Circular No. 05/2002/TT-BTC of January 17th, 2002, on income tax of high income earners providing guidelines for implementation of Decree 78/2001/ND-CP of the Government dated 23 October 2001 on implementation of the ordinance on income tax of high income earners. đã được thay thế bởi Circular No. 81/2004/TT-BTC of August 13, 2004 guiding the implementation of The Governments Decree No.147/2004/ND-CP of July 23, 2004 detailing the implementation of the ordinance on income tax on high-income earners và được áp dụng kể từ ngày 13/09/2004.
Nội dung toàn văn Circular No. 05/2002/TT-BTC of January 17th, 2002, on income tax of high income earners providing guidelines for implementation of Decree 78/2001/ND-CP of the Government dated 23 October 2001 on implementation of the ordinance on income tax of high income earners.
THE MINISTRY OF FINANCE
SOCIALIST REPUBLIC OF VIET NAM
Hanoi, January 17th, 2002
ON INCOME TAX OF HIGH INCOME EARNERS PROVIDING GUIDELINES FOR IMPLEMENTATION OF DECREE 78/2001/ND-CP OF THE GOVERNMENT DATED 23 OCTOBER 2001 ON IMPLEMENTATION OF THE ORDINANCE ON INCOME TAX OF HIGH INCOME EARNERS
Pursuant to the Ordinance on Income Tax of High Income Earners 35/2001/PL-UBTVQH10 of the Standing Committee of the National Assembly dated 19 May 2001;
Pursuant to Decree 78/2001/ND-CP of the Government dated 23 October 2001 on Implementation of the Ordinance on Income Tax of High Income Earners;
The Ministry of Finance provides the following guidelines:
I. SCOPE OF APPLICATION
Persons liable to pay income tax pursuant to article 1 of Decree 78/2001/ND-CP of the Government dated 23 October 2001 on Implementation of the Ordinance on Income Tax of High Income Earners (hereinafter referred to as Income Tax) shall comprise:
1.1 Vietnamese citizens being in Vietnam, or working or being on business trips abroad, and earning income;
1.2 Individuals who do not have Vietnamese citizenship but residing indefinitely in Vietnam, and earning income (hereinafter referred to as other individuals residing in Vietnam);
1.3 Foreigners earning income in Vietnam, comprising:
- Foreigners working in Vietnam in Vietnamese enterprises, economic organizations, cultural or social organizations, and so forth, or in foreign enterprises, representative offices, branches of foreign companies; and individuals practising their profession independently;
- Foreigners not currently residing in Vietnam but who have income which is sourced in Vietnam, in circumstances such as income from technology transfer and copyright.
2. Taxable income:
Taxable income as stipulated in article 2.1 of Decree 78/2001/ND-CP of the Government dated 23 October 2001 shall include regular and irregular income.
2.1 Regular income shall include:
2.1.1 Items of income in the form of salaries, wages and remuneration, including payments for overtime, nightshift, and thirteenth month (if any), subsidies in lieu of salary received from social insurance funds, and allowances for lunch and mid-shift meals (if received in cash).
If a signed labour contract provides that income actually received shall exclude income tax (net income), it must be converted to income in which income tax is included to provide the basis for determining taxable income (using the formula in Appendix 1).
2.1.2 Bonuses received monthly, quarterly, annually, or irregularly on the occasion of holidays, Tet, anniversaries of the establishment of an industry, from whatever source and in whatever form, that is, in monetary form or in material kind.
2.1.3 Income received from participation in business associations, boards of management, management committees and councils of enterprises.
2.1.4 Personal stable income as stipulated in article 1 of Decree 78/2001/ND-CP of the Government dated 23 October 2001 received from participation in business, production or service activities of various kinds which are not subject to corporate income tax, such as: design, architecture and consultancy services on the basis of long term contracts, teaching,
Intensive examination coaching, cultural and artistic performances, sporting and gymnastic activities of a professional nature.
2.1.5 Items of income paid by organizations or individuals paying income for rent for accommodation, electricity and water. In particular, rent must be calculated in accordance with the actual amount paid but shall not exceed fifteen (15) per cent of the total income from salaries, wages and remuneration. If an individual resides in the office where he works, taxable income shall be based on rent or depreciation expenses for the proportion of the area the individual uses expressed as a percentage of the whole area of the house, and this percentage shall be a maximum of fifteen (15) per cent.
2.2 Irregular income shall include:
2.2.1 Income in the form of gifts and presents in kind that are sent by organizations and individuals from abroad to individuals in Vietnam in all forms, such as sent by way of an income- paying organization such as the post office, or carried personally by persons returning to the country. Recipients of gifts may be individuals, either Vietnamese or foreigners, and owners or representatives of a private enterprise. If an item belonging to an individual is carried by that person into Vietnam and declared on the customs form when conducting immigration procedures, it shall not constitute taxable income in the form of a gift or present.
