Circular No. 117/1998/TT-BTC guiding the implementation of tax incentives and stamp duty exemptions as stipulated in Article 13 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 on converting state-owned enterprises into joint-stock companies

CIRCULAR

Guidelines for implementing tax and registration fee preferences as stipulated in Article

13 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 on converting state enterprises into joint-stock companies

On the basis of the Law on Encouraging Domestic Investment (amended) dated May 20, 1998;

Pursuant to the guidance of the Prime Minister in Official Letter No. 5121/VPCP-KTTH dated October 20, 2003 of the Government Office;

The Ministry of Finance issues guidelines for implementing tax and registration fee preferences as stipulated in Article 13 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government on converting state enterprises into joint-stock companies as follows:

On the basis of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government on the conversion of state-owned enterprises into joint stock corporations;

I. CONTENTS OF TAX AND REGISTRATION FEE PREFERENCES

1. Regarding corporate income tax

a. For state enterprises converted into joint-stock companies that qualify as new investment forms eligible to enjoy incentives under the amended Law on Encouraging Domestic Investment:

Conditions for enjoying tax incentives; levels of tax incentives; procedures, sequence, and authority for reviewing tax incentives shall be implemented according to the provisions of the amended Law on Encouraging Domestic Investment and guiding documents issued by the Government and the Ministry of Finance.

b. For state enterprises converted into joint-stock companies that do not meet the conditions to enjoy incentives under the amended Law on Encouraging Domestic Investment:

b.1. Level of incentive:

A reduction of 50% in corporate income tax for two consecutive years (24 months) from the date when the joint-stock company receives its business registration certificate and operates under the Law on Enterprises.

b.2. Procedures, authority, and sequence for implementing incentives:

Within ten days from the date of receiving the Business Registration Certificate, joint-stock companies eligible for reduced corporate income tax as guided in Point 1.b of this Circular must complete tax registration declarations and prepare documents to submit to the directly managing tax authority requesting the reduction of tax as prescribed. The documents include:

- Decision of the competent authority transferring state enterprises into joint-stock companies (certified copy or stamped copy of the original document);

- Business Registration Certificate (certified copy or stamped copy of the original document);

- Tax registration form;

- Application for reduction of corporate income tax with signatures of authorized representatives and the stamp of the entity.

Within a maximum period of ten days from the date of receipt of the documents, the tax authority must issue a notification regarding the time limit for the company to enjoy the tax reduction as prescribed. If the unit's documents are found to be invalid or incomplete, they must be notified to resubmit or supplement within seven days from the date of receipt of the documents.

The review of corporate income tax reductions for entities mentioned in Point 1.b of this Circular shall be conducted by the directly managing tax authority during annual tax settlement and must be recorded on the annual tax payment notice for the company.

2. Regarding high-income individual income tax

When employees in joint-stock companies receive income distributed from surplus bonus and welfare funds before privatization to purchase shares, such income will not be included in taxable income (if applicable). If the employee does not use the received income to purchase shares, it must be included in taxable income (if applicable).

3. Regarding registration fees

According to Clause 2 of Article 13 of Decree No. 44/1998/NĐ-CP dated June 29, 1998 of the Government, assets under the management and use of state enterprises being privatized and transferred to the ownership of joint-stock companies are exempt from registration fees.

Procedures for waiving registration fees are as follows:

Joint-stock companies (converted from state enterprises) when registering ownership of assets subject to registration fees (previously managed and used by state enterprises) must present the following documents to the tax authority (registration location):

- Registration fee declaration form for each asset according to the prescribed model;

- Decision of the competent authority on the actual value of the enterprise for privatization accompanied by the Minutes on the determination of the actual value of the enterprise (certified copy);

- Decision of the competent authority on the transfer of state enterprises into joint-stock companies as stipulated in Article 17 of Decree No. 44/1998/NĐ-CP (certified copy or stamped copy of the original document).

The tax authority will check the documents and confirm that the assets fall under the category exempt from registration fees on the registration fee declaration form, serving as the basis for the company to register with the relevant government agency. For assets subject to registration fees of joint-stock companies not listed in the Decision of the competent authority on the actual value of the privatized enterprise, the tax authority will collect registration fees according to the prescribed regulations.

State enterprises that have been converted into joint-stock companies and are eligible for reduced corporate income tax as stipulated in Clause 1 of Article 10 of Decree No. 28/CP dated May 7, 1996 of the Government but have not yet been reviewed for tax reduction shall continue to implement the tax reduction as prescribed above. The entity must prepare complete documents to request tax incentives and submit them to the directly managing tax authority for consideration and resolution according to the guidance at Point I.1.b.2 of this Circular. If the period for tax reduction review falls within the 1996 and 1997 fiscal years, the actual amount of corporate income tax reduced for the entity shall be deducted from the corporate income tax the entity must pay in the 1998 fiscal year.

II. IMPLEMENTATION:

This Circular takes effect from the date of signature. During implementation, if there are difficulties or obstacles, enterprises and tax authorities are requested to report to the Ministry of Finance for timely consideration and resolution.

This Circular takes effect from the date of issuance. During implementation, any difficulties or obstacles should be reported by enterprises and tax authorities to the Ministry of Finance for timely consideration and resolution.