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Official Gazette

Friday, October 7, 2022

CIRCULAR No. 140/2012/TT-BTC OF AUGUST 21, 2012: On tax policies to remove difficulties for organizations and individuals

Updated: 15:41’ - 29/11/2012

THE MINISTRY OF FINANCE

Circular No. 140/2012/TT-BTC of August 21, 2012, guiding the Government’s Decree No. 60/2012/ND-CP of July 30, 2012, detailing the National Assembly’s Resolution No. 29/2012/QH13 promulgating a number of tax policies to remove difficulties for organizations and individuals

Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax Administration;

Pursuant to November 21, 2007 Law No. 04/2007/QH12 on Personal Income Tax;

Pursuant to June 3, 2008 Law No. 13/2008/QH12 on Value-Added Tax;

Pursuant to June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax;

Pursuant to the National Assembly’s Resolution No. 29/2012/QH13 of June 21, 2012, promulgating a number of tax policies to remove difficulties for organizations and individuals;

Pursuant to the Government’s Decree No. 60/2012/ND-CP of July 30, 2012, detailing the implementation of the National Assembly’s Resolution No. 29/2012/QH13 promulgating a number of tax policies to remove difficulties for organizations and individuals;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the proposal of the director of the General Department of Taxation;

The Minister of Finance promulgates the Circular guiding the Government’s Decree No. 60/2012/ND-CP of July 30, 2012, detailing the National Assembly’s Resolution No. 29/2012/QH13 promulgating a number of tax policies to remove difficulties for organizations and individuals.

Chapter I

ENTERPRISE INCOME TAX

Article 1. Enterprise income tax reduction

1. To reduce 30% of payable enterprise income tax (EIT) amounts in 2012 for:

a/ Small- and medium-sized enterprises, including cooperatives (below collectively referred to as small- and medium-sized enterprises).

b/ Labor-intensive enterprises engaged in the production, sub-contracted production or processing of agricultural, forest or fishery products, textile and garment, leather and footwear, and electronic components; or socio-economic infrastructure construction (below collectively referred to as labor-intensive enterprises).

2. Small- and medium-sized enterprises referred to at Point a, Clause 1 of this Article are enterprises meeting the capital or labor criterion stated in Clause 1, Article 3 of the Government’s Decree No. 56/2009/ND-CP of June 30, 2009, on support for development of small- and medium-sized enterprises.

a/ The capital amount used as the basis for determining a small- or medium-sized enterprise eligible for reduction of the payable EIT amount in 2012 is the total capital indicated in the enterprise’s accounting balance sheet made on December 31, 2011. For a small- or medium-sized enterprise of which the 2011 fiscal tax year does not coincide with the calendar year, the capital amount used as the basis for determining its eligibility for reduction of the payable EIT amount in 2012 is the total capital indicated in the enterprise’s accounting balance sheet made on the last day of the fiscal year. 

For a small- or medium-sized enterprise established on January 1, 2012, onward, the capital amount used as the basis for determining its eligibility for reduction of the payable EIT amount in 2012 is the charter capital indicated in the first-granted enterprise registration certificate or investment certificate.

b/ The annual average number of employees (including employees of branches and affiliated units) used as the basis for determining an enterprise eligible for tax reduction under Point a, Clause 1 of this Article is the total number of employees  the enterprise regularly employed in 2011, excluding those working under short-term contracts of under 3 months.

The annual average number of regular employees shall be determined as guided in the Ministry of Labor, War Invalids and Social Affairs’ Circular No. 40/2009/TT-BLDTBXH of December 3, 2009, guiding the method of determining the number of regular employees under the Government’s Decree No. 108/2006/ND-CP of September 22, 2006, detailing and guiding a number of articles of the Investment Law.

For an enterprise established from January 1, 2012, onward, the total number of employees, excluding those working under short-term contracts of under 3 months, is the average number of regular employees working from the date of establishment through December 31, 2012.

c/ For an enterprise engaged in various business lines, the capital or labor criterion to be applied to determine its size under Decree No. 56/2009/ND-CP must be of the principal business line indicated in its enterprise registration certificate. In case the enterprise’s principal business operation cannot be identified, either of the following criteria may be applied:

- The highest number of employees in one of the business operations of the enterprise in 2011; or

- The highest turnover in one of the business operations of the enterprise in 2011.

