Circular No. 12-TC/TTCT guiding the implementation of policies for exempting and reducing agricultural taxes in northern provinces and cities

 CIRCULAR

Guidelines for Implementing Agricultural Tax Exemption and Reduction Policies in Northern Provinces and Cities. 

In recent years, production, costs, income, and income distribution of agricultural cooperatives have undergone many changes. However, compared to actual currency, the general agricultural tax exemption and reduction policy remains appropriate. The guidance on implementing this policy has not been systematized, leading to difficulties and confusion in applying it to specific cases in many localities. In some cases, tax exemptions and reductions do not match actual income. Some cooperatives that deserve significant exemptions and reductions receive less, while others with actual harvests reaching or exceeding the taxable yield also receive tax exemptions, causing unfair contributions and failing to encourage cooperatives to actively combat natural disasters and fully implement state plans.

To address the above situation, the Ministry of Finance has systematized and re-guided the application of the agricultural tax exemption and reduction policy to suit the current situation for different types of cooperatives suffering varying crop losses as follows:

1. For cooperatives affected by natural disasters resulting in crop losses, if the total annual revenue from all taxable areas is equal to or lower than the actual material costs incurred on those taxable areas,such cooperatives shall be exempted or reduced from taxes according to Article 26 of the Agricultural Tax Regulation.

Article 26 of the Agricultural Tax Regulation : "In case a region suffers from particularly severe natural disasters causing significant damage, the Provincial People's Council may propose tax reduction or exemption for the entire region, but all such proposals must be approved by the Ministry of Finance before implementation."

Individual farmers within the affected area, if similarly impacted by natural disasters, shall be considered for tax exemption or reduction like cooperatives.

2. For cooperatives affected by natural disasters resulting in crop losses, if the total annual revenue from all taxable areas exceeds the actual material costs incurred on those taxable areas,such cooperatives shall be exempted or reduced from taxes according to Article 6 of Decree 375-TTg dated October 15, 1959, and Point 2 of Article 1 of Decree 63-CP dated May 26, 1962 of the Council of Ministers; for individual households, they shall be exempted or reduced from taxes according to Article 24 of the Agricultural Tax Regulation 715-TTg:

Article 6 of Decree 375-TTg (Provisions on Tax Exemptions and Reductions for Agricultural Cooperatives)

"If the loss is under 10% of the total taxable profits, no tax reduction.

If the loss is 10%, reduce 10% of the tax.

If the loss is over 10% to 15%, reduce 15% of the tax.

If the loss is over 15% to 20%, reduce 20% of the tax.

If the loss is over 20% to 25%, reduce 30% of the tax.

If the loss is over 25% to 30%, reduce 40% of the tax.

If the loss is over 30% to 35%, reduce 50% of the tax.

If the loss is over 35% to 40%, reduce 70% of the tax.

If the loss is over 40%, the tax is waived entirely."

Point 2 of Article 1 of Decree 63-CP (provisions on bases for comparison and calculation to determine loss ratios and tax reduction and exemption ratios): "Based on the actual annual harvest from the taxable area of the cooperative compared to the usual annual taxable yield, if the harvest decreases, tax exemption or reduction will be granted according to the provisions of Article 6 of Decree No. 375-TTg."

Article 24 of the Agricultural Tax Regulation (provisions on tax exemptions and reductions for individual farming households):

"- Damage below 20% of the total taxable crop income, no reduction in tax

- Damage from 20% to less than 50% of the total taxable crop income, the reduction ratio of the tax equals the damage ratio

- Damage from 50% to 60% of the total taxable crop income, reduce 70% of the tax

- Damage over 60% of the total taxable crop income, exempt the entire tax

- In the total land area of an agricultural household, if there is a portion that is completely unharvested (total loss), even though the total damage of the household has not reached 20% of the total taxable crop income, the tax on the unharvested crop income will still be fully exempted." And Point V, page 55 of the Agricultural Tax Regulation further specifies: "When considering partial crop losses, it shall not be considered as total loss."

The examination and calculation of tax exemption for each plot of land with total loss must strictly follow the Agricultural Tax Regulation and Decrees No. 375-TTg and No. 63-CP of the Council of Ministers, which only apply to individual farming households, not collective production of cooperatives. Now abolish Point 4 of Circular No. 16BTC/NN dated May 31, 1962 regarding tax exemption for cooperative land with total loss.

3. For elderly households, families of cadres, soldiers, workers, civil servants... living alone without the ability to pay taxes, they are exempted or reduced agricultural tax according to Article 27 of the Agricultural Tax Regulation.

Article 27 of the Agricultural Tax Regulation : "For farming households who encounter unexpected accidents or have a legitimate reason leading to a decrease in labor capacity, affecting their livelihood and contribution capability, the people's opinion should propose consideration for tax reduction or exemption based on the specific circumstances of each household, not based on the ratios specified in Article 24 for crop damage."

In cases where agricultural production cooperatives have a good spring-summer harvest but suffer a crop failure due to natural disasters in the autumn harvest, having already been granted tax reduction according to Points 1 and 2 of this circular, if the autumn harvest cannot be collected, the Provincial People's Committee may consider reducing or exempting the remaining tax payable by the cooperative.

These tax reduction and exemption proposals must be reported to the Ministry of Finance for approval before implementation.

4. To ensure the proper implementation of the policy on tax exemptions and reductions for agricultural taxpayers in areas affected by crop damage, the Ministry of Finance advises local People's Committees to pay attention to several points:

1. Must organize thorough propaganda and dissemination of the purpose and main contents of the agricultural tax exemption and reduction policy, ensuring that cadres and the public understand them; especially cadres at the County and Commune levels must thoroughly grasp the methods of work to implement correctly.

2. Must have a work plan and strictly guide areas affected by crop damage to comply strictly with all aspects from investigation, situation understanding, calculation, establishment of tax exemption and reduction registers, to examination and announcement of tax exemption and reduction for each cooperative and individual household, ensuring accuracy, fairness, simplicity, timeliness, and transparency. After approving tax exemption and reduction, units that temporarily paid more tax for the spring-summer harvest and now have excess tax should have the Provincial People's Committee immediately decide to refund the excess tax to each unit; tax paid in rice should be refunded in rice; tax paid in cash should be refunded in cash.

3. Tax exemption and reduction for agriculture is a complex task, requiring ideological leadership and specific supervision to avoid the mentality of "emphasizing collection, being strict in exemptions and reductions or granting exemptions and reductions indiscriminately, thus deviating from policy."