
Chapter I
SCOPE OF APPLICATION
Article 1.- According to
Article 1 of the Ordinance on Income Tax on High-Income Earners (hereinafter
referred to as the Income Tax Ordinance), the income tax payers include:
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2. Individuals who do not bear the Vietnamese
nationality but reside in Vietnam for an indefinite time and earn income;
3. Foreigners working in Vietnam, including
those who do not live in Vietnam but have their income generated in Vietnam.
Article 2.- Taxable
incomes include regular and irregular ones, except for those prescribed in
Article 4 of this Decree.
1. Regular incomes include:
a/ Incomes in forms of wage, salary and
remuneration;
b/ Assorted allowances;
c/ Income amounts being house rental, power and
water charges which are paid by the income earners employers. Particularly,
house rental shall be calculated according to the actually paid amounts but
must not exceed 15% of total amount of wage, salary and/or remuneration;
d/ Rewards in cash and in kind from different
sources;
e/ Other incomes earned by individuals through
their partnership in business societies or membership in enterprises managing
boards;
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2. Irregular incomes include:
a/ Gifts, donations in kind in all forms sent by
overseas organizations and individuals to individuals in Vietnam;
b/ Incomes from technology transfer, including:
Transfer of the right to own or right to use industrial property objects;
transfer of technologies through the purchase, sale or supply of technical
know-hows, technological options, trademarks; provision of support services and
technological consultations, transfer of the use or the right to use
industrial, trade or scientific equipment, except for cases where they are
presented as gifts or donations;
c/ Incomes from technical construction designs,
industrial designs, copyright royalty and other services;
d/ Lottery prizes and sale promotion prizes in
other forms.
Article 3.- Income tax
shall temporarily not be imposed on income amounts being bank deposit
interests, savings interests, interests on bills, bonds, promissory notes
and/or shares, incomes from securities investment activities, securities
purchase-sale spread.
Article 4.- Tax-free
incomes are specified as follows:
1. The following allowances are provided for by
the Vietnamese State for incomes generated in Vietnam, including:
a/ Night shift allowance;
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c/ Responsibility allowance;
d/ Region-based allowance, job attraction
allowance, special allowance for a number of remote islands and border regions;
e/ Seniority allowance for the armed forces;
security and defense allowance;
f/ Specific allowances for a number of branches
and occupations as prescribed by law;
g/ Itinerancy allowance;
h/ Preferential allowance for cadres who had
joined the revolution before 1945 and other allowances from the State budget.
2. Other incomes generated in Vietnam:
a/ Working trip allowance;
b/ Food ration expenses for a number of special
branches and occupations according to the State-prescribed regime;
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d/ Insurance indemnities for participants in
person and property insurance regimes;
e/ Severance allowance as provided for by the
State;
f/ Allowances for those who are transferred to
work at production and/or business establishments, including one-time regional
transfer allowance;
g/ Monetary rewards for technical modifications,
innovations and inventions, international prizes and national prizes organized
or recognized by the Vietnamese State;
h/ Monetary rewards accompanying the
State-conferred titles, such as Professor, People’s Teacher, Labor Hero,
People’s Armed Force Hero;
i/ Social insurance and medical insurance
premiums deducted from wages and remuneration of laborers.
3. Incomes of business household owners, which
are already subject to enterprise income tax.
4. Regular incomes of foreigners who reside in
Vietnam for less than 30 days within 12 consecutive months from the date of
their first arrival in Vietnam.
Chapter II
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Article 5.- Bases for
tax calculation are the taxable incomes and the tax rates.
Article 6.- Taxable
regular income is the total amount of incomes earned by each individual defined
in Clause 1, Article 2 of this Decree, calculated on a monthly average in a
year, more concretely:
1. For Vietnamese citizens working at home, or
working or laboring abroad and other individuals permanently reside in Vietnam,
the total income earned in a year shall be divided by 12 months (calendar
year). In case of Vietnamese citizens who work both at home and abroad, their
taxable income shall be the total amount of incomes generated at home and
abroad.
2. For foreigners:
a/ If they reside in Vietnam for 183 days or
more, the total income generated inside and outside Vietnam shall be divided by
12 months. In cases where the declared monthly average income generated abroad
is lower than that in Vietnam and this cannot be proved, the monthly average
income in Vietnam shall be used to calculate the income generated during the
period they stay abroad. The conventional tax calculation month shall include
30 days;
b/ If they stay in Vietnam for between 30 and
182 days, the taxable income shall be the total income generated in Vietnam,
regardless of the places where they receive their income;
c/ The residence duration of foreigners in
Vietnam shall be calculated to be 12 consecutive months for the first tax
calculation year, and for the subsequent years, it shall be calculated
according to calendar years with each arrival day and each departure day shall
be counted as one full day.
Article 7.- Tax rates
for regular incomes:
1. Vietnamese citizens at home and other
individuals permanently residing in Vietnam, who are subject to the partially
progressive taxation table specified in Clause 1, Article 10 of the Income Tax
Ordinance and still have a remaining income of over VND 15,000,000/month after
paying income tax according to such taxation table, shall have to pay a surtax
of 30% of the amount exceeding VND 15,000,000.
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3. For foreigners who reside in Vietnam for 183
days or more and Vietnamese citizens working or laboring abroad, the partially
progressive taxation table specified in Clause 2, Article 10 of the Income Tax
Ordinance shall apply.
4. For foreigners who stay in Vietnam for
between 30 and 182 days, a tax rate of 25% of the total income earned in
Vietnam shall apply.