In case an enterprise’s principal business operation cannot still be identified after applying the above-said criteria, it shall be identified based on the lowest criterion on capital or number of employees of one of the business lines the enterprise actually conducted in 2011 as provided in Clause 1, Article 3 of Decree No. 56/2009/ND-CP.  

d/ For enterprises organized after the model of parent company and subsidiary companies, with the parent company which is not a small- or medium-sized enterprise holding over 50% of the equity capital of subsidiary companies, if these subsidiary companies satisfy the capital or labor criterion specified in Clause 1, Article 3 of Decree No. 56/2009/ND-CP and do not operate in sectors ineligible for tax reduction, they are also eligible for a 30% reduction of payable EIT amounts in 2012.

3. Labor-intensive enterprises (with the number of employees of their branches and affiliated units taken into account) operating in the sectors eligible for tax reduction as guided at Point b, Clause 1 of this Article are:

a/ Enterprises established before January 1, 2012, with a total number of regular employees of over 300 in 2012, excluding those working under short-term contracts of under 3 months.

The annual average number of regular employees shall be determined according to the Ministry of Labor, War Invalids and Social Affairs’ Circular No. 40/2009/TT-BLDTBXH of December 3, 2009, guiding the method of calculating the number of regular employees under the Government’s Decree No. 108/2006/ND-CP of September 22, 2006, detailing and guiding a number of articles of the Investment Law.

For an enterprise established from January 1, 2012, onward, the total number of employees, excluding those working under short-term contracts of under 3 months, is the average number of regular employees of over 300 working from the date of establishment through December 31, 2012.

For enterprises organized after the model of parent company and subsidiary companies, the number of employees used as the basis for determining the parent company’s eligibility for tax reduction does not include the number of employees of its subsidiary companies, and vice versa.

b/ The reducible EIT amount is the tax amount on incomes from production, sub-contracted production and processing of agriculture, forest and fishery production, textile and garment, leather and footwear, and electronic components and socio-economic infrastructure construction.

c/ Production, sub-contracted production and processing of agriculture, forest or fishery products, textile and garment, leather and footwear (including also leather shoes and sandals), and electronic components shall be determined based on Vietnam’s system of economic sectors promulgated together with the Prime Minister’s Decision No. 10/2007/QD-TTg of January 23, 2007.

d/ Socio-economic infrastructure construction includes construction and installation of water plants, power plants, electricity transmission and distribution works; water supply and drainage systems; roads, railways; airports, seaports, river ports; airfields, railway stations and bus stations; building of schools, hospitals, cultural houses, cinemas, art performance facilities, sports training and competition centers; wastewater and solid waste treatment systems; information and communication works and irrigation works serving agricultural, forestry or fishery production.  

4. The EIT reduction provided at Point a, Clause 1 of this Article does not apply to the following entities:

a/ Small- and medium-sized enterprises engaged in lottery; real estate; securities; finance; banking; insurance; or production of goods or provision of services liable to excise tax.

For a small- or medium-sized enterprise engaged in various business lines, the reducible EIT amount does not include the tax amount on income from lottery; real estate; securities; finance; banking; insurance; or from the production of goods or provision of services liable to excise tax

b/ Class-I enterprises specified in Joint Circular No. 23/2005/TTLT-BLDTBXH-BTC of August 31, 2005, of the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Finance guiding the classification of state companies and arrangement of salaries for full-time members of the Boards of Directors, general directors, directors, deputy general directors, deputy directors and chief accountants of these companies.

c/ Special-class enterprises specified in the Prime Minister’s Decision No. 185/TTg of March 28, 1996, on special-class state enterprises, and Decision No. 186/TTg of March 28, 1997, on the list of special-class state enterprises.

d/ Economic organizations which are non-business units.

Article 2. EIT exemption

To exempt the payable EIT amount arising in 2012 on income from the supply of workers’ mid-shift meals of enterprises and organizations supplying mid-shift meals.

