Joint Circular No. 07/1998/TTLT/BTC-BTS guides the implementation of Decision No. 358/TTg dated May 29, 1997 of the Prime Minister on tax incentives for fishing activities in distant sea areas.

JOINT CIRCULAR

Guidelines for implementing Decision No. 358/TTg dated May 29, 1997 of the Prime Minister on tax incentives for marine fishing activities in distant waters

Pursuant to current tax laws, investment encouragement laws, and Decision No. 358/TTg dated May 29, 1997 of the Prime Minister on tax incentives for marine fishing activities in distant waters, the Ministry of Finance and the Ministry of Fisheries provide guidelines on procedures, sequences, and authorities for granting exemptions and reductions in taxes for entities engaged in marine fishing activities in distant waters as follows:

Organizations and individuals from all economic sectors, including foreign-invested enterprises and parties involved in joint business contracts under the Law on Foreign Investment in Vietnam, who have vessels actually operating in marine fishing activities in distant waters, regardless of whether they are newly established or previously established, newly invested vessels, expanded investments, or previously purchased vessels, shall be entitled to tax incentives as stipulated in Article 1 of Decision No. 358/TTg dated May 29, 1997 of

 I. SCOPE OF APPLICATION

1. Scope of application:

2. The following cases do not fall within the scope of entities eligible for tax incentives as guided by this Circular:

- Marine fishing activities in other sea areas outside the distant waters.

In the case where a fishing entity has vessels operating in marine fishing activities in distant waters as well as in other sea areas, separate accounting must be conducted for the results of operations in each area.

- Other commercial activities (construction, transportation, etc.) outside marine fishing activities.

3. Some terms mentioned in this Circular are understood as follows:

- Marine fishing activities refer to the act of catching marine products such as fish, shrimp, crab, cuttlefish, pearl, and other marine products.

- Distant waters, as defined in Article 2 of the Regulation on Management and Utilization of Credit Funds for New Projects, Renovation of Fishing Vessels, and Marine Fishing Services in Distant Waters, issued together with Decision No. 393/TTg dated June 9, 1997 of

the Prime Minister, are: "sea areas limited by the 30-meter depth contour line from the coast for the Gulf of Northern Vietnam, East and West South Vietnam, and the Gulf of Thailand, and the 50-meter depth contour line from the coast for Central Vietnam."The depth contour line is a line connecting coordinates with the same depth measured from the water surface to the seabed.

Therefore, distant waters are sea areas with depths of 30 meters or more from the coast for the Gulf of Northern Vietnam, East and West South Vietnam, and the Gulf of Thailand; and depths of 50 meters or more from the coast for Central Vietnam. In the case of islands belonging to the distant waters area, they are also considered distant.

4. Entities mentioned in point 1, section above are entitled to tax incentives as follows:

a. They are granted a 50% reduction in resource tax and turnover tax for the first three years from the date of obtaining permission to engage in marine fishing activities in distant waters; and exemption from income tax for the first three years from when taxable income begins.

b. Owners of fishing vessels registered to own fishing vessels in distant waters pay a stamp duty of 1% (one percent) of the value of the vessel at the time of registration. If the owner of the vessel does not obtain permission to engage in distant waters fishing and the main engine power of the fishing vessel is less than 90 CV, then the stamp duty must be paid according to the provisions of Decree No. 193/CP dated December 29, 1994 of the Government.

c. Entities engaged in distant waters fishing that are also subject to the Law on Domestic Investment Promotion (as stipulated in Article 4 of the Law on Domestic Investment Promotion, Article 1 of Decree No. 29/CP dated May 12, 1995 of the Government detailing the implementation of the Law on Domestic Investment Promotion, and guided in Section I of Circular No. 94 TC/TCT dated December 22, 1995 of the Ministry of Finance) shall simultaneously enjoy tax incentives as provided in Articles 16, 17, 18, 19, 20, and 21 of Decree No. 29/CP dated May 12, 1995 of the Government detailing the implementation of the Law on Domestic Investment Promotion. However, each type of tax can only benefit from the highest rate of exemption or reduction and duration specified; the rates of exemption or reduction or duration specified in different documents cannot be combined to apply to a single entity receiving incentives.

d. All types of taxes and other fees other than those mentioned above must be implemented according to current laws.

II. PROCEDURES AND AUTHORITY FOR CONSIDERING TAX EXEMPTIONS AND REDUCTIONS:

1. Procedures for considering reductions in resource tax and turnover tax, and exemption from income tax:

a. Entities eligible for reductions in resource tax and turnover tax and exemption from income tax must submit their application to the local Tax Authority directly managing them. The application includes:

- A request for tax exemption and reduction from the entity (original).

- Business registration certificate issued by the competent authority (certified copy).

- Confirmation of actual time spent on marine fishing activities in distant waters issued by the aquatic resource protection agency (certified copy).

- Confirmation of tax registration and declaration made by the local tax authority where the entity is headquartered and where the actual fishing takes place (copy).

