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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:
15/2000/TT-BTC
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Hanoi, May 23, 2000
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CIRCULAR
GUIDING THE
SUPPLEMENTS AND AMENDMENTS TO A NUMBER OF POINTS IN THE FINANCE MINISTRY’S CIRCULAR No. 39 TC/TCT OF JUNE 26, 1997 GUIDING
THE IMPLEMENTATION OF THE GOVERNMENT’S
DECREE No. 05/CP OF JANUARY 20, 1995 AND DECREE No. 30/CP OF APRIL 5, 1997
DETAILING THE IMPLEMENTATION OF THE ORDINANCE ON INCOME TAX ON HIGH-INCOME
EARNERS
Pursuant
to the Ordinance Amending a Number of Articles of the Ordinance on Income Tax
on High-Income Earners, adopted on June 30, 1999 by the National Assembly’s
Standing Committee;
Pursuant to the Government’s Decree No. 170/1999/ND-CP of December 6, 1999
amending a number of Articles of Decree No. 05/CP of January 20, 1995, which
details the implementation of the Ordinance on Income Tax on High-Income
Earners;
The Ministry of Finance hereby guides the supplements and amendments to a
number of points of the Finance Ministry’s Circular No. 39 TC/TCT of June 26, 1997 guiding
the implementation of the Government’s Decree No. 05/CP of January 20, 1995 and Decree
No. 30/CP of April 5, 1997 detailing the implementation of the Ordinance on
Income Tax on High-Income Earners as follows:
1. Point 2 of Section I shall be added with the
following content at its ending paragraph:
Where it is stipulated in the contracts that if
individuals receive incomes without income tax (NET income), the non-tax
incomes shall be converted into incomes with tax, which shall serve as a basis
for taxable income determination. If individuals receive non-tax incomes, of
which incomes from salaries represent 70% or more, the incomes from salaries
shall be converted into incomes with tax, then plus (+) the remaining incomes
for determination of taxable income.
2. Point 4.1 of Section I shall be amended as
follows:
"Job severance allowance provided by the
social insurance fund" shall be replaced with the following contents:
"Job severance allowance, job-losing allowance for subjects shall comply
with the Labor Code".
3. Point 4.2 of Section I shall be amended as
follows:
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4. Point 1.2 of Section II shall be amended as
follows:
Tax rates for regular incomes shall comply with
Clause 3, Article 1 of the Ordinance amending a number of Articles of the
Ordinance on Income Tax on High-Income Earners adopted on February 6, 1997 by
the National Assembly’s Standing Committee,
and Clause 2, Article 1 of the Ordinance amending a number of Articles of the
Ordinance on Income Tax on High-Income Earners adopted on June 30, 1999 by the
National Assembly Standing Committee.
Tax on regular income shall be calculated by the
partially progressive method in the tax levels; the method for partially
progressive tax calculation is concretized in the following example: a
Vietnamese person has an average monthly income of VND 4,500,000; the payable
income tax amount is VND 450,000, which is calculated as follows:
- Level 1: Income of up to VND 2,000,000: not
taxed
- Level 2: Income of over VND 2,000,000 up to
VND 3,000,000: tax rate of 10%
+ The payable tax amount is:
(VND 3,000,000 - VND 2,000,000) x 10% = VND
100,000
- Level 3: Income of over VND 3,000,000 up to
VND 4,000,000: tax rate of 20%
+ The payable tax amount is:
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- Level 4: Income of over VND 4,000,000: tax
rate of 30%
+ The payable tax amount is:
(VND 4,500,000 - VND 4,000,000) x 30% = VND
150,000
Total income tax amount to be paid shall be VND
450,000 = (VND 100,000 + VND 200,000 + VND 150,000)
To simplify the calculation of payable income tax
amount under the partially progressive tax index, it may be calculated
according to the following guiding index:
a/ Calculating regular-income tax on Vietnamese
citizens and other individuals permanently residing in Vietnam
Unit for calculation: Vietnam dong (VND)
Level Average monthly Tax rate Payable tax
income (%) amount
1 Up to 2,000,000 0 0
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3 Over 3,000,000 20 TI x 20% -up to 4,000,000
500,000
4 Over 4,000,000 30 TI x 30% -up to 6,000,000
900,000
5 Over 6,000,000 40 TI x 40% -up to 8,000,000
1,500,000
6 Over 8,000,000 50 TI x 50% -up to 10,000,000
2,300,000
7 Over 10,000,000 60 TI x 60% -3,300,000
Of which: TI: Taxable income
(x): Multiply by tax rate
(-): Subtract
Vietnamese citizens at home and other
individuals permanently residing in Vietnam, if after paying income tax
according to this tax index, the remaining income exceeds VND 8,000,000 a
month, they shall have to pay an additional income tax of 30% on the amount in
excess of VND 8,000,000.