Article 3. Conditions for EIT reduction and exemption

1. Enterprises and organizations eligible for tax reduction or exemption under Article 1 or 2 of this Circular are those established and operating under Vietnamese law; implement the law-prescribed accounting, invoice and voucher regimes and pay tax according to their declaration.

2. For enterprises currently enjoying EIT incentives under the EIT Law or other legal documents on EIT, the reducible EIT amount under Article 1 of this Circular shall be calculated based on the tax amount left after subtracting incentives currently enjoyed by enterprises according to regulations.

3. Enterprises and organizations supplying workers’ mid-shift meals eligible for tax exemption under Article 2 of this Circular shall commit to keeping prices of mid-shift meals in 2012 not higher than those applied in December 2011. Enterprises and organizations which are detected by competent agencies through examination or inspection as having failed to implement their price commitments will no longer be eligible for tax exemption under Article 2 of this Circular.

In case an enterprise or organization supplying workers’ mid-shift meals is a small- or medium sized enterprise and, therefore, concurrently eligible for 30% reduction of the payable EIT amount in 2012 under Point a, Clause 1, Article 1 of this Circular and exemption from the payable EIT amount arising in 2012 for income from the supply of workers’ mid-shift meals, it may select to enjoy the most beneficial tax incentive.

Article 4. Determination of reducible or exempted tax amounts

1. Enterprises and organizations shall separately account incomes from production and business activities eligible for EIT reduction or exemption and those from ineligible activities. If unable to determine income from activities eligible for tax reduction or exemption, income for calculation of the reduced or exempted tax amount shall be determined based on the proportion (%) of income from activities eligible for tax reduction or exemption to the total turnover of the organization or enterprise in 2012.   

2. The EIT amount to be reduced under Clause 1, Article 1 of this Circular is the EIT amount temporarily calculated on a quarterly basis and the difference between the payable EIT under the 2012 tax finalization and the total EIT amount temporarily calculated on a quarterly basis.

3. The EIT amount to be exempted under Article 2 of this Circular is determined as follows:

a/ For an enterprise or organization which can determine turnover, expenses and taxable income from the supply of workers’ mid-shift meals in 2012, the exempted EIT amount in 2012 for income from the supply of workers’ mid-shift meals shall be determined based on the payable EIT amount actually arising in 2012 as determined by the enterprise or organization.

b/ For an enterprise or organization which, in the 2012 tax period, does not separately account income from the supply of workers’ mid-shift meals and income from production and business activities ineligible for tax incentives, the income from the supply of workers’ mid-shift meals eligible for tax exemption in 2012 will equal (=) the total taxable income from production and business activities (excluding other incomes) multiplied (x) by the proportion (%) of turnover from the supply of workers’ mid-shift meals to the total income of the enterprise or organization in 2012.

c/ The exempted EIT amount for income from the supply of workers’ mid-shift meals does not include the tax amount on income from the supply of meals to transportation and aviation enterprises to serve passengers and the tax amount on income from other business activities.

Article 5. Tax declaration

1. Enterprises and organizations eligible for EIT reduction or exemption under Article 1 or 2 of this Circular shall declare reduced or exempted tax amounts according to the Law on Tax Administration and its guiding documents.

Enterprises and organizations shall make and send to their direct managing tax offices an appendix on EIT reduction or exemption (according to form No. 01/MGT-TNDN issued together with this Circular, not translated), clearly proving their eligibility for EIT reduction or exemption, and at the same time declare the reduced or exempted tax amount in item [31] in declaration form No. 01A/TNDN or item [30] in declaration form No. 01B/TNDN and item [9] in declaration form No. 03/TNDN (issued together with the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011).

2. Enterprises and organizations that have made tax declaration according to regulations but have not yet made declaration for tax reduction or exemption under Article 1 or 2 of this Circular may make additional declaration.

For enterprises and organizations that make additional declaration to their tax declaration dossiers of quarters I and II of 2012, an additional declaration dossier for EIT reduction or exemption comprises the declaration on the temporarily calculated EIT amount of quarters I and II of 2012, added with the exempted or reduced tax amount; and the appendix on EIT reduction or exemption in quarters I and II of 2012 stated in Clause 1 above.