2.2.2 Income arising from transfer of technology pursuant to independent contracts, including:
- Transfers of ownership of or rights to use objects of industrial property, such as inventions, industrial designs, utility solutions, goods and commercial trademarks;
- Transfers by way of purchase and sale, or supply (with or without equipment attached) of technical know-how, technological solutions and processes, designs or design samples, formulae, drawings, preliminary outlines, charts, diagrams, technical parameters or other specialized technical know-how;
- Provision of the following support and consultancy services:
- Research, analysis, evaluation of opportunities, pre- feasibility and feasibility studies of investment projects and technology renovation;
- Technical support, technology selection, guidance on installation of equipment, trial operation of technological lines;
- Consultancy in relation to management of technology, organization and operation of technology and production processes;
- Training, improvement of technical expertise and managerial skills of management personnel, technicians and workers (excluding forms of specialist industry training);
- Provision of services on data collection, processing and provision about markets, technology, laws, raw materials and the environment;
- Transfers of the use of or rights to use industrial, commercial or scientific equipment (except for cases of mere importation of machinery, equipment, supplies, and so forth);
- Irregular income tax shall not be payable for a transfer of technology under clause 2.2.2 in the form of a gift.
2.2.3 Income in the form of royalties for literary and artistic works.
2.2.4 Income from technical construction designs, technical industrial designs, and services such as consultancy, training and brokerage services; income from artistic performances, sporting and gymnastic activities not of a professional nature.
2.2.5 Income arising from scientific activities, such as seminars, and subjects of scientific research at all levels.
2.2.6 Winnings from lotteries distributed by the State and all forms of promotional prizes.
3. Income in respect of interest received from bank deposits, bank savings and loans, profits from purchases of term bonds, ordinary bonds, Government bonds, shares, and income from activities of investing in securities, and the difference on purchase and sale of securities shall be temporarily exempted from income tax pursuant to article 3 of Decree 78/2001/ND-CP.
4. Types of income which are not subject to tax pursuant to article 4 of Decree 78/2001/ND-CP shall comprise:
4.1 The following types of income sourced in Vietnam as stipulated by the State of Vietnam:
4.1.1 Allowances for night work (excluding wages for nightshift);
4.1.2 Allowances for toxicity and danger applicable to trades or work with toxic or dangerous labour conditions, such as underground mines, offshore oil rigs, suspension at heights, work involving direct exposure to toxic chemicals, toxic gases, toxic dust; working in places with levels of radioactivity above permissible levels or where there are contagious diseases;
4.1.3 Allowances for responsibility as stipulated by the State;
4.1.4 Regional allowances, incentive allowances and special allowances for work in remote or unfrequented areas, areas with harsh climate, new economic zones, offshore islands and border areas with difficult conditions (excluding expatriate allowances for foreigners);
4.1.5 Allowances for seniority in the armed forces; allowances for national defence and security;
4.1.6 Special allowances for certain professions, such as forensic medicine and surgery;
4.1.7 Itinerant allowances for some industries, trades and work which require a regular change of working place and residence;
4.1.8 Preferential allowances for officials who carried out revolutionary activities prior to 1945 and other allowances from the State Budget.
The monetary amount of allowances shall be determined in accordance with the regulations of the competent body and the current regime for financial management. With respect to foreigners, the amount of allowances shall be determined on the basis of their basic salary under their contract and the allowance co-efficient which under the regulations of the Ministry of Labour, War Invalids and Social Affairs is generally applicable to all subjects.
4.2 Other items of non-taxable income:
4.2.1 Allowances for business trips on each occasion of a business trip shall be transport costs and accommodation costs, where there are valid vouchers or residency costs in accordance with the regime. In the case of a fixed all-inclusive business trip allowance, it is only the above items which shall be non- taxable;
4.2.2 Fixed meal allowances for certain special industries and trades, lunches, bring-in lunches or on-site meals, meals between shifts (excluding cash payments);
4.2.3 Social benefits for those entitled to social security benefits, such as war invalids, sick servicemen, families of war martyrs, people who assisted the Revolution; and one-off payments for difficult situations, and subsidies to resolve social evils;
4.2.4 Insurance compensation payments in respect of personal and property insurance policies;
4.2.5 Termination allowances in accordance with the provisions in the Labour Code;
4.2.6 Allowances for relocation to production establishments in accordance with State provisions, including allowances for one-off relocation of foreigners coming to reside in Vietnam;
4.2.7 Monetary prizes for technical innovations and inventions, international awards, and national awards organized or recognized by the State (excluding monetary prizes donated by other organizations and individuals);
4.2.8 Monetary prizes accompanying titles bestowed by the State, such as Vietnamese heroic mother, hero of the people's armed forces, workers' hero, professor, people's teacher, eminent teacher, people's artist, eminent artist, and so forth.
4.3 Monies paid for social insurance or health insurance from salaries and wages of workers.
4.4 Profits of the owner of a private business or of individuals being foreigners which are already subject to payment of tax under the Law on Corporate Income Tax.
4.5 Regular income of a foreigner who resides in Vietnam for less than thirty (30) days within a period of twelve (12) consecutive months from the date of arrival in Vietnam.
4.6 Benefits which are enjoyed because the income-paying body pays such benefits, such as expenses for staff training which are paid to the training place, airfares for holidays for foreigners to return home to visit their families, and tuition fees for the children of foreigners which are paid directly to schools in Vietnam.
II. BASIS OF TAX CALCULATION
The basis of the calculation of income tax liability shall be taxable income and tax rates.
1. With respect to regular income:
1.1 Regular taxable income shall be the total income of each individual as stipulated in article 2.1 of Decree 78/2001/ND-CP calculated as the monthly average in a year, in particular:
1.1.1 In respect of Vietnamese citizens being in Vietnam, or working or being on business trips abroad, and other individuals who do not have Vietnamese citizenship but reside indefinitely in Vietnam: their total annual income, including income abroad, shall be divided by twelve (12) months (of the Gregorian calendar). In the case of Vietnamese citizens with a period working in Vietnam and a period working abroad, taxable income shall be the total income sourced in Vietnam and abroad.
