Circular No. 113/2011/TT-BTC amending and supplementing Circular No. 62/2009/TT-BTC dated March 27, 2009, Circular No. 02/2010/TT-BTC dated January 11, 2010, and Circular No. 12/2011/TT-BTC dated January 26, 2011.

CIRCULAR

Amending and supplementing Circular No. 62/2009/TT-BTC dated March 27, 2009, Circular No. 02/2010/TT-BTC dated January 11, 2010 and

Circular No. 12/2011/TT-BTC dated January 26, 2011

--------------------

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

Pursuant to Decree No. 100/2008/NĐ-CP dated September 8, 2008 of the Government detailing certain provisions of the Personal Income Tax Law;

Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

The Ministry of Finance guides the amendment of Circular No. 62/2009/TT-BTC dated March 27, 2009, Circular No. 02/2010/TT-BTC dated January 11, 2010 and Circular No. 12/2011/TT-BTC dated January 26, 2011 as follows:

Article 1. Amend Article 5 of Circular 62/2009/TT-BTC dated March 27, 2009 guiding the amendment and supplementation of Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance as follows:

Organizations and individuals paying agency sales commissions for goods; salaries, wages, other service fees, and other payments to individuals performing services with a total payment amount of VND 1,000,000 or more per transaction shall implement tax withholding before making such payments to individuals according to the following guidelines:

- Apply a withholding rate of 10% on income paid to individuals with a taxpayer identification number and 20% for individuals without a taxpayer identification number, except in cases where the Ministry of Finance has issued separate guidance on temporary withholding rates (such as agency insurance commissions, lottery agency commissions).

Organizations entering into labor contracts or service contracts with individuals or organizations shall be responsible for informing the individuals about the withholding rates mentioned above so that the individuals can apply for a taxpayer identification number.

The tax authority shall issue the taxpayer identification number within five working days from the date of receipt of the complete application for issuance of the taxpayer identification number.

- In the case where an individual has only one source of income subject to withholding tax (including insurance agents, lottery agents) at the rate mentioned above but estimates that their total taxable income after deductions will not reach the threshold for tax payment (for example, an individual earning less than VND 48 million per year if single or less than VND 67.2 million per year if they have one dependent entitled to full 12-month deductions or less than VND 86.4 million per year if they have two dependents entitled to full 12-month deductions,...), then the individual receiving the income must submit a declaration (according to Form No. 23/BCK-TNCN attached hereto) to the organization paying the income to serve as the basis for temporarily not withholding personal income tax. Based on the declaration of the recipient, the organization paying the income will not withhold tax. At the end of the year, the organization paying the income still must provide a list and income details of those who have not reached the withholding tax threshold to the tax authority. Individuals making declarations must bear responsibility for their declarations; in the event of fraud being discovered, they will be dealt with according to the regulations of the Tax Administration Law.

- In the case where organizations or individuals hire workers under short-term contracts lasting more than three months but less than twelve months, the withholding tax rate mentioned above shall not be applied, but instead, temporary withholding tax shall be implemented according to the progressive rate table calculated monthly.

Article 2. Amend Article 5 of Circular No. 02/2010/TT-BTC dated January 11, 2010 of the Ministry of Finance as follows:

"3.5.3. Determination of personal income tax for individuals transferring land use rights, houses, apartments already issued with certificates of land use rights; certificates of ownership of houses, apartments shall be carried out as follows:

a. The transfer price is the actual price recorded on the transfer contract. If the transfer contract does not record the transfer price or records a lower transfer price than the land price or house value for stamp duty set by the People's Committee of the province or centrally-administered city (collectively referred to as provincial-level People's Committee) at the time of transfer, the transfer price shall be determined according to the land price or house value for stamp duty set by the provincial-level People's Committee.

b. Cost price includes purchase price and related costs (costs related to land use rights, house ownership rights; land improvement costs, house improvement costs; construction costs; other related costs) declared by the taxpayer and must be supported by valid invoices and documents.

c. The tax rate is 25% on the transfer income (Transfer Price - Cost Price).

In the case where the cost price (purchase price and related costs) lacks valid invoices and documents to support it, a tax rate of 2% shall be applied based on the actual transfer price recorded on the transfer contract; in the case where the transfer contract does not record the transfer price or records a lower transfer price than the land price or house value for stamp duty set by the provincial-level People's Committee at the time of transfer, the tax base shall be taken from the land price or house value for stamp duty set by the provincial-level People's Committee."

Article 3. Amend Article 2 of Circular No. 12/2011/TT-BTC dated January 26, 2011 of the Ministry of Finance as follows:

1. For land plot purchase contracts, capital contribution contracts to acquire land plots, houses, apartments signed before the effective date of Decree No. 71/2010/NĐ-CP dated June 23, 2010 of the Government detailing and guiding the implementation of the Housing Law, now approved by the developer for individuals to transfer, shall declare and pay personal income tax at a rate of 25% on income.

In the case where the transfer price recorded on the transfer contract or on the personal income tax declaration form is lower than the land price or house value for stamp duty set by the provincial-level People's Committee at the time of transfer or lacks valid invoices and documents to support the cost price, the tax authority shall determine the transfer price and calculate tax at a rate of 2% on the determined transfer price. The determination of the transfer price is based on the land price or house value for stamp duty set by the provincial-level People's Committee.

2. For the transfer of future housing purchase contracts, individuals shall declare and pay tax at a rate of 25% on income. In the case where the transfer price recorded on the transfer contract or on the personal income tax declaration form is lower than the land price or house value for stamp duty set by the provincial-level People's Committee at the time of transfer, and there are no valid invoices and documents to support the transfer price and cost price, the tax authority shall calculate tax at a rate of 2% on the land price or house value for stamp duty set by the provincial-level People's Committee.

Article 4. Implementation organization:

This Circular takes effect from September 19, 2011. Abolish all personal income tax guidelines inconsistent with the guidelines in this Circular.

2. During the implementation process, if any difficulties arise, organizations and individuals are requested to report them to the Ministry of Finance (General Department of Taxation) for timely resolution./.