Additional tax declaration dossiers may be submitted to tax offices on any working days, not depending on the time limit for submission of the tax declaration dossier of the subsequent period, but before tax offices or competent agencies announce decisions to conduct tax examination or inspection at taxpayers’ head offices.

3. In case an enterprise eligible for tax reduction has declared and paid to the state budget the reduced tax amount of quarters I and II of 2012, it may offset the reduced tax amount against the payable tax amount of quarters III and IV of 2012 and the remaining payable tax amount under the 2012 tax finalization. In case the reduced tax amount cannot be fully offset against the remaining payable tax amount under the 2012 tax finalization, the enterprise may request the offsetting of the remainder against the payable tax amount of the subsequent year or tax refund in accordance with the Law on Tax Administration and its guiding documents.

4. In case an enterprise or organization eligible for tax exemption has declared and paid to the state budget the exempted tax amount of quarters I and II of 2012, it may offset the exempted tax amount against the payable tax amount of quarters III and IV of 2012 or the remaining payable tax amount under the 2012 tax finalization for other business activities. In case the exempted tax amount cannot be fully offset against the remaining payable tax amount under the 2012 tax finalization, the enterprise or organization may request the offsetting of the remainder against the payable tax amount of the subsequent year or tax refund in accordance with the Law on Tax Administration and its guiding documents.

5. Handling of the difference between the reduced tax amount upon tax  finalization declaration and that temporarily calculated on a quarterly basis

a/ In case an enterprise, upon the 2012 EIT finalization, has a reduced EIT amount higher than the total reduced tax amount temporarily calculated for the four quarters of 2012, the enterprise may enjoy reduction for the difference between the reduced EIT amount upon its 2012 tax finalization and the total reduced EIT amount of the four quarters of 2012 as temporarily calculated. 

b/ In case an enterprise, upon the 2012 EIT finalization, has a reduced EIT amount lower than the total reduced tax amount temporarily calculated for the four quarters of 2012, the reduced tax amount shall be determined according to the tax finalization. 

6. In case competent agencies, through examination and inspection, detect that an enterprise’s or organization’s EIT amount arising in the period eligible for tax reduction or exemption under Article 1 or 2 of this Circular is higher than the tax amount declared by the unit itself (including cases in which enterprises and organizations eligible for EIT reduction or exemption under this Circular have declared but not yet determined the reduced or exempted tax amount), the enterprise or organization will enjoy reduction of or exemption from the payable EIT amount under this Circular (including the increased EIT amount and the reduced or exempted EIT amount under this Circular not yet determined).

In case competent agencies, through examination and inspection, detect that the an enterprise’s or organization’s reduced or exempted EIT amount under Article 1 or 2 of this Circular is smaller than that declared by the unit itself, the enterprise or organization will enjoy reduction of or exemption from the EIT amount determined by competent agencies.

Depending on the severity of organizations’ and individuals’ violations, competent agencies shall impose fines on violations of the tax law according to regulations.

Chapter II

VALUE-ADDED TAX

Article 6. Exemption from flat value-added tax of 2012 for business households and individuals

1. To exempt flat value-added tax (VAT) of 2012 for:

a/ Households and individuals leasing houses or rooms to workers, laborers, students and pupils;

b/ Households and individuals providing babysitting services;

c/ Households and individuals supplying workers’ mid-shift meals.

2. Condition for tax exemption:

Business households and organizations eligible for tax exemption under Clause 1 of this Article must meet the following conditions:

- Paying VAT at a flat rate;

- Committing to keeping rent rates or babysitting charge rates or prices of workers’ mid-shift meals in 2012 not higher than those applied in December 2011. For households or individual that commence business operation in 2012, the rent rates or babysitting charge rates or prices of workers’ mid-shift meals must not be higher than those applied in December 2011 by other households or individuals dealing in the same business line in the same localities that have commenced operation before 2012.

