Công văn 336/TCT-TNCN

To: Department of Taxation of provinces and centrally-affiliated cities

The personal income tax finalization in 2013 is implemented under the following documents:

- The Law on Personal Income Tax, Law amending and supplementing a number of articles of the Law on Personal Income Tax, Decree No. 100/2008/ND-CP dated September 08, 2008 of the Government; Decree No. 65/2013/ND dated June 27, 2013; Circular No. 84/2008ATT-BTC dated September 30, 2008 of the Ministry of Finance, Circular No. 62/2009/TT-BTC dated March 27, 2009 of the Ministry of Finance; Circular No. 02/2010/TT-BTC dated January 11, 2010 of the Ministry of Finance; Circular No. 113/2011/TT-BTC dated August 04, 2011 of the Ministry of Finance; Circular 111/2013/TT-BTC dated August 15, 2011 of the Ministry of Finance and Circular No. 176/2009/TT-BTC dated September 09, 2009 of the Ministry of Finance and the guiding documents;

- The Law on Tax Administration, the Law amending and supplementing a number of articles of the Law on Tax Administration; Decree No. 85/2007/ND-CP dated May 25, 2007 of the Government; Decree No. 106/2010/ND-CP dated October 28, 2010 of the Government; Decree No. 83/2013/ND-CP dated July 22, 2013 of the Government; Circular No. 28/2011/TT-BTC dated February 28, 2011 of Ministry of Finance and Circular No. 156/2013/TT-BTC dated November 06, 2013 of Ministry of Finance and the guiding documents.

To ensure the uniform implementation as prescribed by law, the General Department of Taxation hereby draws the attention to the contents of personal income tax finalization in 2013 as follows:

I. CASES OF DECLARATION OF PERSONAL INCOME TAX FINALIZATION

1. Payers of income subject to personal income tax irrespective of whether tax deduction incurs or not are responsible for tax finalization declaration and finalize tax on behalf of individuals. Where organizations and individuals do not pay income arising in 2013, they shall not declare their personal income tax finalization;

2. Organizations which pay income but are separated, split, merged, consolidated, converted, dissoluted or broken under the Enterprise Law must finalize tax for the amount of personal tax deducted fromin 45 days after the decision on separation, splitting, merger, consolidation, conversion, dissolution or break and issue certificate of tax withholding for the laborers as a basis for personal income tax finalization;

In case of re-organization of enterprise (separation, splitting, merger, consolidation, conversion), the laborers are transferred from the old organization to the new organization (the one formed after the re-organization of enterprise). At the end of year, if the laborers authorize the tax finalization, the new organization shall collect the certificate of personal income tax withholding issued by the old organization as a basis for aggregating the income and amount of tax deducted and finalize tax on behalf of laborers;

3. Individual resident having income from salary, wages, income from business, operations of insurance agents, multi-level marketing business and lottery agents shall finalize the personal income tax under the guidance at Point c, point e, Clause 2, Article 26 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance;

Where the individual resident as a foreigner has finished work in Vietnam and finalized tax before December 31, then this individual comes back to Vietnam and works until the end of that year. At the end of the year, the individual finalizes tax with the taxable income from January 01 to December 31 and is deducted from the amount of personal income tax paid in foreign country but not exceeding the tax payable under Vietnam’s tariff for calculation of apportion of income earned in foreign country.

4. Individual resident with income from transfer of securities, at the end of year, if requesting the application of tax rate of 20% on the taxable income, shall declare the tax finalization directly with the tax authority. Where the individual transferring securities has paid tax by the tax rate of 0.1% on the price of transfer of securities at a time without request for re-determining the amount of personal income tax at the tax rate of 20%, he/she shall not have to finalize tax;

5. Condition “having a rented house to live in Vietnam from 183 days or more” to certify the individual resident takes effect on July 01, 2013. Before July 01, 2013, the condition “having a rented house to live in Vietnam” to determine the individual resident is 90 days. The determination of number of days of rented house is based on the house lease contracts, including the contracts signed before July 01, 2013. Where the individual is subject to tax finalization, upon tax finalization, the condition “having a rented house to live in Vietnam” to determine the individual resident of the year 2013 is 183 days;

II. AUTHORIZED PERSONAL INCOME TAX FINALIZATION

1. Cases of authorized personal income tax finalization

1.1. Individuals having income from salary and wage authorize the payers of income to finalize tax for the income paid by organizations and individuals in the following cases:

- Individuals only having income from the salary and wage sign labor contract from 3 months or more at one payer of income and are working there at the time of authorization of tax finalization, even when not fully working 12 months of the year.

