JOINT CIRCULAR No. 122/2008/TTLT-BTC-BQP GUIDING THE SYSTEM OF COLLECTION AND PAYMENT OF PERSONAL INCOME TAX FOR PERSONNEL RECEIVING SALARIES UNDER THE MINISTRY OF NATIONAL DEFENSE

JOINT CIRCULAR

Guidelines on the collection and payment of Personal Income Tax for individuals receiving salaries under the Ministry of National Defense

hưởng lương thuộc Bộ Quốc phòng

_______________________

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

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

Pursuant to Decree No. 85/2007/NĐ-CP dated May 25, 2007 of the Government detailing certain provisions of the Law on Tax Administration;

Pursuant to Decree No. 204/2004/NĐ-CP dated December 14, 2004 of the Government on the Salary System for Civil Servants, Public Officials, and Military Personnel;

Pursuant to Decision No. 257/2006/QĐ-TTg dated November 9, 2006 of the Prime Minister promulgating regulations on frequency band allocation for economic and social purposes, national defense, and security;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

To suit the specific activities of units under the Ministry of National Defense, the Ministry of Finance and the Ministry of National Defense jointly issue guidelines on the collection and payment of Personal Income Tax within the military as follows:

I. SUBJECTS AND SCOPE OF APPLICATION

1. This Circular guides the collection and payment of Personal Income Tax for subjects receiving salaries who are officers, professional soldiers, defense civil servants, and contractual workers (hereinafter referred to as salary recipients) in agencies and units under the Ministry of National Defense with income from salaries, wages, and other income with the nature of salaries and wages received in monetary or non-monetary forms from agencies and units under the Ministry of National Defense (hereinafter referred to as the payer of income).

2. This Circular does not apply to salary recipients specified in Clause 1 of this Section who have other taxable incomes (other than income from salaries and wages). The declaration and payment of tax for other taxable incomes shall be carried out according to the guidance provided in Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance guiding the implementation of the Law on Personal Income Tax and the Government's Decree detailing the implementation of the Law on Personal Income Tax (hereinafter referred to as Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance).

II. TAXABLE AND NON-TAXABLE INCOME FROM SALARIES AND WAGES

1. Taxable income from salaries and wages is the income that salary recipients receive from the payer of income in monetary or non-monetary forms, including:

1.1. Salaries, wages, and other amounts with the nature of salaries and wages recorded in recruitment decisions, salary increase decisions, rank promotion decisions, transfer decisions, decoration, and rank advancement; or in labor contracts;

1.2. Allowances, subsidies, and living expenses that salary recipients receive, except for allowances and subsidies as specified in Clause 2 of this Section;

1.3. Other monetary or non-monetary remuneration, bonuses, and benefits, including:

a) Remuneration for participating in scientific and technical projects; remuneration for participating in projects and programs; royalties for writing books, articles, translating materials; remuneration for teaching, performing arts, sports, advertising services, and other services;

b) Bonuses in monetary or non-monetary form, excluding the following bonuses:

- Bonuses accompanying state-awarded titles, including bonuses accompanying commendations and rewards as prescribed by laws on commendation and reward, specifically:

+ Bonuses accompanying commendation titles such as: National Model Soldier; Model Soldier at the Ministry, Sector, Central Organization, Provincial, and Municipal levels; Model Soldier at the Base level, Advanced Worker, Model Worker;

+ Bonuses accompanying awards such as: Orders, Medals of various types;

+ Bonuses accompanying national honors such as the title of Mother Heroic Vietnam, Hero of the People's Armed Forces, Hero, Teacher, Doctor, Artist of Merit, etc.;

+ Bonuses accompanying the Ho Chi Minh Award, State Awards;

+ Bonuses accompanying Commemorative Medals, Badges;

+ Bonuses accompanying Certificates of Merit, Letters of Commendation;

- Bonuses accompanying national and international awards recognized by the Vietnamese state;

- Bonuses for technological improvements, inventions, and discoveries recognized by competent state authorities;

- Bonuses for reporting violations of the law to competent state authorities;

c) Other benefits received from the payer of income by salary recipients.