- Publicizing and posting up the rent rates or babysitting charge rates or prices of workers’ mid-shift meals at their business establishments and notifying the People’s Committees of the communes or wards where they conduct business operation and their managing tax offices before November 1, 2012, of their application of rent rates, charge rates or prices not higher than those applied in December 2011 right from January 1, 2012.

3. Based in the approved 2012 tax registers, tax offices shall make a list of business households leasing houses or rooms to workers, laborers, students and pupils, providing babysitting services or supplying workers’ mid-shift meals and their exempted tax amounts for reporting to the People’s Committees of the same level and to their immediate superior tax offices for monitoring and examination. Tax offices shall also post up such list at their head offices before November 15, 2012, and notify business households and individuals thereof.

In case a business household or individual eligible for exemption from flat VAT of 2012 has already paid to the state budget the flat VAT amounts of the months of 2012, the paid tax amount shall be considered overpaid and be refunded or offset against the payable presumptive VAT amount of the subsequent year.

In case of tax refund, tax offices shall make a list of business households and individuals eligible for tax refund in each commune or ward and issue a tax refund decision to each household or individual.

Tax offices shall publicize and post up at their head offices the list of business households and individuals leasing houses or rooms to workers, laborers, students and pupils, providing babysitting services or supplying workers’ mid-shift meals eligible for tax refund before November 15, 2012.

4. Business households and individuals that are detected through examination and inspection as having failed to implement their price commitments will no longer be eligible for tax refund and subject to payment of tax arrears and fines for delayed tax payment according to the tax administration law.

Article 7. Exemption from payable VAT arising in 2012 on the supply of workers’ mid-shift meals

1. To exempt payable VAT arising in 2012 on the supply of workers’ mid-shift meals (excluding the supply of meals for transportation and aviation enterprises to serve passengers and other business activities).

2. Enterprises and organizations supplying mid-shift meals eligible for VAT exemption under Clause 1 of this Article must:

- Be established and operate under Vietnamese law; and implement the law-prescribed accounting, invoice and voucher regimes and pay tax according to declaration;

- Pay VAT according to the credit method;

- Commit to keeping the prices of mid-shift meals in 2012 not higher than those applied in December 2011, for enterprises and organizations which commenced operation in 2011 or earlier, or not higher than those applied in December 2011 by other mid-shift meal suppliers which commenced operation in 2011 or earlier in the same localities, for enterprises and organizations which commence operation in 2012.

- Publicize and post up the prices of mid-shift meals at their business places and notify them to the People’s Committees of the communes or wards where they carry out business activities and to their direct managing tax offices before November 1, 2012.

3. In case an enterprise or organization supplying workers’ mid-shift meals is engaged in various business lines, it shall separately declare the turnover of and input VAT and output VAT on the supply of workers’ mid-shift meals for determining the payable VAT arising in 2012 on the supply of workers’ mid-shift meals.

The payable VAT amount arising in each month of 2012, which is exempted, is determined as follows:

Payable VAT amount on the supply of workers’ mid-shift meals

=

Output  VAT amount on the supply of workers’ mid-shift meals

-

Deductible input VAT amount on the supply of workers’ mid-shift meals

In which:

a/ The output VAT amount on the supply of workers’ mid-shift meals equals (=) total VAT on the sold mid-shift meals indicated on value-added invoices.

The VAT amount indicated on value-added invoices equals (=) the taxed price of a sold mid-shift meal multiplied (x) by the VAT rate (10%).

b/ Determination of the deductible input VAT amount

- The input VAT of goods and services used for the supply of workers’ mid-shift meals is wholly deductible.

- If the input VAT of fixed assets, goods and services used for the supply of workers’ mid-shift meals can be separately accounted, the deductible input VAT amount shall be determined according to the separately accounted figures. If the input VAT cannot be separately accounted, the input VAT amount shall be deducted based on the proportion (%) of turnover from the supply of mid-shift meals for works to the total turnover of VAT-liable goods and services sold.