- Individuals having income from the salary and wage sign labor contract from 3 months or more at a unit while having current income at other places with a average monthly amount of 10 million dong or less are deducted from tax by the units paying income at the rate of 10% or 20%. If the individuals do not have request for tax finalization for current income, they shall be entitled to authorize tax finalization at the organization paying income with labor contract of 3 months or more. If the individuals have the request for tax finalization of current income, they shall finalize their tax with the tax authority;

Ex. 1: In 2013, Mr. E has income from salary and wage under his labor contract of over 3 months at company A while having income from services contract with other two companies as B and C. At company B with income of 24 million dong deducted from tax at the rate of 10%. At company C with income of 30 million dong deducted from tax at the rate of 10%. Therefore, Mr. E’s average monthly current income in 2013 is less than 10 million dong ((24 million dong + 30 million dong) : 12 months = 4.5 million dong/month). If Mr. E is subject to tax finalization and has no request for tax finalization for the current income, he may authorize the tax finalization of the year 2013 for company A. Company A finalizes tax on behalf of Mr. E only for the income paid by company A;

- Individuals having income from the salary and wage sign labor contract from 3 months or more at a unit while having additional income from house or land use right leasing with the average monthly revenue in a year of no more than 20 million dong deducted from personal income tax at the place of house or land use right leasing. If these individuals do not request the tax finalization of income from house or land use right leasing, they may authorize the finalization at the organization paying income with labor contract of 03 months or more. If these individuals request the tax finalization of income from house or land use right leasing, they may finalize tax directly with the tax authority;

Ex. 2: In 2013, Mr. E has income from salary and wage under his labor contract of over 3 months at company A while having income from house leasing for a period of 08 months, the income from house leasing is 25 million dong/month with tax paid at the leasing place. Therefore, Mr. E’s annual income from house leasing is less than 20 million dong ((8 months x 25 million dong): 12 months = 16.6 million dong/month). If Mr. E is subject to tax finalization and does not request the tax finalization of income from house leasing, he may authorize company A to finalize tax on his behalf. Company A finalizes tax on behalf of Mr. E only for the income paid by company A;

1.2. Individuals authorizes the payers of income to finalize tax on their behalf under the Form No.04-2/TNCN issued together with Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance with the copy of invoice or document evidencing the charitable and humanitarian contributions and learning encouragement (if any).

2. Case of non-authorization of tax finalization

2.1. Individuals satisfying the conditions are entitled to authorize the payers of income to finalize tax under the guidance at Point 1 mentioned above but have been issued with certificate of personal income tax withholding shall not authorize the tax finalization to the organizations and individuals paying income (except that organizations and individuals paying income have revoked and annulled the certificate of personal income tax withholding issued to individuals).

2.2. Individuals having income from salary and wage without condition assurance are entitled to authorize the payers of income to finalize tax under the guidance at Point 1 mentioned above but they are subject to the personal income tax finalization as prescribed, then they shall finalize tax with the tax authority of the entire income generated in the year. A number of cases of non-authorization of personal income tax finalization are as follows:

- Individuals only having their current income deducted from tax at the rate of 10% or 20% (including cases of having current income at a unique place) shall not authorize their finalization.

- Individuals having income from salary and wage sign labor contract from 03 months or more at a unit while having their current income not deducted from tax (including case of less than the deductible level and equal to the deductible level but not deducted)

Ex.3:In 2013, Mr. E has income from salary and wage under his labor contract of over 3 months at company A while having income from services contract with other two companies as company B and C. At company B, his income is 10 million dong deducted from tax at the rate of 10%. At company C, his income is 1.5 million dong of less than the deductible level. Therefore, in 2013, Mr. E has an undeductible income. If he is subject to the tax finalization, he shall not authorize his tax finalization at company A but finalize his tax directly with the tax authority;

- Individuals having income from salary and wage with labor contract of over 03 months at a unit and current income at other places with average annual income of less than 10 million dong deducted from tax and income from house and land use right leasing with the average annual revenue of less than 20 million and having paid their personal income tax at the leasing place shall not authorize the payers of income to finalize tax.