Article 8.- Taxable
irregular income of each individual shall be calculated for each time of income
generation, specifically:
1. Gifts, donations in kind sent from abroad
shall be considered incomes of persons who are named as gift or donation
recipients, including cases where recipients are enterprises owners.
2. For incomes from technology transfer,
technical construction designs and industrial designs, the taxable income shall
be calculated according to the value of each contract, regardless of number of
payment times.
3. For incomes being lottery prizes, sale promotion
prizes, the taxable income shall be calculated for each time of prize drawing
and reception.
Article 9.- Tax rates
for irregular incomes shall be those prescribed in the partially progressive
taxation table in Clause 1, Article 12 of the Income Tax Ordinance, except for
the following cases:
1. The tax rate of 5% shall apply to incomes
from technology transfers valued at more than VND 2,000,000 each time of income
generation.
2. The tax rate of 10% shall apply to incomes
being lottery prizes or sale promotion prizes valued at more than VND
12,500,000 each time of income generation.
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Article 10.- Income
amounts in foreign currencies must be converted into Vietnam dong at the
average exchange rates on the inter-bank foreign currency market at the time of
income generation for the calculation of taxable incomes. Incomes in kind shall
be valued at local market prices at the time of income generation. For gifts
and donations in kind sent from abroad, the prices thereof for calculating
taxable incomes shall comply with regulations on import goods� tax calculation prices at
the time of receipt of such gifts and donations.
Chapter III
TAX DECLARATION, PAYMENT
AND FINAL SETTLEMENT
Article 11.- The income
tax declaration and payment shall be carried out according to the withholding
principle. Organizations and individuals that pay incomes shall be obliged to withhold
tax therefrom before paying incomes to tax payers.
Article 12.- The tax
payment registration and declaration for regular incomes shall be made for
monthly average income in a tax calculation year, which is declared monthly for
temporary tax payment according to net incomes.
1. Tax payers shall have to make tax payment
registration and declaration with the tax authorities through organizations
and/or individuals that pay incomes to them (for case of tax declaration and
payment according to the withholding principle) or agencies authorized to
collect income tax. In cases where individuals who have taxable incomes, from
which the tax has not yet been withheld, they shall have to make tax
declaration and payment directly with the tax authorities.
2. Organizations and individuals that pay
incomes or agencies authorized to collect income tax (hereinafter referred to
as income-paying agencies) shall make the tax declaration and payment according
to the provisions of Clause 1, Article 16 of this Decree.
Article 13.- The tax
declaration and payment for irregular incomes shall be made for each time of
income generation.
Income-paying agencies shall have to withhold
tax before paying incomes (including incomes of individuals in foreign
countries who transfer technology into Vietnam). Individuals who carry gifts or
donations for others shall have to declare and pay income tax on behalf of the
gift or donation recipients.
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Article 15.- The
Finance Ministry shall organize the income tax collection, and direct, guide
and inspect organizations in performing the income tax collection by method of
withholding income tax before making the income payment.
The income-paying agencies that make tax
withholding shall be entitled to a remuneration of 0.5% of collected tax amount
for regular incomes, and 1% of collected tax amount for irregular incomes
before remitting tax into the State budget.
Article 16.- The
income-paying agencies shall have to:
1. Register, declare, withhold and remit income
tax in full and on time into the State budget; make integrated written tax declaration
and calculation and submit to the tax authorities the list of income tax
payers.
2. Guide tax payers in receiving declaration
forms, making income tax declaration, payment and final settlement with the tax
authorities.
3. Keep books and records related to the income
tax declaration, calculation and payment, observe the periodical reporting
regime and report on tax final settlement with the tax authorities.
4. Calculate tax, withhold tax and calculate
remuneration amounts they are entitled to and remit tax into the State budget.
5. Give receipts to tax payers, manage, use and
settle tax receipts according to the prescribed regime.
Article 17.- Organizations
that manage and/or pay incomes to foreigners shall have to guide and complete the
procedures for income tax payment before carrying out exit procedures for
foreigners.
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Chapter IV
TAX EXEMPTION OR
REDUCTION
Article 18.- Income tax
exemption or reduction shall be considered for:
1. Cases where tax payers suffer damage or loss
caused to their property, incomes and lives by natural calamities, enemy
sabotage or accidents. The level of tax exemption or reduction to be considered
shall correspond the damage or loss degree but must not exceed the payable tax
amount.
2. In special cases where the tax payment by
individuals affects the national economic, political and/or social interests,
the Finance Ministry shall propose the Prime Minister to decide on tax
exemption or reduction for each specific case.
The Finance Ministry shall prescribe the
procedures for income tax exemption or reduction provided for in this Article.
Chapter V
IMPLEMENTATION
PROVISIONS
Article 19.- Acts of
violating the provisions of the income tax legislation shall be handled
according to the provisions of Articles 21, 22, 23 and 24 of the Income Tax
Ordinance.
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Article 20.- In cases
where an international treaty which Vietnam has signed or acceded to contains
provisions on income tax payment different from this Decree, the provisions of
such treaty shall apply.
Article 21.- This
Decree takes effect as from July 1, 2001 and replaces the Government’s Decree
No.05/CP of January 20, 1995, Decree No.30/CP of April 5, 1997 and Decree No.170/1999/ND-CP
of December 6, 1999.
Article 22.- The
Finance Minister shall guide the implementation of this Decree.
The ministers, the heads of the
ministerial-level agencies, the heads of the agencies attached to the
Government and the presidents of the People’s Committees of the provinces and
centrally-run cities shall have to implement this Decree.
ON BEHALF OF THE GOVERNMENT
FOR THE PRIME MINISTER
DEPUTY PRIME MINISTER
Nguyen Tan Dung