In case an enterprise or organization supplying workers’ mid-shift meals is engaged in various business lines and cannot separately account the turnover of and input VAT and output VAT on the supply of mid-shift meals and other business activities and, therefore, cannot accurately determine the payable VAT amount arising in a month, the exempted VAT amount shall be determined as follows:

Exempted VAT amount

=

Payable VAT amount according to the monthly tax declaration

x

Taxable turnover of the supply of mid-shift meals

Total taxable turnover of goods and services

 

In which:

Payable VAT amount

=

Total output VAT amount

-

Total deductible input VAT amount of the tax period (excluding the negative VAT amount carried forward from the preceding period)

VAT exemption does not apply to enterprises and organizations which have no arising payable VAT amounts according to the above formula (they have negative VAT amounts).

4. An enterprise or organization supplying workers’ mid-shift meals eligible for tax exemption which has not declared its exemption from payable VAT amount from January 1, 2012, shall make additional declaration. After the exempted VAT amount is declared, any overpaid tax amount may be offset against the payable VAT amount of other business activities or the payable VAT amount of the subsequent tax period or refunded according to regulations.

Enterprises and organizations supplying workers’ mid-shift meals eligible for VAT exemption shall account the exempted VAT amounts as other incomes when determining EIT-liable income.

5. If an enterprise or organization is detected through examination or inspection as having failed to implement its price commitments, it will no longer be eligible for exemption from payable VAT amounts. Those that are ineligible for tax exemption but have made tax exemption declaration will be subject to payment of tax arrears and fines for delayed tax payment according to the tax administration law.

6. VAT declaration dossiers and procedures comply with the guidance in the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011, and Appendix on VAT exemption (form No. 02/MT-GTGT issued together with this Circular, not translated).

- Item 07 “Exempted VAT on the supply of workers’ mid-shift meals” in form No. 02/MT-GTGT shall be incorporated in item 38 “Decrease of VAT amounts of preceding period” in VAT declaration form No. 01/GTGT issued together with the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011.

- For cases of making supplementary declaration of the exempted VAT amounts of previous months, taxpayers shall incorporate items 07 in the previous month’s appendices No. 02/MT-GTGT in item 38 “Decrease of VAT amounts of the preceding period” in VAT declaration form No. 01/GTGT issued together with the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011.

Chapter III

PERSONAL INCOME TAX

Article 8. Personal income tax exemption and exemption period for incomes from salaries and remuneration or income from business activities (except business individuals and households leasing houses or rooms; providing babysitting services; or supplying workers’ mid-shift meals eligible for tax exemption under Article 9 of this Circular)

1. To exempt personal income tax (PIT) from July 1, 2012, through December 31, 2012, for business individuals and households with taxed incomes from salaries, remuneration or incomes from business activities at level 1 of the partially progressive tariff provided in Article 22 of November 21, 2007 Law No. 04/2007/QH12 on Personal Income Tax.

2. Business individuals and households with incomes from salaries, remuneration or business activities at level 2 or above of the partially progressive tariff provided in Article 22 of November 21, 2007 Law No. 04/2007/QH12 on Personal Income Tax, shall pay PIT on income from level 1 of the partially progressive tariff.

Article 9. Exemption from flat PIT of 2012 for business individuals and households leasing houses or rooms; providing babysitting services; or supplying workers’ mid-shift meals

To exempt flat PIT from January 1, 2012, through December 31, 2012, for business individuals and households leasing houses or rooms to workers, laborers, students and pupils; providing babysitting services; or supplying workers’ mid-shift meals, provided that they keep the rent rates, babysitting charge rates or mid-shift meal prices not higher than those applied in December 2011.

For individuals or households that commence business operation in 2012, the rent rates of houses or rooms, babysitting charge rates or prices of workers’ mid-shift meals must not be higher than those applied in December 2011 by other individuals and organizations dealing in the same business lines in the same localities which commenced operation before 2012.

Article 10. Declaration and withholding of PIT on incomes from salaries and remuneration

1. For income payers:

From July 1, 2012, through December 31, 2012, organizations and individuals paying monthly salaries and remuneration shall still make declaration but not yet calculate and withhold PIT of individuals with taxed income from salaries or remuneration at level 1 (monthly taxed income is VND 5 million or less) of the partially progressive tariff provided in Article 22 of the Personal Income Tax Law. For individuals with taxed income from salaries and remuneration at level 2 or above (monthly taxed income of over VND 5 million), income payers shall declare, withhold  and pay PIT from level 1 of the partially progressive tariff provided in Article 22 of the Personal Income Tax Law.

