Thông tư 160/2009/TT-BTC

CIRCULAR

GUIDING YEAR 2009 PERSONAL INCOME TAX EXEMPTION PURSUANT TO RESOLUTION 32/2009/QH12 OF THE NATIONAL ASSEMBLY DATED 19 JUNE 2009

Pursuant to the Law on Personal Income Tax dated 21 November 2007;
Pursuant to Article 4 of Resolution 32/2009/QH12 of the National Assembly dated 19 June 2009 on amendment of overall targets and economic and State budget criteria, on additional issue of Government bonds in year 2009, and on year 2009 Personal Income Tax exemption;
Pursuant to the opinion and directions of the Prime Minister of the Government set out in Official Letter 50048/VPCP-KTTH of the Government Office dated 27 July 2009 on guidelines for implementation of Resolution 32/2009/QH12 of the National Assembly dated 19 June 2009 on Personal Income Tax ["Resolution 32"]:
The Ministry of Finance hereby provides the following guidelines on Personal Income Tax exemption and reduction pursuant to Resolution 32:

Article 1. Taxpayers entitled to Personal Income Tax exemption and the period of Personal Income Tax exemption

1. Taxpayers entitled to Personal Income Tax exemption from 1 January 2009 until the end of 31 December 2009 comprise resident individuals and non-resident individuals having income from capital investments, from capital transfers (including transfers of securities), from copyright and from franchises.

As from 1 January 2010 resident individuals and non-resident individuals having income from capital investments, from capital transfers (including transfers of securities), from copyright and from franchises shall pay Personal Income Tax in accordance with regulations.

2. Taxpayers entitled to Personal Income Tax exemption from 1 January 2009 until the end of 30 June 2009 comprise resident individuals having income from business, from salary and wages, from receipt of inheritances and from receipt of gifts.

As from 1 July 2009 resident individuals having income from business, from salary and wages, from receipt of inheritances and from receipt of gifts shall pay Personal Income Tax in accordance with regulations.

Article 2. Income used as basis for determining the amount of exempt Personal Income Tax

Income used as the basis for determining the amount of exempt Personal Income Tax for taxpayers as guided in article 1 of this Circular means Personal Income Tax taxable income deferred in the first 6 months of year 2009 and Personal Income Tax taxable income accrued2 within the period of entitlement to Personal Income Tax exemption; and specifically applicable to each type of income as follows:

1. Applicable to income from business:

1.1. In the case of a business individual complying with the accounting regime on invoices and source documents, accounting for turnover and expenses and paying tax in accordance with his or her declaration: income used as the basis for determining the amount of exempt Personal Income Tax means taxable income corresponding to turnover and expenses accrued within the first 6 months of year 2009.

In the case of a business individual unable to accurately determine taxable income accrued within the first 6 months of year 2009, taxable income used as the basis for determining the amount of exempt Personal Income Tax shall be fixed as follows:

- In the case of an individual conducting business for the full twelve months of Year 2009: Equal to fifty per cent (50%) of Personal Income Tax taxable income for the whole of year 2009.

- In the case of an individual conducting business for less than the full twelve months of Year 2009:

(Taxable income to be used as the basis for determining the amount of exempt Personal Income Tax) = [(Turnover from actual business in the first 6 months of year 2009) divided by (Turnover from business in the whole of year 2009)] x (Taxable income for the whole of year 2009).

1.2. In the case of a business individual only accounting for business turnover and not for expenses and paying tax in accordance with his or her declaration: income used as the basis for determining the amount of exempt Personal Income Tax shall be income fixed on the basis of turnover accrued within the first 6 months of year 2009, and the fixed rate of taxable income.

1.3. In the case of a business individual paying tax on the basis of a fixed level of turnover, the amount of exempt tax shall be the amount of tax payable on such fixed level for the first 6 months of year 2009 as stipulated by the tax office in its tax notice.

Turnover and expenses used as the basis for determining taxable income of a group of business individuals in the cases in sub-clauses 1.1 and 1.2 above means turnover and expenses actually accrued within the first 6 months of year 2009. The method of determining turnover and expenses shall be the method guided in Circular 84/2008/TT-BTC of the Ministry of Finance dated 30 September 2008 ["Circular 84"].