2. Allowances and subsidies not included in taxable income include:

2.1. Monthly preferential allowances and one-time subsidies, including:

a) Allowances and subsidies for war invalids, disabled veterans, dependents of martyrs, allowances and subsidies for revolutionary cadres, allowances and subsidies for heroes of the armed forces, heroes of labor, and other beneficiaries of preferential policies for persons with meritorious service;

b) One-time hardship subsidies, accident and occupational disease subsidies;

c) One-time childbirth and adoption subsidies;

d) One-time disability allowance;

đ) One-time retirement subsidy;

e) One-time and monthly pension subsidies;

g) Severance pay, unemployment benefit, and one-time social insurance benefit for those who do not meet the conditions for retirement;

h) Subsidies for addressing social evils as prescribed by law;

i) One-time demobilization subsidy, discharge subsidy, job creation subsidy; one-time subsidy when officers and professional soldiers cease active service;

k) Other subsidies paid by Social Insurance;

2.2. Hazardous and dangerous work allowances for industries, professions, or jobs in workplaces with hazardous and dangerous factors;

2.3. Recruitment incentives for new economic zones, economic bases, and remote islands with particularly difficult living conditions;

2.4. Regional allowances as prescribed by law for those working in remote, isolated areas, and harsh climates;

2.5. National Defense and Security allowances, including:

a) Special allowances;

b) Tenure allowances for officers and professional soldiers;

c) National Defense and Security service allowances for defense civil servants;

d) Military-specific allowances, including:

- Policies and regulations for Border Guard Troops;

- Regulations and policies for forces directly participating in teams strengthening bases in the Central Highlands, Southwest, Northwest regions, and border provinces of Vietnam-Laos;

- Regulations and policies for cadres and soldiers serving at Ho Chi Minh Mausoleum;

- Regulations and policies for submarine crew P under the Navy Military Region;

- Sea allowance for the Navy Military Region;

- Allowance for forces on naval ships;

- Special regulations for military pilots, flight crews, and other personnel directly serving flights at military airports under the Ministry of National Defense;

- Allowance for managing detention centers, temporary detention centers, and holding houses under the Ministry of National Defense;

- Special allowances for certain judicial positions and inspectors within the Military;

- Regulations and policies for specialized anti-terrorism forces under the Ministry of National Defense;

- Regulations and policies for military personnel, defense workers performing support duties in the military;

- Regulations and policies for maritime police forces;

- Regulations and policies for forces performing Task C;

- Other special military allowances as prescribed by law;

III. BASIS FOR TAX CALCULATION

1. The basis for calculating tax on income from wages and salaries is taxable income and tax rate.

2. Taxable income is determined by deducting the following items from gross income subject to tax:

a) Mandatory insurance contributions such as:

- Social insurance, health insurance;

- Professional liability insurance for certain professions required to participate in mandatory insurance and other mandatory insurances as prescribed by law;

b) Personal deductions;

c) Contributions to charitable funds, humanitarian funds, and educational funds.

IV. TAX REDUCTION

1. Taxpayers facing difficulties due to natural disasters, fires, accidents, or serious illnesses affecting their ability to pay taxes may be eligible for tax reduction corresponding to the extent of damage but not exceeding the amount of tax payable.

2. The basis for determining the extent of damage eligible for tax reduction is the actual expenses incurred to mitigate the damage minus any compensation received from insurance agencies (if applicable), or from organizations or individuals causing the accident (if applicable).

3. The amount of tax reduction is determined as follows:

3.1. In cases where the tax payable in the tax year exceeds the extent of damage, the tax reduction will be equal to the extent of damage;

3.2. In cases where the tax payable in the tax year is less than the extent of damage, the tax reduction will be equal to the tax payable;

3.3. The process of granting tax reduction is carried out annually. Taxpayers facing difficulties due to natural disasters, fires, accidents, or serious illnesses in a particular year will be eligible for tax reduction for that year.

4. Documentation and procedures for tax reduction

Taxpayers facing difficulties must submit specific tax reduction documentation to the entity paying their income as follows:

4.1. For taxpayers facing difficulties due to natural disasters or fires

- A request for tax reduction with confirmation from the head of a battalion-level unit or higher;

4.2. For taxpayers facing difficulties due to accidents

- An accident report or record confirmed by the police or a medical assessment of the degree of injury;

- Documentation confirming compensation from insurance agencies or agreements for compensation from the person causing the accident (if applicable);

- Relevant expense receipts directly related to mitigating the accident;

4.3. For taxpayers suffering from serious illnesses

- A copy of the medical records or health examination book;

- Receipts proving medical expenses issued by healthcare authorities; or purchase invoices for medicine accompanied by a doctor's prescription.

5. Authority to issue tax reduction decisions

Battalion-level heads and equivalent officials have the authority to decide on tax reductions for eligible taxpayers but not exceeding the tax payable for the year and are responsible for their decisions.