1.1.2 In respect of foreigners who reside in Vietnam for a period of one hundred and eighty three (183) days or more (hereinafter referred to as foreign residents of Vietnam), the total amount of income, including that sourced in Vietnam and that sourced outside Vietnam, shall be divided by twelve (12) months. In cases where the declared average monthly income abroad is less than that in Vietnam and evidence of same is unable to be provided, the average monthly income in Vietnam shall be used as the basis for calculating the income amount abroad. For taxation purposes, one month shall have thirty (30) days.
1.1.3 In respect of foreigners who reside in Vietnam for a period of between thirty (30) and one hundred and eighty two (182) days, taxable income shall be the total amount of income resulting from work in Vietnam in that period, irrespective of whether the income was received in Vietnam or abroad.
1.2 The tax rate applicable to regular income shall be applied in accordance with the progressive tariff on each portion of income as stipulated in article 10 of the Ordinance on Income Tax:
- In respect of regular income of a Vietnamese citizen and of any other individual who does not have Vietnamese citizenship but resides indefinitely in Vietnam:
Unit: 1000 dong
Average monthly per capita income
Tax rate (%)
up to 3,000
over 3,000 up to 6,000
over 6,000 up to 9,000
over 9,000 up to 12,000
over 12,000 up to 15,000
Where the remaining average monthly income exceeds fifteen million (15,000,000) dong after payment of income tax in accordance with the above tariff, the individual concerned shall also be liable for an additional tax payment of thirty (30) per cent of the amount in excess of fifteen million (15,000,000) dong.
- In respect of regular income of a foreign resident of Vietnam and of a Vietnamese citizen working or on a business trip abroad:
Unit: 1000 dong
Average monthly per capita income
Tax rate (%)
up to 8,000
over 8,000 up to 20,000
over 20,000 up to 50,000
over 50,000 up to 80,000
over 80,000 up to 120,000
In respect of foreigners who reside in Vietnam for a period of between thirty (30) and one hundred and eighty two (182) days, they shall be subject to the uniform tax rate of twenty five (25) per cent of their aggregate income.
In respect of Vietnamese working for some period in Vietnam and for some period abroad, they shall pay tax under the corresponding tariff.
Tax on regular income shall be calculated by the method of a progressive tariff on each portion of income within a level. This method of calculation is set out in detail in Appendix 2 to this Circular.
2. With respect to irregular income:
2.1 Irregular taxable income shall be the total income of each individual, whether Vietnamese or foreign, on each occasion when income is received as stipulated in article 2.2 of Decree 78/2001/ND-CP in particular:
Income in the form of donations and gifts sent from abroad to Vietnam shall be calculated on the basis of the value of the donation or gift on each occasion, including cases where the recipient is the owner of a private enterprise.
Income arising from technology transfer, technical construction designs, or technical industrial designs shall be calculated upon financial finalization of each contract, irrespective of the number of payments.
Income from lottery winnings and promotional prizes shall be calculated on each occasion when the lottery was opened and/or a prize was won.
2.2 Irregular income shall be subject to the tax rates specified in article 12 of the Ordinance on Income Tax and in article 9 of Decree 78/2001/ND-CP:
2.2.1 The tax rate based on the progressive method applied to each portion of irregular income, except for income stipulated in clauses 2.2.2 and 2.2.3 below, shall be as follows:
Unit: 1000 dong
Amount of individual income payment
Tax rate (%)
up to 2,000
over 2,000 up to 4,000
over 4,000 up to 10,000
over 10,000 up to 20,000
over 20,000 up to 30,000
2.2.2 A tax rate of five per cent of aggregate income shall apply to:
- Income arising from the transfer of technology exceeding two million (2,000,000) dong on each occasion;
- Income being donations and gifts in kind sent from abroad to Vietnam exceeding two million (2,000,000) dong on each occasion.
2.2.3 A tax rate of ten (10) per cent of aggregate income shall apply to income from lottery winnings exceeding twelve million five hundred thousand (12,500,000) dong on each occasion.
III. ORGANIZATION OF INCOME TAX DECLARATION AND COLLECTION
1. Organization and management of collection:
Article 11 of Decree 78/2001/ND-CP provides: Income tax declaration and payment shall be implemented on the basis of the principle of deduction at the income source. Organizations and individuals paying income (hereinafter referred to as income-paying bodies) shall have the responsibility of deducting income tax from income prior to payment of income to individuals and of paying the income tax to the State Budget.
Tax authorities shall directly collect taxes in other cases. Income-paying bodies shall include:
- Organizations and individuals paying salaries, wages, bonuses, remuneration and other payments in the nature of salaries or wages;
- Domestic labour management, recruitment, introduction or supply agencies;
- Agencies managing, selecting and sending employees abroad, such as ministries, departments, enterprises, and so forth;
- Diplomatic offices and representative organizations of Vietnamese offices and enterprises abroad;
- Agencies checking or distributing gifts or donations sent from abroad, such as customs offices at bordergates, post offices, and organizations or individuals providing services for transfer of gifts or donations in kind;
- Individuals bringing gifts or donations into Vietnam;
- Organizations or individuals receiving royalties in respect of the transfer of technology or purchase of copyright;
- Organizations paying lottery winnings, promotional and other prizes;
- Organizations or individuals making payments for services or consultancy;
- Organizations or individuals arranging extra coaching, artistic and other performances, sporting competition and events, seminars and subjects of scientific research; and all other organizations and individuals paying income to individuals;
- Publishers of books, magazines and newspapers; film producers; producers of visual and aural videos and disks.