Ex. 4. In 2013, Mr. E has income from salary and wage under his labor contract of over 3 months at company A while having current income and from house leasing. The average current income in 2013 is less than 10 million dong deducted from tax. The average revenue from house leasing in 2013 is less than 20 million dong with tax payment at the leasing place. Therefore, if Mr. E is subject to the tax finalization, he shall not authorize his tax finalization at company A but finalize his tax directly with the tax authority;

3. Case of adjustment after authorization of tax finalization

Individuals after authorizing their tax finalization and the payers of income have done the tax finalization on behalf of individuals, if detecting the individuals are subject to direct tax finalization with the tax authority, then the organizations and individuals paying income shall not adjust the personal income tax finalization but issue certificate of tax withholding to the individuals under the finalization number and record at the lower left corner of the certificate of tax withholding the content: Company…has finalized the personal income tax on behalf of Mr/Mrs….(under authorization) in the line (ordinal number)….of the list 05A/BK-TNCN”  for the individuals to finalize their tax directly with the tax authority;

III. TAX RELIEF

The tax relief to determine the taxable income shall comply with the guidance in Clause 3, Section I, Part B of Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance; Article 2 of Circular No. 62/2009/TT-BTC dated March 27, 2009 of the Ministry of Finance; Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance includes the following contents:

1. Calculation of tax relief for individuals

Where in the tax period, the individual residents has not calculated tax relief for themselves or caculated tax relief for themselves of less than 12 months, they shall be calculatef for full 12 months if doing tax finalization as prescribed. For foreign residents, the calculation of tax relief shall comply with the guidance at Item c.1.2, Point c, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance;

Ex. 5: Suppose from January 2013 to June 2013, Mr. G does not have income from salary and wages. From July 2013 to December 2013 Mr. G had income from salaries and wages from the signing of non-term labor contract to work at company Y, then in 2013, Mr. G is calculated for his tax relief from July 2013 through December 2013 (corresponding to the month of income generation). If Mr. G does the finalization (authorizing the finalization or doing finalization directly with the tax authority), he shall be entitled to the tax relief for himself for full 12 months.

2. Calculation of tax relief for dependants

The tax relief for the dependants whom the taxpayers are obliged to support is calculated from the month of generation of nurture obligation under the guidance in Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance, Circular No. 62/2009/TT-BTC dated March 27, 2009 of the Ministry of Finance; Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, including the cases as follows:

- In case where the taxpayers register the tax relief for his dependants after the time of actual generation of nurture obligation but in the Form No. 16/DK-TNCN declare “the time to calculate tax relief” consistently with the time of actual generation of nurture obligation, then when finalizing the personal income tax, they shall be re-calculated in accordance with actual generation of nurture obligation without re-registration;

- Where the taxpayers register the tax relief for their dependants after the time of actual generation of nurture obligation and in the Form No. 16/DK-TNCN declare “the time to calculate tax relief” after the time of actual generation of nurture obligation. If the individuals are subject to tax finalization, then upon tax finalization for re-calculation by the actual generation, the individuals shall re-register in the Form No. 16/DK-TNCN issued together with Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance and enclose it with tax finalization dossier;

Ex. 6: Suppose in March 2013, Mrs. K gave birth to a child and in June 2013, Mrs. K registers tax relief for her dependant. In the Form No. 16/DK-TNCN she declares “the time to calculate tax relief” is March 2013, then in the year, she shall be temporarily calculated for tax relief for her dependant since June 2013. Upon finalization, Mrs. K is entitled to the tax relief for her dependant since March 2013 to the end of December 2013 without re-registration;