2. Applicable to income from salary and wages:

Income from salary and wages used as the basis for determining the amount of exempt Personal Income Tax shall be taxable income from salary and wages which the employer must pay to the individual within the first 6 months of year 2009, irrespective of the time it is paid, and specifically as follows:

2.1. If the income-paying entity has fully paid all income from salary and wages from January up until the end of June 2009 (the first 6 months of year 2009) to the employee (pursuant to a contract or a decision on wages) within the period of entitlement to Personal Income Tax exemption as guided in article 1.2 of this Circular, then income used as the basis for determining the amount of exempt Personal Income Tax shall be the income actually paid.

2.2. If the income-paying entity has already accounted for its expenses or issued a decision on wages for the first 6 months of year 2009 pursuant to a labour contract, but actually pays such salary and wages to the employee outside the period of entitlement to Personal Income Tax exemption as guided in article 1.2 of this Circular, then this shall still be exempt income. The deadline for actually paying salary and

2.3. In the case of monetary bonuses for the whole of year 2009 (such as an annual bonus, or the thirteenth month Tet bonus and so forth), the income used as the basis for determining the amount of xempt Personal Income Tax shall be fifty per cent (50%) of such monetary bonus. The deadline for actually paying monetary bonuses for the whole of year 2009 in order for them to qualify as exempt income shall be 31 March 2010.

For example: In year 2009 Mr. A was awarded a monetary bonus of 10 million dong; accordingly Mr. A is entitled to Personal Income Tax exemption on income of 5 million dong (equal to 50% of the amount of the bonus for the whole year).

2.4. In the case of quarterly monetary bonuses, tax exempt income shall be the amount of the monetary bonus for the first quarter and for the second quarter of year 2009 pursuant to a decision of the head of the income-paying entity. The deadline for actually paying monetary bonuses for the first and second quarters of year 2009 in order for them to qualify as exempt income shall be 31 December 2009.

For example: In August 2009 Mr. B was awarded a bonus for work performance in the second quarter of year 2009 pursuant to a decision of the income-paying entity. Accordingly Mr. B is entitled to Personal Income Tax exemption on the total amount of income being the monetary bonus for such quarter.

2.5. In the case of other income items such as cash for holidays and summer vacations, cash for uniforms and other benefits, income entitled to Personal Income Tax exemption shall be the part of income actually paid within the period of entitlement to Personal Income Tax exemption as guided in article 1.2 of this Circular.

2.6. Income from salary and wages accrued in year 20083 but paid within the period of entitlement to Personal Income Tax exemption as guided in article 1.2 of this Circular shall also be tax exempt.

3. Applicable to income from capital investments:

Income used as the basis for determining the amount of exempt Personal Income Tax shall be income receivable from capital investment activities of year 2009, and specifically as follows:

- In the case of dividends receivable from share capital contribution, it shall be the dividends distributed in accordance with law within year 2009.

- In the case of interest [of the lender] on loans provided, it shall be the amount of monetary interest actually received in year 2009 as consistent with the interest rate stipulated in the loan contract.

If an individual receives income in advance for a number of years, then the amount of income corresponding to year 2009 shall be Personal Income Tax exempt.

- In the case of income receivable being increased value of a capital contribution portion [to an enterprise] upon dissolution, conversion of operational model, merger or consolidation of the enterprise or upon withdrawal of capital, it shall be the increased portion of the value of the capital contribution share receivable as compared to the original capital. The point of time for determining exempt income shall be the time when the income-paying entity or the individual concerned completes legal procedures for ascertaining the value of the capital contribution portion receivable, consistent with the period of entitlement to Personal Income Tax exemption as guided in article 1.1 of this Circular.

4. In the case of income from capital transfers (including transfers of securities), income used as the basis for determining the amount of exempt Personal Income Tax shall be the monetary amount receivable by an individual from transactions being capital transfers completed in accordance with the guidelines in clause 2 of section II of Part B of Circular 84, consistent with the period of entitlement to Personal Income Tax exemption as guided in article 1.1 of this Circular.

5. In the case of income from copyright and commercial franchises, income used as the basis for determining the amount of exempt Personal Income Tax shall be the monetary amount paid pursuant to the contract, consistent with the period of entitlement to Personal Income Tax exemption as guided in article 1.1 of this Circular.

If an individual receives income in advance for a number of years, then only the amount of income corresponding to year 2009 shall be Personal Income Tax exempt.

6. In the case of income from receipt of inheritances and gifts, the point of time for determining exempt income shall be the time when the individual receiving the inheritance or gift submits a valid file to the competent State administrative body, consistent with the period of entitlement to Personal Income Tax exemption as guided in article 1.2 of this Circular.