- For entities paying income tax through self-declaration, when requesting exemption from income tax, they must also submit the financial settlement statement along with the audit report on the tax settlement of the year being considered for reduction or exemption (certified copy).

b. Procedures for considering tax reductions and exemptions for entities benefiting from tax incentives under the Law on Domestic Investment Promotion are carried out according to the provisions of Circular No. 94 TC/TCT dated December 22, 1995 of the Ministry of Finance guiding procedures, sequences, and authorities for considering tax exemptions and reductions under the Law on Domestic Investment Promotion and Decree No. 29/CP dated May 12, 1995 of the Government detailing the implementation of the Law on Domestic Investment Promotion.

2. Sequence and authority for considering reductions in resource tax and turnover tax, and exemption from income tax:

2. Procedure and authority for reducing resource tax, turnover tax, and exempting income tax:

The direct tax administration agency receiving the application for tax exemption or reduction from the entity must conduct a review; if the application is incomplete or inaccurate, it shall request the entity to supplement and amend the application. Thereafter, the agency shall issue a decision on tax exemption or reduction within its authority. In cases exceeding its authority, the agency must submit a report along with the entity's application to the higher-level tax administration agency for resolution. Within a maximum period of thirty days from the date of receipt of the application, the competent authority must decide on tax exemption or reduction, or notify the entity of the reasons for not resolving or not granting the exemption or reduction.

Authority to examine and reduce resource taxes, business income taxes, and exempt profit taxes:

a. The Director of the Tax Department has the authority to examine and decide on tax exemptions and reductions for individual, household, cooperative, joint venture entities, companies, enterprises, and exploitation facilities managed by local authorities (except for cases specified in point c below).

b. The Director General of the State Tax Administration examines and decides on tax exemptions and reductions for exploitation facilities managed centrally, foreign-invested enterprises, or joint ventures with foreign entities operating under the Law on Foreign Investment in Vietnam (except for cases specified in point c below).

c. The Minister of Finance examines and decides on cases where the average reduction in business income tax exceeds fifty million VND per month, and profit tax exemptions exceed one hundred million VND per year.

The competent authority examining and deciding on business income tax reductions and profit tax exemptions also examines and decides on resource tax reductions.

Exemptions and reductions of resource taxes, business income taxes, and profit taxes are conducted annually following the end of the fiscal year. During the year in which the exemption or reduction applies, the head of the direct tax administration agency shall inspect the exploitation permit, business registration certificate, and compare them with the conditions for tax exemption or reduction as stipulated in this Circular to temporarily refrain from collecting profit tax, defer payment of no more than fifty percent of the monthly business income tax and resource tax due to the exploitation facility.

3. Procedures and authority for handling the registration fee at a rate of 1%:

Ship owners and boat owners subject to the registration fee at a rate of 1% must submit their application to the provincial or municipal Tax Department where the exploitation facility is headquartered. The application includes:

- A declaration form for the registration fee for ships and boats according to the current regulations on registration fees; the declaration must clearly state the main engine power of the ship or boat.

- An operating permit for marine product exploitation in distant waters.

- A business registration certificate.

The Director of the provincial or municipal Tax Department shall review the application and procedures and collect the registration fee according to the regulations before the ship or boat owner registers ownership or usage rights of the asset.

Any ship or boat that has paid the registration fee at the rate of 2% as prescribed in Article 4 of Decree No. 193/CP dated December 29, 1994 of the Government, and subsequently obtained a permit for marine product exploitation in distant waters, shall not be entitled to a refund of the registration fee paid or deduction from other payable amounts.

If an exploitation facility engages in false declarations to obtain tax reductions or registration fee exemptions, it will be subject to back payment of all types of taxes and registration fees declared falsely and administrative penalties according to the law on administrative violations in the field of taxation.

III. IMPLEMENTATION

1. This Circular takes effect fifteen days from the date of signature, replacing Circular No. 109 TT/LB dated December 31, 1993 issued by the Ministry of Finance and Fisheries guiding the implementation of Decision No. 400/TTg dated August 7, 1993 of the Prime Minister.The Prime Minister.

Exploitation facilities currently enjoying tax benefits under Decision No. 400/TTg dated August 7, 1993 of the Prime Minister shall continue to implement such benefits up to the full level and duration specified in Decision No. 400/TTg. After the expiration of the benefit period under Decision No. 400/TTg, if the entity qualifies for continued benefits under Decision No. 358/TTg dated May 29, 1997, they may continue to enjoy such benefits under Decision No. 358/TTg..

2. Tax agencies, provincial or municipal aquatic resources protection agencies, and border guard units at ports shall cooperate closely to monitor fishing vessels operating in distant waters, ensuring that tax benefits are granted to eligible entities and processing permits within their authority. They shall organize quick and efficient registration, declaration, and confirmation processes to avoid inconvenience for beneficiaries. During implementation, any issues should be promptly reported to the Ministry of Finance and the Ministry of Fisheries for study and resolution.

During implementation, any issues should be promptly reported to the Ministry of Finance and the Ministry of Fisheries for study and resolution./.