Ex. 7: Suppose in March 2013, Mrs. K gave birth to a child and in June 2013, Mrs. K registers tax relief for her dependant. In the Form No. 16/DK-TNCN she declares “the time to calculate tax relief” is June 2013, then in the year, she shall be temporarily calculated for tax relief for her dependant since June 2013. Upon finalization for re-calculation by the actual generation since March 2013, Mrs. K has to re-register by the actual generation in the Form No. 16/DK-TNCN issued together with Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance and enclose it with tax finalization dossier;

- Where the taxpayers has a generation of nurture obligation for their other dependants specified at Item d.4, Point Article, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance (such as: sibling, grandparents, aunt…), then the time limit is no later than December 31, 2013. If registering the tax relief beyond the above time limit, the taxpayers shall not be entitled to the tax relief for their dependants in the year 2013;

3. Conditions to determine the persons who are disabled and unable to work as the dependant;

The persons who are disabled and unable to work as specified at Item dd.1.1, Point dd, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance are the persons subject to the adjustment of law on the persons who are disabled and suffer from serious disease and are unable to work. Serious disease is applied under the List issued together with dispatch No. 16662/BTC-TCT dated December 02, 2013 of the Ministry of Finance;

IV. DETERMINATION OF INCOME FOR CALCULATION OF PERSONAL INCOME TAX

1. Taxable income and deductions

- Period from January 2013 to the end of June 2013

The taxable income and deductions are determined under the guidance in Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance, Circular No. 62/2009/TT-BTC dated March 27, 2008 of the Ministry of Finance, Circular 02/2010/TT-BTC dated January 11, 2010 of the Ministry of Finance and the dispatch No.12501/BTC-CST dated September 20, 2010 of the Ministry of Finance and the guiding documents;

- Period from July 2013 to the end of December 2013

The taxable income and deductions are determined under the guidance in Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance, dispatch No. 8355/BTC-TCT dated June 28, 2013 of the Ministry of Finance, dispatch No. 8817/BTC-TCT dated July 08, 2013 of the Ministry of Finance;

2. Assessable income

The average monthly assessable income of 2013 is determined by the total income of 2013 (12 months) minus (-) total deductions of the year and divided by 12 months as follows:

Ex. 8: In 2013, Mr. E is an individual resident having income in the first 06 month of 20 million dong/month with the tax relief for himself and 01 dependant. In the last 06 months, Mr. E has income of 10 million dong/month with the tax relief for himself and 01 dependant. In addition to deductions of tac relief, Mr. E has no other deduction. Therefore, if at the end of year, Mr. E is subject to tax finalization then the average assessable income in 2013 is determined as follows:

- Total taxable income:

(20 million dong x 6 months) + (10 million dong x 6 months) = 180 million months.

- Total deductions:

 (4 million dong + 1.6 million dong) x 6 months + (9 million dong+ 3.6 million dong) x 6 months = 109.2 million dong.

- Assessable income in 2013

180 million dong - 109.2 million dong = 70.8 million dong

- The average monthly assessable income in 2013:

70.8 million dong : 12 months = 5.9 million dong

3. Conversion of income excluding tax to income with personal income tax

The conversion of income excluding tax to income with personal income tax is done as follows:

- Period from January 2013 to the end of June 2013: apply under the guidance in Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance and the guiding documents;

- Period from July 2013 to the end of December 2013: apply under the guidance in Clause 4, Article 7 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance;

Ex. 9: In Appendix 01 (attached to this dispatch)

V. PROCEDURES FOR DECLARATION OF PERSONAL INCOME TAX FINALIZATION

1. Tax finalization dossier

Dossier for personal income tax finalization in 2013 shall comply with the forms of declaration issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance, including the following contents:

- Where the multi-level marketing business organization in 2013 has paid income to individuals participating in the multi-level marketing business and at the end of year shall finalize the total taxable income and amount of personal income tax deducted in the year for its employees under the Form No. 02/KK-BH and the List No.02/BK-BH issued with Circular No. 28/2011/TT-BTC dated Februay 28, 2011 of the Ministry of Finance and comply with the guidance in Appendix 02 and 03 (attached to this dispatch);

- Where under the regulations of foreign law, the foreign tax authority does not issue certificate of amount of tax paid, the taxpayers may submit the copy of certificate of tax withholding (specify the payment of tax with declaration of income tax) issued by the agency paying income or the copy of bank document for the amount of tax in foreign country with the taxpayer’s confirmation;