V. TAX REGISTRATION, WITHHOLDING, DECLARATION, PAYMENT, AND SETTLEMENT

Individual income tax registration, withholding, declaration, payment, and settlement for income from wages and salaries of taxpayers under the Ministry of National Defense shall apply as follows:

1. For those receiving wages in units under the Ministry of National Defense

1.1. Tax Registration

Taxpayers in units under the Ministry of National Defense do not need to register for tax;

1.2. Tax Declaration

- At the beginning of each year, each taxpayer declares and registers the number of dependents entitled to personal deductions and submits the declaration form to the direct management and income-paying unit for calculation of dependent deductions. If there are changes in dependents during the year, they must declare again;

- In cases where taxpayers share dependents with other taxpayers such as spouses, siblings, etc., they must agree to declare dependents according to the principle that each dependent can only be counted once for personal deductions in a tax year; if taxpayers sharing the same dependent claim personal deductions, they will be subject to penalties under the Law on Tax Administration;

- Taxpayers only need to submit a declaration form for dependents, confirmed by the personnel management agency and the unit head, without submitting proof of dependents, and are responsible for the accuracy of their declarations;

1.3. Withholding Tax

- Withholding tax on income from wages and salaries is conducted monthly; units paying salaries from the state budget are responsible for withholding individual income tax and remitting it to higher-level units;

- Based on the taxable income from wages and salaries and other wage-like income of taxpayers, the income-paying unit calculates the provisional tax payable according to the progressive tax rates for submission to higher levels;

- In cases where units pay income to individuals outside their own organization, they must withhold tax at source as follows:

+ Withhold 10% of income for taxpayers as specified in Clause 1, Section I of this Circular;

+ Other taxpayers follow the guidelines set forth in Circular No. 84/2008/TT-BTC dated September 30, 2008, issued by the Ministry of Finance.

1.4. Tax Payment

- Monthly, the income-paying entity must submit the withheld tax to the higher-level financial authority to the account of the Department of Finance/Military Ministry opened at the State Treasury Central Office;

- Quarterly, no later than the 30th day of the first month of the following quarter, the Department of Finance/Military Ministry transfers the individual income tax paid by the income-paying entities to the State Budget;

- By the end of the year, no later than June 30 of the following year, based on the settlement reports from the income-paying entities, the Department of Finance/Military Ministry is responsible for determining the total amount of individual income tax due, the amount already paid, and submitting the remaining amount due to the Central State Budget;

1.5. Tax Settlement

- The taxpayer does not need to prepare a tax settlement report;

- The income-paying entities shall settle taxes on behalf of each individual and report the consolidated settlement with the annual budget settlement to the higher-level authority;

- At the end of the period when settling individual income tax for each specific case, if the individual has more withheld tax during the year than the tax due, the income-paying entity shall offset the difference against the tax due of that individual in the subsequent period. If the taxpayer requests a refund of overpaid tax, the income-paying entity must refund it to the individual. The taxpayer must submit a refund request to the paying entity as the basis for the refund; the entity will use the individual income tax withheld collectively in the month to make the refund, and the remainder will be submitted to the higher level;

- The tax settlement report for individual income tax prepared by the income-paying entity shall be submitted to the higher-level financial authority;

2. For enterprises under the Ministry of National Defense:

2.1. Implementation of tax declaration, withholding, payment, and settlement of individual income tax shall be carried out in accordance with Circular No. 84/2008/TT-BTC dated September 30, 2008, issued by the Ministry of Finance;

2.2. Officers, professional military personnel, civil servants, and contractual workers working in enterprises under the Military Ministry must register for tax, declare deductions for dependents, settle taxes, and request refunds as individuals with income from salaries and wages in administrative agencies, public institutions, other business establishments, in accordance with Circular No. 84/2008/TT-BTC dated September 30, 2008, issued by the Ministry of Finance;

2.3. Determination of taxable income from salaries and wages of officers, professional military personnel, civil servants, and contractual workers working in enterprises under the Military Ministry shall be implemented in accordance with Clause 2, Section II, Part A of Circular No. 84/2008/TT-BTC dated September 30, 2008, issued by the Ministry of Finance. Specifically, the defense-security allowance is deducted from taxable income and uniformly implemented according to Point 2.5, Clause 2, Section II of this Circular;

VI. IMPLEMENTATION

1. Effective date

This Circular takes effect from January 1, 2009. Other contents related to income from salaries and wages not mentioned in this Circular shall be implemented in accordance with Circular No. 84/2008/TT-BTC dated September 30, 2008, issued by the Ministry of Finance;

2. Responsibilities for implementation:

2.1. The Department of Finance/Military Ministry is responsible for organizing and implementing this Circular;

2.2. Commanders of units and individuals subject to taxation are responsible for complying with and implementing this Circular;

In the course of implementation, if there are difficulties or obstacles, the units shall promptly reflect them to the Ministry of Finance and the Military Ministry for study and resolution./.