Where management bodies do not directly pay income, but have the functions or tasks of managing, controlling and supervising activities of organizations which have individuals liable to pay tax, such bodies shall also be considered as income-paying bodies if they are able to ensure timely and concentrated collection of income tax.
Income-paying bodies shall be entitled to a commission calculated on the basis of the income tax collected prior to payment to the State Budget, for the purpose of covering the expenses of tax collection and to reward individuals achieving good results in tax collection in accordance with the following rates:
- Half of one (0.5) per cent in the case of tax on regular income;
- One per cent in the case of tax on irregular income and income tax collected via foreign contractors.
2. Tax registration and issuance of tax code numbers:
2.1. Each individual with regular income of a level at which such income becomes taxable, and each income-paying body which has individuals with taxable income, must register with a tax office in order to be issued with a tax code number (using Form 05-DK-TCT issued with this Circular). Income tax payers shall be liable to comply with the provisions on tax code numbers in Circular 79/1998/TT-BTC of the Ministry of Finance dated 12 June 1998 providing guidelines for implementation of Decision 75/1998/QD-TTg of the Prime Minister of the Government dated 4 April 1998 on code numbers for taxpayers.
2.2 Individuals paying tax on regular income via an income-paying body shall lodge declarations of personal income tax with such body. The income-paying body shall then collate all declarations of personal income tax from individuals and submit them to the tax office directly managing it so that the latter may issue tax code numbers for each individual.
2.3 Individuals paying income tax directly to a tax office shall submit their declaration of personal income tax to such tax office so that it may issue them with a tax code number.
2.4 Income-paying bodies and individuals paying income tax directly must conduct tax registration immediately after taxable income arises. Taxpayers who have been issued with a tax code number must record such number in the appropriate square on the top of their tax declaration form.
2.5 Each individual shall only be required to conduct tax registration once in order to be issued with a tax code number, which shall be a unique number, and individuals must use that number when they make tax payment declarations to the tax office or they must provide it to their income-paying body. High income earners who pay tax via a number of income-paying bodies shall conduct registration to be issued with a tax code number at the most convenient body, and thereafter shall notify their issued tax code number to the other income-paying bodies.
3. Tax registration and declaration:
3.1 Individuals having taxable income (including regular and irregular income) shall be responsible for declaring the income with the income-paying body or the tax office of the locality in which the individual works.
3.2 An income-paying body shall make a declaration for tax registration and shall make declarations of payment of income tax by individuals to the tax office which manages tax collection (value added tax and corporate income tax) from it, namely either a sectional or divisional tax office.
3.3 In the case of an income-paying body which does not have a tax office managing tax collection of its value added tax and corporate income tax (because it is does not conduct production or business activities, such as a representative office or an international organization, and so forth), it shall make a declaration for tax registration and declarations of payment of income tax by individuals to the tax department of the province or city under central authority in which the head office of the income-paying body is located.
3.4 Taxpayers must make a monthly declaration of provisional payment of tax on regular income, specifically:
- Declaration by an income-paying body: An income-paying body shall deduct and pay tax on regular income on the amount of taxable income that such body pays to an individual in a month, shall prepare a declaration of monthly income tax (Form 01-TNXT in the Appendices) listing all sums paid to individuals (with their tax code numbers), and shall submit the declaration to the tax office directly managing its tax collection.
The time-limit for submitting the declaration shall be prior to the fifteenth day of the following month. If the number of taxpayers in a month exceeds two hundred (200), the income- paying body may make one overall declaration for each section, department or production group, but if the tax office requires a detailed declaration the income-paying body shall provide same.
- With respect to various types of regular income other than salaries and wages received from business services not subject to corporate income tax, such as consultancy services on the basis of long term contracts, teaching, intensive examination coaching and cultural and artistic performances, the receipt of which does not fall at regular monthly intervals due to the particular characteristics: in order to guarantee the organization of timely collection, the income-paying body shall provisionally deduct ten (10) per cent of the total income each time it pays such income, shall declare and pay such tax, and shall provide the individuals concerned with a tax receipt.
4. Payment and finalization of tax:
4.1 In respect of regular income:
4.1.1 Payment of tax:
Organizations and individuals paying income and all taxpayers shall be responsible to pay tax to the State Budget immediately after they have submitting their tax declarations. The time-limit for payment shall be no later than the twenty fifth day of the following month, after which date taxpayers shall be fined in accordance with regulations.
On the basis of the actual monthly payment of income, the income-paying body shall deduct tax and shall pay it to the State Budget (in accordance with Form 01-TNTX attached), after retaining the commission to which it is entitled. Other individuals shall declare and pay tax at the tax office in accordance with Form 03-TNXT in the Appendices to this Circular.