2. Place to submit tax finalization dossier

2.1. For the payers of income

Place to submit personal income tax finalization dossier for 2013 of the payers of income complies with the guidance at Point c, Clause 1, Article 16 of Circular No.156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance;

2.2. For individual residents having income from salary and wage, incomes from business or securities transfer.

Place to submit personal income tax finalization dossier for 2013 of individual residents having income from salary and wage, incomes from business or securities transfer complies with the guidance at Point c.2, Clause 2 and Point c.2, Clause 5, Article 16 of Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance, including the following contents:

- Under the guidance at Item c.2.2, Point c, Clause 2, Article 16 of Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance, “the case where the individuals doing their business at many place, then the place to submit the tax finalization dossier is the Sub-Department of Taxation where the first tax identification number is issued to the business individuals”. The place where the first tax identification number is issued is the tax agency which has issued the tax identification number to the individuals.

Ex. 10: Mr. E has a business establishment in district A while having another in district B. The tax agency of district A is the first place where Mr. E’s tax identification number. Therefore, Mr. E shall finalize his tax at the tax agency in district A.

Where individuals are issued with tax identification number at the time they are not business individuals and then their business activities are generated, the place to submit the tax finalization dossier is the Sub-Department of Taxation managing the first business place. Where the first business place has stop working, then the place to submit the tax finalization dossier is the subsequent business place under operation;

Ex. 11. Mr. E is issued with tax identification number since 2000 because of income from salary and wage in Hanoi city, In 2012, Mr.E is a business owner in HCM City and in 2013, he has another business establishment in Dong Nai province, then the place to submit the finalization dossier is the tax agency directly managing the business place in HCM City. Where in 2013, the business place in HCM City no longer operates, the place of finalization is the tax agency directly managing the business establishment in Dong Nai province.

- Where the individuals reside in many places and are subject to the tax finalization at the tax agency where the individuals are residing, then they may choose a place of residence for tax finalization;

Ex. 12: In 2013, Mr. E registers his permanent residence in Hanoi city while registering his temporary residence in HCM City. If Mr. E is subject to the tax finalization at his place of residence, he may choose to submit his finalization dossier in Hanoi or HCM City;

VI. TIME LIMIT FOR SUBMISSION OF TAX FINALIZATION DOSSIER

The payers of income and individuals subject to declaration of finalization shall submit their finalization dossiers within 90 days after the end day of solar year;

VII. TAX REFUND

1. The personal income tax refund for the payers of income to perfom the finalization on behalf of individuals who have authorized their finalization shall comply with the provisions in Article 28 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance and Article 53 of Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance, thus the finalization dossier of the organizations and individuals paying income does not include the declaration of personal income tax finalization;

2. The personal income tax refund for individual residents having their income from salary and wage directly finalizing with the tax agency; individuals having income from their business or securities transfer and request their tax finalization shall comply with the guidance in Article 46 of Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance and Article 28 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance;

VIII. IT APPLICATION TO FINALIZATION IN 2013

1. Upgrade of IT application for personal income tax finalization

Under the provisions in Circular No. 156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance, the tax finalization declaration dossier in 2013 shall continue the application of forms of finalization issued in Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance. Therefore the software supporting the taxpayers in tax declaration and application of personal income tax management (QLT_TNCN) shall only be updated to change the relevant formula of tax calculation under the new policies in Circular No. 111/2013/TT-BTC dated August 15 of the Ministry of Finance;

- Applications within scope of update: Declaration support, online tax declaration, personal income tax finalization support and tax management;

- Contents of application updes meeting the professional regulations: Change of formula of tax calculation on the forms of declaration of personal income tax finalization issued with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance for the norms related to the regulations on calculation of tax relief for individuals and their dependants under Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance;

- Plan for application deployment:

+ On January 22, 2014: Deploying the update versions of application: Declaration support and personal income tax finalization support. Particularly online tax declaration is expected to update on February 05, 2014

+ On February 16, 2014: Deploying the update versions of application of personal income tax management.