7. If any of the income items eligible for Personal Income Tax exemption as guided in article 1.1 of this Circular are paid after year 2009, then the deadline for actually paying income in order for it to qualify as exempt income shall be 30 June 2010, and income paid after this deadline shall not be Personal Income Tax exempt.

Article 3. Tax declaration and finalization of year 2009 Personal Income Tax

1. Applicable to income-paying entities:

1.1. Monthly tax declarations: Income-paying entities need not declare any of the income items eligible for Personal Income Tax exemption as guided in article 1.2 of this Circular if they are paid after 1 July 2009. They need only provide in their declarations details of non-exempt income and tax amounts withheld each month from such non-exempt income.

1.2. Tax finalization:

Income-paying entities need not conduct tax declaration and finalization of any of the income items eligible for Personal Income Tax exemption or of the amount of exempt tax of exempt taxpayers as guided in article 1 of this Circular, and specifically as follows:

- Income-paying entities which pay out income from capital investments, from capital transfers, from copyright and from franchises need not conduct tax declaration and finalization.

- Income-paying entities which pay out income from salary and wages need not conduct tax finalization of income which is exempt in the first 6 months of year 2009, but only need conduct tax declaration and finalization of income and of tax amounts withheld [and] which accrued from 1 July 2009 up to 31 December 2009.

For example: In 2009 Company C pays a total of one billion VND salary and wages to employees of the company, of which 400 million is income eligible for Personal Income Tax exemption. For year 2009 Company C only need conduct Personal Income Tax declaration and finalization of income on which tax is payable, namely 600 million dong.

Data in tax declaration and finalization files shall only be data concerning non-exempt income on which Personal Income Tax is payable for year 2009.

2. Applicable to resident individuals having income from salary and wages [and/or] income from business:

2.1. Resident individuals having income from salary and wages [and/or] income from business must conduct Personal Income Tax finalization in the following cases:

- The amount of tax payable in the last six months of 2009 is greater than the amount already withheld;

- The taxpayer requests a tax refund or an offset of tax in the following period.

2.2. The following deductions shall be included when conducting Personal Income Tax finalization:

- Fifty per cent (50%) of the total amount of the following items actually paid may be deducted: social insurance and medical insurance premiums, compulsory professional indemnity insurance premiums, and insurance premiums paid on one occasion for the whole year. With respect to insurance premiums which are paid monthly, items actually paid in the last six months of 2009 may be deducted.

- Deductions for actual family dependants within the last six months of 2009 may be deducted as follows:

+ A taxpayer with income may make deductions for himself or herself at 24 million dong (6 months x 4 million dong per month).

+ Deductions for dependants may be made in accordance with the number of dependants, the number of months for which thy are dependant, and the amount deductible for each person per month (1.6 million dong/person/month).

- With respect to contributions to charitable, humanitarian and study promotional funds, items actually paid in the last six months of 2009 may be deducted.

2.3. Individuals shall use the standard forms issued with Circular 84 to conduct Personal Income Tax finalization, and must clearly record the following in their declarations:

- The tax assessment period as 1 July 2009 to 31 December 2009.

- Items relevant to determination of turnover (for business individuals) and to income, deductions and so forth must correspond with the tax assessment period of 1 July 2009 to 31 December 2009.

Article 4. Organization of implementation

1. This Circular shall be of full force and effect after forty-five (45) days from the date of its signing. If prior to the date of promulgation of this Circular, income-paying entities resolved matters with taxpayers differently from the way guided in this Circular, then they must carry out the following:

- Income-paying entities which have already withheld items which are in fact tax exempt, must reimburse the sums withheld to the taxpayers.

- Individuals who have already paid tax on items which are in fact exempt, shall be granted a tax refund or an offset of tax in the following period.

2. Income-paying entities which pay out tax exempt income after 30 June 2009 (on exempt income accrued in the first 6 months of year 2009) or after 31 December 2009 (on tax exempt income accrued for the whole of year 2009) shall be responsible to make accurate assessments of what is tax exempt income, and to keep evidence of same and present it on request to the tax office. Any breaches shall be dealt with as tax fraud pursuant to the Law on Tax Management.

3. Resident individuals and non-resident individuals having income not entitled to Personal Income Tax exemption as guided in article 1 of this Circular must pay Personal Income Tax in accordance with the Law on Personal Income Tax.

4. Any problems arising during implementation should be reported to the Ministry of Finance for prompt resolution.