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- Income tax amount to be paid according to the
tax index = VND 20,000,000 x 60% - VND 3,300,000 = VND 8,700,000
- The remaining income after the tax payment
according to the partially progressive tax index: VND 11,300,000 = (VND
20,000,000 - VND 8,700,000)
- Additional income tax: VND 990,000 = (VND
11,300,000 - VND 8,000,000) x 30%
Total monthly income tax to be paid shall be VND
9,690,000 = VND 8,700,000 + VND 990,000
b/ To calculate regular income tax on foreigners
residing in Vietnam and Vietnamese citizens working abroad
Unit for calculation: Vietnam dong (VND)
Level Monthly average Tax rate Payable tax income
(%) amount
1 Up to 8,000,000 0 0
2 Over 8,000,000 10 TI x 10% -up to 20,000,000
800,000
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4 Over 50,000,000 30 TI x 30% -up to 80,000,000
7,800,000
5 Over 80,000,000 40 TI x 40% -up to 120,000,000
15,800,000
6 Over 120,000,000 50 TI x 50% -27,800,000
Of which: TI: Taxable income
(x): Multiply by tax rate
(-): Subtract
For example: If a foreigner having a monthly
regular income of VND 70 million, the income tax shall be calculated as
follows:
Monthly regular income of VND 70 million is in
level 4, the income tax amount to be paid shall be:
(VND 70 million x 30%) �
VND 7.8 million = VND 13.2 million
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For regular incomes besides salaries and wages
such as incomes earned through participation in business and services
activities, which are not liable to enterprise income tax such as consultancy
services under long-term contracts, teaching, vocational training, examination
coaching, cultural and art performances; because these incomes are not regular,
in order to ensure timely collection and payment, the income-paying agencies
shall, when paying the income, substract 10% of total income for tax payment.
The tax agencies shall have to provide receipts for the income-paying
organizations and/or individuals so that the latter can provide tax receipts
for each individual when the tax amount has already been deducted. At the end
of the year, individuals shall have to declare their total incomes and make tax
final settlement with the tax bodies according to the partially progressive tax
index.
For irregular incomes: The income paying
organizations and/or individuals shall have to deduct tax before paying
incomes.
6. Point 1 of Section VI shall be amended as
follows:
All violations of the provisions of the
Ordinance on Income Tax on High-Income Earners shall be settled according to
the Government’s Decree No. 22/CP of
April 17, 1996 on sanctions against administrative violations in the tax domain
and Circular No. 128/1998/TT-BTC of September 22, 1998 of the Ministry of
Finance.
7. Implementation organization:
This Circular takes effect as from July 1st,
1999.
The phrase "Clause 2, Article 10 of the
Ordinance on Income Tax" in Circular 39 TC/TCT of June 26, 1997 shall be
replaced with the phrase "Clause 2, Article 1 of the Ordinance amending a
number of Articles of the Ordinance on Income Tax on High-Income Earners
adopted on June 30, 1999 by the National Assembly Standing Committee".
Other provisions not guided in this Circular shall
continue to comply with Circular 39 TC/TCT of June 26, 1997 of the Ministry of
Finance.
In the course of the implementation, if any
problems arise, organizations and individuals are requested to report them to
the Ministry of Finance for study, consideration and settlement.
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FOR THE MINISTER OF FINANCE
VICE MINISTER
Pham Van Trong