2. Requirements for receipt and processing of tax finalization dossier for 2013

The management system of personal income tax has completed the nation-wide deployment in October 2012 as a basis for efficient support for tax agencies to process data of tax finalization and personal income tax refund. The General Department of Taxation requires the Department of Taxation:

- To receive, verify, certify and transfer data of declaration of personal income tax finalization to the database of personal income tax finalization concentrated at the General Department of Taxation to fully record and account the declaration into the management system of personal income tax as a basis for processing and inspection of data of personal income tax finalization at the tax agency. The procedures for receipt and processing of tax finalization dossier is basically the procedures the General Department of Taxation trained the Department of Taxation during 2009. However, in order to additionally support the tax agencies in control of data, the General Department of Taxation shall change a number of technical solutions and re-update a number of steps in the Procedures. The procedures for amendment and supplementation shall be announced to the tax agencies and posted on websites of tax industry in order to inform the taxpayers and tax officers at the time of deployment of applications;

- The tax agencies shall guide the taxpayers around the forms of submission of declaration of tax finalization for the following cases:

+ For the taxpayers having registered and declared their online personal income tax finalization, they shall be exempt from paper declaration because they have used their digital signatures to ensure the legality of the declaration submitted.

+ For the taxpayer who have not registered the online tax declaration, the tax agencies shall guide and encourage them to submit their paper declaration of tax finalization (as a legal basis for the tax agencies to determined the completion of taxpayers’ obligations of tax declaration and finalization while sending the data file to the tax agencies via the website at address http://tncnonline.com.vn or directly submit it directly at the tax agencies for load reduction in data processing of tax agencies and convenience for taxpayers upon settlement of tax refund dossier. Where the taxpayers submit only paper declaration to the tax agencies, these tax agencies shall use the functions of management system of personal income tax for direct entry and accounting of taxpayers’ finalization data;

IX. IMPLEMENTATION ORGANIZATION

The General Department of Taxation requires the Departments of Taxation, based on the guiding documents of the Law on personal income tax and guiding contents in this document to deploy, disseminate, guide and properly implement the personal income tax finalization in the area with the specific contents as follows:

1. Propagation contents

1.1. The tax agencies at all levels shall train the contents of tax policy related to the personal income tax finalization for 2013 of the payers of income.

1.2. Propagating and guiding the taxpayers to focus on implementing the following contents:

- Cases of tax finalization required;

- Dossier and procedures for tax finalization;

- Preparation and submission of tax finalization dossier;

- Place to submit tax finalization dossier;

- Method of calculation of personal income tax;

2. Method of propagation and support

Departments of Taxation, based on the specific conditions at localities, shall choose the forms below to organize the propagation of law on personal income tax for tax finalization:

- Directly propagate on Departments of Taxation’s websites the personal income tax finalization;

- Coordinate with the media agencies in the area to propagate and answer questions about law on personal income tax;

- Propagate, mobilize and encourage the taxpayers to submit their personal income tax finalization dossiers via internet;

- Apply forms to support the taxpayers to perform their tax finalization such as: arranging location, furniture, computers and suitable personnel; using media tools directly guiding and answering problems on policy of personal income tax and contents of tax finalization, procedures and tax finalization dossier (declaration form); supporting the preparation of declaration and submission of tax finalization dossier. For localities with a lot of foreigners directly coming to the tax agencies for submission of tax finalization dossiers, there must be separate supporting department…

Any difficulty arising during the implementation of this Circular should be promptly reported to the General Department of Taxation for timely guidance and handling;

Appendix 01

(Issued together with dispatch No. 336/TCT-TNCN dated January 24, 2014 of the General Department of Taxation)

Ex. 9: In 2013, under the labor contract signed between Mr. D and company X, Mr. D is paid a monthly salary of 31.5 million. In addition to the salary Mr. D is paid for sports club membership fees of 1 million dong/ month and a rented house with the monthly rent of 6 million dong/month by company X. Mr. D must pay compulsory insurance of 1.5 million dong/month. Company X is responsible for paying the personal income tax for Mr.D as prescribed.

In the year, Mr.D only calculates his tax relief without dependant and charitable and humanitarian contributions and learning encouragement.