In the case of a foreigner whose period of residence in Vietnam has been pre-determined, tax shall be paid as follows:
- If it is less than thirty (30) days, he or she shall not be subject to income tax;
- If it is between thirty (30) days and one hundred and eighty two (182) days, tax shall be paid on the total income sourced in Vietnam;
- If it is one hundred and eighty three (183) days or more, tax shall be paid on income sourced in Vietnam and on income sourced outside Vietnam in accordance with the progressive tariff as stipulated in clause 1.2 of Section II of this Circular.
Where the period of residence is not pre-determined, tax shall be paid provisionally at the rate of twenty five (25) per cent and the amount of tax payable shall be resolved upon official tax finalization at the end of the year.
4.1.2 Finalization of tax:
184.108.40.206 Principles of tax finalization:
- Income tax in respect of regular income shall be finalized for each Gregorian year at the end of the year or upon expiry of the duration of a contract during a year. An individual shall aggregate all income during the year and shall prepare and submit a declaration of tax finalization to the income-paying body (in cases where the individual receives income at one place only).
- Where an individual worked at and received income from different places of work in the same year, the individual must aggregate his or her income and prepare a declaration of tax finalization to the body which pays his or her stable income, or conduct tax finalization at the tax office in accordance with Form 04-TNTX attached.
- The income-paying body or the taxpayer shall verify the amount of tax payable stated in the declaration form of the individual against the actual amount which has been paid for the purpose of determining any shortfall to be paid or any amount in excess to be refunded during the next tax period and shall prepare a general tax finalization form.
- An income-paying body shall prepare a general tax finalization form in accordance with Form 2A-TNTX attached and a declaration of the details of income paid to each individual in Form 2B-TNTX. If there are many individuals, the income-paying body may submit Forms 2B- TNTX to the tax office in soft copy.
- An income-paying body or an individual shall finalize tax with the tax office no later than 28 February of the following year or thirty (30) days after the expiry of the duration of a contract.
220.127.116.11 A number of cases of tax finalization:
- Where an individual works at different places at different times in one year, monthly income tax shall be deducted at each source of income and, at the end of the year, a tax declaration must be prepared and payment of tax must be finalized at the last place of employment.
- Where an individual receives income from participation in business associations or boards of management, or regular income from sources other than his or her principal business, such individual must prepare a general tax finalization in addition to his or her income from his or her principal business for the purpose of income tax payment and finalization in accordance with taxation regimes.
- Where an individual has registered for tax payment via an income-paying body, and receives taxable regular income from different sources at the same time during a year, such individual must make an additional declaration to the income- paying body so that the latter may prepare a general tax finalization, or must notify the tax office so that he or she may conduct tax finalization at the tax office. In the latter case, an individual must also notify the income-paying body so that the body may determine the amount of tax deducted, the amount of tax paid, and provide a receipt for the tax paid.
Income tax finalization in respect of regular income shall be determined on the amount of income actually received in a year. In respect of foreigners residing in Vietnam, where regular income tax finalization is calculated on the amount of income arising1, no distinction shall be made between the place where income is paid, being either in Vietnam or abroad.
In the case where an individual only works for a few months at an income-paying body, the individual shall conduct tax finalization with that body so that the latter may issue a receipt for tax paid, and if the individual works and receives income in the remaining months of the year at another place, he or she shall declare and pay tax at the new body and shall conduct tax finalization with the body at which he or she is currently working. If the individual does not continue to work for the remaining months of the year, he or she shall conduct tax finalization with the tax office.
(a) Tax finalization in respect of Vietnamese and individuals who do not have Vietnamese citizenship but reside indefinitely in Vietnam:
- Individuals who work only in Vietnam in the tax year shall aggregate and declare their total regular income (including the months during which they have no income) in the calendar year, which shall be divided by twelve (12) months to calculate the average taxable income. Based on the monthly average taxable income and the tax tariff stipulated in clauses 1.1 and 1.2 of Section II of this Circular, they shall calculate their income tax to be paid for the whole year and compare it with the monthly income tax already paid in order to determine the income tax shortfall that must be paid (or the excess that shall be returned).
- In cases where an individual is assigned to go abroad on a short term study tour or official trips for given periods of the year and receives only per diem allowances for travelling, food, and accommodation, such income shall not be required to be declared and shall not be taxable income.
- For individuals working both in Vietnam and abroad and earning income generated in Vietnam and abroad in the same year, the taxable income shall also be the monthly average income, calculated by dividing the total income in the year by twelve (12) months, and the income tax payable shall be determined in accordance with the relevant tax tariff as follows:
- During the time of working in Vietnam, tax shall be paid according to the tax tariff stipulated in article 10.1 of the Ordinance on Income Tax of High Income Earners;
- During the time of working abroad, tax shall be paid according to the tax tariff stipulated in article 10.2 of the Ordinance on Income Tax of High Income Earners;
- If in any one month there are a number of days in Vietnam and a number of days abroad, the average amount of tax payable for one day shall be calculated using the appropriate tax tariff, in order to calculate tax payable for those days (less than one month) in Vietnam or those abroad. For the purposes of calculation, one month shall be rounded to thirty (30) days.
- Individuals working abroad for the whole year shall aggregate and declare the total income of the year, which shall be divided by twelve (12) months in order to calculate the average monthly taxable income, and shall determine the income tax payable in accordance with the tax tariff stipulated in article 10.2 of the Ordinance on Income Tax of High Income Earners. Where the individual has already paid income tax abroad and is able to present evidence of tax payment in such countries, the amount of tax paid shall be deducted but shall not exceed the amount of tax to be paid in accordance with the relevant tax tariff of Vietnam. Where income tax has been paid in countries which have signed agreements on avoidance of double taxation with Vietnam, the provisions of such agreements shall apply.