Income payers shall write the withheld tax amount (excluding the temporarily exempted tax amount) in item [33] in declaration form No. 02/KK-TNCN issued together with the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011.

Example 1: Mr. A has an income of VND 9,200,000 from salaries and remuneration in July 2012. He enjoys a family-based reduction of VND 4,000,000 for himself and a reduction of VND 200,000 for social insurance premiums. He has no dependents and no charity or humanitarian contributions.

Mr. A’s taxed income is:

VND 9,000,000 - VND 4,000,000 - VND 200,000 = VND 5,000,000.

Mr. A’s taxed income is at level 1 of the partially progressive tariff, therefore, his PIT amount of July 2012 will be temporarily not withheld.

Example 2: Mr. B has an income of VND 21,200,000 from salaries and remuneration in July 2012. He is entitled to a family-based reduction of VND 4,000,000 for himself and a reduction of VND 318,000 for social insurance premiums. He has no dependents and no charity or humanitarian contributions.

- Mr. B’s taxed income is:

VND 21,200,000 - VND 4,000,000 - VND 318,000 = VND 16,882,000.

Mr. B’s taxed income is at level 2 or above of the partially progressive tariff provided in Article 22 of the Personal Income Tax Law therefore has to pay tax as follows:

- B’s payable PIT amount is:

+ Grade 1: VND 5,000,000 x 5% = VND 250,000.

+ Grade 2: (VND 10,000,000 - VND 5,000,000) x 10% = VND 500,000.

+ Grade 3: (VND 16,882,000 - VND 10,000,000) x 15% = VND 1,032,300.

Mr. B’s total payable PIT amount is: VND 1,782,300 (250,000 + 500,000 + 1,032,300).

2. For individuals who declare and pay PIT by themselves:

From July 1, 2012, through December 31, 2012, individuals with taxed income from salaries and remuneration at level 1 (monthly taxed income of VND 5 million or less) of the partially progressive tariff provided in Article 22 of the Personal Income Tax Law may not be temporarily declare and pay monthly PIT.

Individuals with monthly taxed income at level 2 or above (monthly taxed income of over VND 5 million) shall declare and pay PIT from level 1 of the partially progressive tariff provided in Article 22 of the Personal Income Tax Law.

Article 11. PIT declaration by business individuals and households

1. Business individuals and households paying tax according to the declaration method shall make tax declaration as follows:

a/ Business individuals and households with a monthly average taxed income at level 1 of the partially progressive tariff (monthly taxed income of VND 5 million or less) shall make quarterly tax declaration and is entitled be entitled to temporary exemption from the whole payable tax amount under the tax returns of quarters III and IV of 2012.

Business individuals and households shall declare the payable tax amount (excluding the exempted tax amount) in item [33] (temporarily paid PIT) in declaration form No. 08/KK-TNCN issued together with the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011.

Example 3: Mr. A has a taxable income of VND 22.8 million in quarter III of 2012. He has one dependent and has paid neither social insurance and health insurance premiums nor charity or humanitarian contributions.

- Mr. A is entitled to family-based reductions for himself and 1 dependent in quarter III of 2012 as follows: (VND 4 million x 3 months) + (VND 1.6 million x 3 months) = VND 16.8 million.

- Mr. A’s taxed income in quarter III is VND 6 million (VND 22.8 million - 18.8 million).

- Mr. A’s monthly average income for temporary tax calculation in quarter III is VND 2 million (VND 6 million: 3 months).

So, A has a monthly average taxed income at level 1 of the partially progressive tariff and therefore is entitled to temporary exemption from the whole tax amount to be temporarily paid in quarter III.

b/ For groups of business individuals

Groups of business individuals shall declare the payable tax amount (excluding the temporarily exempted tax amount) under Point a of this Clause in item [35] (temporarily paid PIT) in declaration form No. 08A/KK-TNCN issued together with the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011.