Mr.D’s personal income tax to be paid in 2013 is as follows:

* Period from January 2013 to the end of June 2013

- Income as a basis for monthly conversion:

31.5 million dong - 4 million dong = 27.5 million dong

- The income after monthly conversion (determined under Appendix):

(27.5 million dong – 3.25 million dong)/0.75 ≈ 32,333 million dong

- Determining the rent included in the monthly taxable income:

+ Total taxable income without rent:

32,333 million dong + 4 million dong + 1 million dong = 37,333 million dong

+ 15% total taxable income (excluding rent):

15% x 37,333 million dong ≈ 5.6 million dong

Therefore the rent is included in the monthly taxable income is 5.6 million dong

- Total monthly taxable income

37,333 million dong + 5.6 million dong = 42,933 million dong

- Monthly assessable income:

42,933 million dong - 4 million dong – 1.5 million dong = 37,433 million dong

* Period from July 2013 to the end of December 2013

Step 1: Determine the rent paid for included in income as a basis for conversion

- Income as a basis for conversion (excluding rent):

31.5 million dong + 1 million dong - 9 million dong – 1.5 million dong = 22 million dong

- Assessable income (determined under Appendix):

(22 million dong – 1.65 million dong)/0,8 = 25,4375 million dong

- Taxable income (excluding rent):

25.4375 million dong + 9 million dong + 1.5 million dong = 35.9375 million dong/month

- 15% total taxable income (excluding rent):

35.9375 million dong x 15% = 5.390 million dong/month

Therefore the rent included in the income as a basis for conversion is 5,390 million dong/month

Step 2: Determine assessable income

- Income as a basis for conversion to assessable income:

31.5 million dong + 1 million dong + 5.390 million dong - 9 million dong – 1.5 million dong = 27.39 million dong/month

- Assessable income (converted under Appendix):

(27.39 million dong – 3.25 million dong)/0.75 = 32.187 million dong/month

- Mr. D’s taxable income:

32.187 million dong + 9 million dong + 1.5 million dong = 42.687 million dong/month

* Total taxable income in 2013:

6 months x 42.933 million dong + 6 months x 42.687 million dong = 513.72 million dong.

- Total deductions in 2013:

4 million dong x 6 months + 9 million dong x 6 month + 1.5 million dong x 12 month = 96 million dong

- Assessable income in 2013:

513.72 million dong - 96 million dong = 417.72 million dong

- Personal income tax payable in 2013:

(60 million dong x 5%) + (120 million dong - 60 million dong) x 10% + (216 million dong - 120 million dong) x 15% + (384 million dong - 216 million dong) x 20% + (417.72 million dong - 384 million dong) x 25% = 65.43 million dong

Or:

[(417.72 million dong : 12 month) x 25% - 3,25 million dong] x 12 month = 65,43 million dong.

Appendix 02

 (Issued together with dispatch No. 336/TCT-TNCN dated January 24, 2014 of the General Department of Taxation)

GUIDANCE ON DECLARATION OF FORM No. 02/KK-BH

Issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance; Guiding the implementation of a number of articles of the Law on tax administration, guiding the implementation of Decree No. 85/2007/ND-CP dated May 25, 2007 and Decree No. 106/2010/ND-CP dated October 28, 2010 of the Government

[01] Tax period: Record by the year of period of tax declaration

[02] First time: Mark (x) in the square box if declaration of tax finalization

[03] Time of addition: If declaration is done after the one, it is determined as additional declaration and mark the time of additional declaration in the square box

[04] Name of taxpayer: Specify full name of the multi-level marketing business organization.

[05] Tax ID number: Specify the TAX ID number of the multi-level marketing business organization under the Certificate of tax registration or Announcement of tax ID number or Card of tax ID number issued by the tax authority;

[06], [07], [08]: Specify address of head office of the multi-level marketing business organization under the Certificate of business registration.

[09], [10], [11]: Specify the telephone and fax number and email of the multi-level marketing business organization (if any).