(b) Tax finalization in respect of foreigners:
- Income tax in respect of regular income of foreigners shall be declared and finalized on the basis of the period of residence. Individuals shall be responsible for declaring accurately the number of days of their stay in Vietnam and their taxable income in order to calculate the period of residence and income tax payable in Vietnam. The period of residence for the first tax year shall be calculated by aggregating all days of residence in Vietnam within twelve (12) consecutive months from the date of arrival in Vietnam; any subsequent year shall be determined in accordance with the Gregorian calendar and the date of arrival and the date of departure shall be considered as one day. A foreigner who has been considered as a resident in the previous year shall be considered a resident for the period of stay in the following year.
- If a foreigner resides in Vietnam for a period of between thirty (30) and one hundred and eighty two (182) days in a tax year, the total income generated in Vietnam shall be declared and income tax payable shall be finalized at the uniform fixed rate of twenty five (25) per cent.
- For foreigners residing in Vietnam for one hundred and eighty three (183) days or more in a tax year: the total income generated in Vietnam and abroad in the tax year shall be declared and divided by twelve (12) months in order to determine the monthly average income and finalize the income tax payable in accordance with the provisions of article 10.2 of the Ordinance on Income Tax. In cases where a foreigner declares a lower monthly average income abroad than in Vietnam but is unable to prove same, the monthly average income in Vietnam shall serve as the basis for determining the income tax payable for the period abroad. In cases where the time of final departure from Vietnam is able to be determined in a tax year, tax shall be finalized in respect of the taxable income up to the month of departure from Vietnam.
- In the case where some periods of the second tax year (after the first year) have been included in the first tax year, for which the fixed rate of twenty five (25) per cent is applied, during the tax finalization for the second tax year, the rate of twenty five (25) per cent shall continue to apply for such periods (unless the taxpayer wishes to declare and pay tax under the progressive tariff) but the period of residence in the second Gregorian calendar year (from January 1 to December 31) shall be the aggregate number of days present in Vietnam.
- Foreigners residing in Vietnam, when conducting tax finalization, shall prepare a list of the number of days they resided in Vietnam during the tax year (in Form 05-TNTX attached). If it is has been verified that an individual is a resident in Vietnam for more than a year, Form 05-TNTX shall not be required to be completed, except it must be completed for the year of the month when such resident departs from Vietnam.
- Foreigners who are in the class of residents in Vietnam shall be responsible to declare their worldwide income. In order for there to be a basis for correct determination of their taxable income, foreigners shall be responsible to present source documents of their income received abroad.
18.104.22.168 Finalization of amount of tax payable:
- After they have lodged declarations of tax finalization, income-paying bodies shall finalize with the tax office the amount of any further tax to be collected and shall be responsible for deducting it and making payment to the State Budget within fifteen (15) days from the date of tax finalization. In cases where the amount of tax already paid is more than the amount to be paid, the amount in excess shall be refunded by way of off-set against the tax payable for the next period. If the tax payable by an individual is less than the amount already paid but that individual no longer works for the income-paying body, the refund procedures shall be conducted at the tax office and the individual concerned shall lodge an application stating the amount of tax payable, amount of tax deducted, amount of tax refund request, and receipts for tax payment verified by the income-paying body, on the basis of which the tax office may make the refund.
- In the case of individuals who conduct tax finalization directly with the tax office, any shortfall must be paid within fifteen (15) days of lodging their declaration of tax finalization. In the case where the income tax already paid is more than the amount to be paid, the excess shall be refunded by way of off-set against the tax payable for the next period, and where there is no tax payable in the next period, then refunds shall be made.
Procedures and application files for tax refunds to high income earners who have already paid tax to the State Budget shall be implemented in accordance with the provisions in Circular 68/2001/TT-BTC of the Ministry of Finance dated 24 August 2001 providing guidelines on refund of tax paid to the State Budget.
4.2 In respect of irregular income:
- Income tax in respect of irregular income shall be paid on each occasion when the income is received. Income-paying bodies shall provide declaration forms for income earners in order to declare their taxable income and shall calculate and deduct tax prior to payment of income. Tax finalization between taxpayers and income-paying bodies shall be carried out immediately on the basis of declaration forms.
- Every month, income-paying bodies shall prepare a list of data from the previous month, containing the number of taxpayers, amount of income, amount of tax deducted, commission entitled to, and amount of tax to be paid to the State Budget (in accordance with the attached Form 06-TNKTX). Income- paying bodies shall pay any shortfall to the State Budget within fifteen (15) days from the date of finalization. The time-limit for paying tax on irregular income shall be the twenty fifth day of the following month at the latest, after which time-limit income-paying bodies shall be fined for late payment in accordance with regulations.
- Income-paying bodies must collect income tax in full prior to payment of income in material kind.
- In the case of income earned by persons who are not present, such as income arising from transfers of technology, copyright, and so forth, income-paying bodies shall declare income on behalf of the income-earners, shall deduct income tax for payment to the State Budget prior to payment of income, and shall notify taxpayers thereof.
- Individuals carrying gifts or donations in material kind on behalf of other persons from abroad must declare and pay income tax on behalf of the recipient of the gift.