2. Tax declaration by business individuals and households paying flat tax that are eligible for tax exemption

a/ Business individuals and households paying flat tax (excluding those leasing houses or rooms, providing babysitting services or supplying workers’ mid-shift meals eligible for tax exemption under Article  9 of this Circular) that have annual taxed income at level 1 of the partially progressive tariff (annual taxed income of VND 60 million or less) will be entitled to exemption from the whole payable tax amount of quarters III and IV of 2012 notified by tax offices.

b/ Business individuals and households leasing houses or rooms to workers, laborers, students and pupils, providing babysitting services or supplying workers’ mid-shift meals that are eligible for tax exemption under Article 9 of this Circular will be entitled to exemption from the whole payable tax amount of 2012.

For cases of tax exemption under this Point, business individuals and households shall publicize and post up rent rates of houses and rooms; babysitting service charge rates and prices of workers’ mid-shift meals at their business places and such rent rates, charge rates or prices must not be higher than those applied in December 2011. Business individuals and households shall notify in writing their direct managing tax offices and local administrations before November 1, 2012, of their application of rent rates, service charge rates or prices not higher than those of December 2011 right from January 1, 2012.

Business individuals and households eligible for tax exemption are not required to make tax re-declaration. Tax offices shall make a list of business individuals and households leasing houses or rooms, providing babysitting services or supplying workers’ mid-shift meals and their exempted tax amounts and report such to People’s Committees of the same level and immediate superior tax offices for monitoring and inspection. They shall also post up such list at their head offices before November 15, 2012, and notify business individuals and households thereof.

Business individuals and households that are detected by tax offices or other state management agencies through inspection and examination as having failed to implement their price commitments will no longer be eligible for tax exemption and subject to payment of tax arrears and fines for tax-related administrative violations according to the tax administration law.

Article 12. PIT finalization declaration

1. PIT finalization declaration for taxed income from salaries and remuneration or from business activities at level 1 of the partially progressive tariff.

a/ Determination of the exempted tax amount for the whole year for individuals with incomes from salaries and remuneration or from business activities at level 1 of the partially progressive tariff:

Exempted tax amount

=

Taxed income at level 1 of the whole year 2012

x

Tax rate according to the partially progressive tariff

x

6 months

12 months

 

b/ Business individuals and households shall declare the PIT amount left after subtracting the exempted tax amount in item [32] (total PIT amount arising in the period) in PIT finalization declaration form No. 09/KK-TNCN issued together with the Ministry of Finance’s Circular No. 28/2011/TT-BTC of February 28, 2011.

2. In case business individuals and households leasing houses or rooms; providing babysitting services or supplying workers’ mid-shift meals that are eligible for tax exemption under Article 9 of this Circular have paid to the state budget PIT amounts of quarters I and II of 2012 (including those that have paid PIT amounts of quarter III because they have not yet received tax exemption notices from tax offices), they will have the paid tax amounts refunded. Direct managing tax offices shall make a list of business individuals and households eligible for tax refund in each commune or ward and issue a tax refund decision to each business individual or household.

Tax offices shall publicize and post up at their head offices the list of business individuals and households leasing houses or rooms, providing babysitting services or supplying workers’ mid-shift meals that are eligible for tax refund before November 15, 2012.

3. When making PIT finalization, individuals with income from salaries and remuneration or from business activities who are eligible for tax exemption shall declare and submit to tax offices an appendix made according to form No. 26/MT-TNCN, and income payers that make tax finalization for income earners shall declare and submit to tax offices an appendix made according to form No. 27/MT-TNCN issued together with this Circular, not translated.

Chapter IV

ORGANIZATION OF IMPLEMENTATION

Article 13. Effect

This Circular takes effect on October 5, 2012.

Article 14. Implementation responsibility

1. Provincial-level People’s Committees shall direct functional agencies in strictly complying with the Government’s regulations and the Ministry of Finance’s guidance.

2. Tax offices at all levels shall disseminate and guide organizations and individuals to comply with this Circular.

3. Organizations and individuals governed by this Circular shall comply with the guidance in this Circular.

Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance for study and settlement.-

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN

VNL_KH1 

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