[12] Name of tax agent (if any): Where the multi-level marketing business organization authorizes the declation of tax finalization to the tax agent, specify name of tax agent under the establishment decision or its Certificate of business registration;

[13] Tax ID number: Specify the tax ID number of tax agent under the Certificate of tax registration or Announcement of tax ID number or card of tax ID number issued by the tax authority.

[14], [15], [16]: Specify address of head office of tax agent under Certificate of business registration or address of permanent residence (for individual).

[17], [18], [19] Specify the telephone and fax number and email of the tax agent (if any);

[20] Tax agent contract: Specify the number and date of tax agent contract between the multi-level marketing business organization with the tax agent (contract under performance);

[21] Total insurance agents in period: Total participants of the multi-level marketing business are paid income in the period. This indicator is equal to the total individuals in the period in indicator [06] of Appendix 02/BK-BH.

[22] Total income paid to insurance agent in the period: Total income paid to participants of the multi-level marketing business network. This indicator is equal to the one [14] of Appendix 02/BK-BH.

[23] Total individuals subject to tax deduction in the period: Total individuals having income from participation in the multi-level marketing business network to the deductible level. This indicator is equal to the total lines at the indicator [13] of Appendix 02/BK-BH> 0.

[24] Total income paid to individuals subject to tax deduction: Total of incomes paid by the multi-level marketing business organization to the individuals subject to tax deduction. This indicator is equal to the total lines at the indicator [10] of Appendix 02/BK-BH corresponding to indicator [13]> 0.

[25] Total personal income tax deducted: Total personal income tax deducted of individuals. This indicator is equal to the one [17] of Appendix 02/BK-BH

Appendix 03

(Issued together with dispatch No. 336/TCT-TNCN dated January 24, 2014 of the General Department of Taxation)

GUIDANCE ON DECLARATION OF FORM No. 02/BK-BH

Issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance; Guiding the implementation of a number of articles of the Law on tax administration, guiding the implementation of Decree No. 85/2007/ND-CP dated May 25, 2007 and Decree No. 106/2010/ND-CP dated October 28, 2010 of the Government

[01] Tax period: Record by the year of period of tax declaration

[02] Name of taxpayer: Specify full name of the multi-level marketing business organization under the establishment decision or Certificate of business registration;

 [03] Tax ID number: Specify the Tax ID number of the multi-level marketing business organization under the Certificate of tax registration or Announcement of tax ID number or Card of tax ID number issued by the tax authority;

[04] Name of tax agent (if any): Where the multi-level marketing business organization authorizes the declation of tax finalization to the tax agent, specify name of tax agent under the establishment decision or its Certificate of business registration;

[05] Tax ID number: Specify the Tax ID number of the tax agent under Certificate of tax registration or Announcement of tax ID number or Card of tax ID number issued by the tax authority;

[06] Number: Specify ordinal number from small to large.

[07] Specify full name of participants of multi-level marketing business network to whom the multi-level marketing business has paid income in the period, including participants having income of less than tax deduction level;

[08] Tax ID number: Specify the tax ID number of participants of multi-level marketing business network under the Announcement of tax ID number or card of tax ID number issued by the tax authority;

[09] ID Card/Passport: Specify the number of ID Card/Passport of individuals who have not tax ID number;

[10] Taxable income: Total taxable incomes from the multi-level marketing business including: agent commission, bonuses in any form, allowances and other amounts that individuals receive from multi-level marketing businesses;

[11] Income as a basis for calculation of tax reduction: The taxable income the multi-level marketing business organization has paid to the individuals who work in the economic zone in the period;

[12] Reduced amount of tax: The amount of tax reduced in the period of the individual if doing any multi-level marketing business in the economic zone. This indicator = {([10] x tax ​​rate under progressive tax tariff applicable to individuals as insurance agents and individuals doing multi-level marketing business x ([11] / [10])} x 50%.

[13] Deducted amount of tax: Total personal income tax of individuals the multi-level marketing business organization has deducted in the period.

[14] Total taxable income: This indicator is equal to the total indicator column [10].

[15] Total incomes as basis for calculation of tax reduction: This indicator is equal to the total indicator column [11].

[16] Total amount of tax reduced: This indicator is equal to the total indicator column [12].

[17] Total amount of tax deducted: This indicator is equal to the total indicator column [13].