- In the case of income arising from industrial technical designs, construction technical designs, and so forth, income tax shall be deducted from the income received on each occasion and shall be declared and finalized in accordance with the value of finalized contracts.
4.3 Issuance of receipts for collection of income tax:
Income-paying bodies shall be responsible for issuing receipts for collection of income tax to any individual requiring a receipt confirming the amount of tax deducted by that body. The issuance of receipts shall primarily be applicable to individuals who must conduct tax finalization directly with the tax office. Every year, income-paying bodies shall carry out finalization of their receipts with the tax office in accordance with the stipulated regime.
IV. RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUALS FOR COLLECTION AND PAYMENT OF INCOME TAX
1. Responsibilities of individuals earning taxable income:
Individuals earning taxable income must voluntarily register and declare their taxable income and pay income tax through income-paying bodies or directly to the tax office in accordance with the guidelines in Section III of this Circular. Tax-paying individuals shall be responsible before the law for the accuracy and truthfulness of their declarations.
Where an individual fails to register or to declare, makes a fraudulent declaration, fails to pay, or pays income tax late, the measures stipulated in article 21 of the Ordinance on Income Tax shall apply. Issuance of exit visas or departure from Vietnam may be delayed in the case of foreigners who have not fulfilled their obligation of payment of income tax in Vietnam in accordance with article 7.2 of the Ordinance on Exit, Entry, Residence and Travel of Foreigners in Vietnam.
2. Responsibilities of income-paying bodies and bodies receiving or being responsible for foreigners:
Income-paying bodies shall have the following responsibilities and obligations:
- To declare and register, on their own initiative, with the local tax office their collection of income tax from individuals by way of deductions by them from the income of the latter; to instruct income- earners in fulfilling declaration procedures and completing income tax declaration forms.
- Based on the list of income tax payers and the actual payment of income in respect of each individual, to deduct income tax and pay income tax to the State Budget every month.
- To receive declaration forms and to verify income declared by individuals against income to be paid or already paid to such individuals in order to calculate tax payable, to certify declaration forms of taxpayers, and to compile an overall list of income tax declarations and payments and forward it to the tax office.
- To keep records and receipts relating to collection of income tax in respect of taxable income, tax calculation, tax deduction, tax declaration, detailed lists of tax collection, maintenance of tax receipts, calculation of commissions and payment of income tax to the State Budget.
- To issue receipts of income tax collection for taxpayers at the latter's request.
- To implement the regimes on reporting, payment and finalization of income tax, on receipts for tax collected, and on entitlements to commissions from the tax office, and to present full documents relating to income tax when required by the tax office.
- Organizations receiving or being responsible for foreigners who come and work in Vietnam shall be responsible for guiding foreigners to fulfil all procedures for income tax payment prior to conducting immigration exit procedures.
3. Responsibilities of the tax office:
- To co-ordinate with State administrative bodies and relevant bodies in verifying and requiring organizations and individuals paying income located within their respective localities to carry out registration and declaration of income tax by way of deduction method.
- To instruct and inspect the compliance of income-paying bodies with the regimes for registering, compiling declarations, calculating income tax, deducting tax from income and paying tax to the State Budget.
- To conduct tax finalizations with income-paying bodies, to issue annual tax notices for taxpayers, to issue receipts for tax collected, and to finalize commissions with income-paying bodies.
- To organize collection of income tax from individuals who register to pay tax directly at the tax office; to issue receipts and printed forms relating to income tax to taxpayers and income-paying bodies.
- To impose measures to enforce collection of income tax (including outstanding tax) and fines in respect of breaches of the Ordinance on Income Tax; to decide on rewards for people who assist to identify such breaches and collect income tax.
- To implement the regime for regular reporting to the higher tax office.
V. TAX EXEMPTION AND REDUCTION
1. Tax exemption and reduction shall be implemented in accordance with article 20.1 of the Ordinance on Income Tax.
Taxpayers who suffer as a result of natural disasters, wars or accidents which cause losses to property and income and affect their living standards shall, depending on the extent of damage, be considered for tax reduction or exemption in that year. The amount of tax to be considered for reduction or exemption shall be equal to the ratio of the value of the damage to the taxable income in that year but shall not exceed the income tax payable for the whole year.
Authority and procedures for consideration of tax exemption and reduction:
1.1 Individual taxpayers shall prepare applications for tax exemption and reduction, shall obtain certification of them by the local authority (people's committees of communes or wards) or by the income- paying body, and shall send them to the local tax office at which the income-paying body registers to pay tax; applications for tax exemption or reduction must clarify the reasons therefor, the value of damage (with attached documents as evidence), the amount of income tax payable and the amount of reduction or exemption applied for.
1.2 The tax office shall verify, consider and issue decisions on tax reduction or exemption or make recommendations to the higher tax office for decision according to the following delegation of authority:
- The director of a Taxation Department shall be entitled to decide on tax reductions or exemptions of under five million dong per year;
- The General Director of the General Department of Taxation shall be entitled to decide on tax reductions or exemptions between five million to one hundred (100) million dong per year;
- The Minister of Finance shall decide on tax reductions or exemptions of more than one hundred (100) million dong per year.
1.3 Pending the decision on tax reduction or exemption by the competent tax office, taxpayers must pay income tax in full in accordance with the Ordinance. When decisions on tax reduction or exemption are issued, the amount of reduction or exemption shall be refunded either by way of deduction from the amount payable for the next period or refund of the amount deducted by income-paying bodies in accordance with decisions of the tax office. In cases where individuals pay tax directly to the tax office, the amount of tax reduced or exempted shall be refunded by way of deduction from the tax payable for the next period or refunded from the State Budget in accordance with decisions of the tax office.
2. In cases of tax reduction or exemption as stipulated in article 20.2 of the Ordinance on Income Tax and article 18.2 of Decree 78/2001/ND-CP: Organizations and individuals shall file applications for tax reduction or exemption at the Ministry of Finance, including a clear analysis of the reasons for, and the economic, political or social benefits for the nation of, such tax reduction or exemption for taxpayers. The Ministry of Finance shall check application files and submit written comments to the Prime Minister for consideration and decision on a case-by-case basis.
VI. DEALING WITH BREACHES AND COMMENDATIONS
1. Dealing with breaches:
1.1 Individuals and organizations failing to implement correctly the provisions on procedures for tax declaration, on keeping books of account and source documents on income tax, or on deduction of the correct amount for income tax shall be fined for an administrative tax offence.
1.2 Individuals and organizations making a false declaration or evading tax shall, in addition to having to pay the full amount of tax payable under the Ordinance on Income Tax of High Income Earners, be fined one to three times the amount of tax evaded; and in the case of tax evasion of a large amount, or in a case of a continuing breach or a different serious breach after having already being fined for an administrative tax offence, the individual or organization may be prosecuted for criminal liability in accordance with law.
1.3 Individuals and organizations paying tax or fines later than the date stipulated for payment or the date stipulated in the decision dealing with the tax offence shall, in addition to having to pay the full amount of tax or fine payable, be liable to a fine of one tenth of one (0.1) per cent of the late payment for every day of delay.
1.4 Organizations and individuals paying income which bring presents and gifts from abroad into Vietnam on behalf of other people and fail to declare, register or list individuals subject to tax payment or fail to deduct income tax prior to payment of income, thereby causing loss in collection of personal income tax, must be responsible for compensation to the State Budget for such loss and shall be fined for an administrative tax offence. Such compensation and fines shall be deducted from the income of income-paying organizations or individuals and shall not be included in expenditure for the purpose of determining income subject to corporate income tax.
1.5 Individuals and organizations failing to pay tax in accordance with a tax notice or failing to pay fines in accordance with a decision dealing with a tax offence shall be dealt with as follows:
1.5.1 A deduction shall be made from the monies held by such organization or individual at the Treasury or at a credit institution in order to pay the tax or fine; and the Treasury or the credit institution shall be responsible to deduct monies from the deposit account of such organization or individual to pay the tax or fine to the State Budget prior to recovery of their debt.
1.5.2 A property inventory shall be made in accordance with law in order to guarantee collection of the full amount of the outstanding tax or fine.
Administrative offences relating to income tax shall be dealt with in accordance with the specific provisions in Decree 22-CP of the Government dated 17 April 1996 on dealing with administrative offences in the taxation field and Circulars 128/1998/TT-BTC dated 22 September 1998 and 30/2001/TT-BTC dated 16 May 2001 of the Ministry of Finance guiding the implementation of Decree 22-CP.
2. Authority to deal with breaches:
2.1 The director of any tax office directly managing tax collection shall have authority to deal with the offences of taxpayers stipulated in clauses 1.1, 1.2, 1.3 and 1.4 of Section VI of this Circular.
2.2 The director of any tax office directly managing tax collection shall have authority to take the measures for dealing with the offences stipulated in clause 1.5 of Section VI of this Circular and shall transfer the file to the competent body to deal with offences in accordance with law in the cases stipulated in clause 1.2 of Section VI of this Circular.
Entities identifying breaches of the Ordinance on Income Tax, thereby assisting the tax office to collect taxes, shall be commended in accordance with the following specific steps:
3.1 Individuals who identify evaders of income tax shall notify the tax authority by way of direct notice, official notice, letter, application, and so forth, clarifying names and addresses of the tax-evading individual or organization.
3.2 Upon receipt of notice, the tax authority must immediately inspect and calculate income tax of the relevant income-paying body, minute such inspection and the amount of tax evaded, and issue tax notices together with decisions on fines, requiring payment by tax-evading individuals or organizations into the temporary holding account of the tax office.
3.3 Based on the amount of taxes and fines paid into the temporary holding account, the tax office shall issue decisions commending organizations and individuals identifying cases of tax evasion and assisting the tax authority. The value of rewards shall not exceed five per cent of the amount of tax paid to the State Budget.
3.4 The remaining monies after rewards shall be paid to the State Budget.
VII. ORGANIZATION OF IMPLEMENTATION
1. This Circular shall be of full force and effect as of 1 July 2001.
2. Income in respect of which there are separate commitments relating to tax levy and tax exemption shall be subject to international treaties and documents to which Vietnam is a signatory or has acceded.
3. Tax offices at all levels shall be responsible for guiding income tax payers and income-paying individuals and organizations in strictly implementing the regulations of ordinances, decrees and circulars providing guidelines on income tax.
Any problem arising from the implementation of this Circular should be reported in a timely manner by the organizations, individuals or localities concerned to the Ministry of Finance (General Department of Taxation) for consideration and resolution.
FOR THE MINISTER OF FINANCE