Circular No. 128/2014/TT-BTC guides the reduction of personal income tax for individuals working in Economic Zones. This document specifies the applicable subjects, taxable income, and the method for calculating the specific amount of tax reduction.
适用范围
Resident and non-resident individuals who sign labor contracts or engage in business activities in Economic Zones
要点
- Individuals working in Economic Zones are entitled to a 50% reduction in personal income tax (Article 3)
- Taxable income includes salaries, wages, and income from business operations in Economic Zones (Article 2)
- Individuals must comply with tax declaration, payment, and settlement procedures as prescribed by laws on tax administration (Article 4)
- The temporarily withheld personal income tax is reduced by 50% of the tax that should be deducted or temporarily withheld corresponding to the taxable income in Economic Zones
- Individuals with income from salaries, wages, and business operations outside Economic Zones are also calculated to reduce taxes according to the ratio of taxable income in Economic Zones
🌐 本文件的社会影响
- Reducing the financial burden on workers in Economic Zones
- Enhancing investment attraction and economic development in this region
- It may create unfair competition with businesses operating outside Economic Zones
❓ 常见问题
I am a resident individual working in an Economic Zone, how much personal income tax can I have reduced?
You are entitled to a 50% reduction in the personal income tax you are required to pay under the law on personal income tax.
Income from where will be considered for tax reduction?
Taxable income includes salaries, wages, and income from business operations in Economic Zones.
What do I need to do to enjoy this benefit?
You must comply with tax declaration, payment, and settlement procedures as prescribed by laws on tax administration.
全文
CIRCULAR
Guidelines on reducing personal income tax for individuals working in Economic Zones
________________
Pursuant to the Law on Personal Income Tax 2007 and the Law Amending and Supplementing Certain Provisions of the Law on Personal Income Tax 2012;
Pursuant to the Law on Tax Administration 2006 and the Law Amending and Supplementing Certain Provisions of the Law on Tax Administration 2012;
Pursuant to Decree No. 65/2013/NĐ-CP dated June 27, 2013 of the Government detailing certain provisions of the Law on Personal Income Tax and the Law Amending and Supplementing Certain Provisions of the Law on Personal Income Tax;
Pursuant to Decree No. 83/2013/NĐ-CP dated July 22, 2013 of the Government detailing implementation of certain provisions of the Law on Tax Administration and the Law Amending and Supplementing Certain Provisions of the Law on Tax Administration;
Pursuant to Decree No. 29/2008/NĐ-CP dated March 14, 2008 of the Government on industrial parks, export processing zones, and economic zones;
Pursuant to Decree No. 164/2013/NĐ-CP dated November 12, 2013 of the Government amending and supplementing certain provisions of Decree No. 29/2008/NĐ-CP dated March 14, 2008 of the Government on industrial parks, export processing zones, and economic zones;
Pursuant to Decision No. 72/2013/QĐ-TTg dated November 26, 2013 of the Prime Minister on issuing financial mechanisms and policies for Border Economic Zones;
Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;
At the proposal of the Director General of the State Revenue总局局长的提议；
The Minister of Finance guides the reduction of personal income tax for individuals working in Economic Zones and Border Economic Zones (hereinafter referred to collectively as Economic Zones) as follows:
Article 1. Taxpayers and Scope of Application
Taxpayers eligible for reduced personal income tax under this Circular include resident and non-resident individuals as defined by the law on personal income tax, who work in Economic Zones, specifically including:
1. Individuals who enter into labor contracts with the Management Board of the Economic Zone, state management agencies within the Economic Zone, and actually work in the Economic Zone.
2. Individuals who enter into labor contracts with organizations or individuals having business establishments in the Economic Zone and actually work in the Economic Zone.
3. Individuals who enter into labor contracts with organizations or individuals outside the Economic Zone but are assigned to work in the Economic Zone to implement economic contracts signed by organizations or individuals outside the Economic Zone with the Management Board of the Economic Zone, state management agencies within the Economic Zone, or with organizations or individuals conducting investment and business operations in the Economic Zone.
4. Individuals or groups of individuals with fixed business locations in the Economic Zone, carrying out business activities according to business registration certificates issued for the Economic Zone.
5. Individuals who enter into labor contracts with organizations in the Economic Zone and actually work in the hazardous waste treatment area of the Economic Zone, which, according to national regulations on the environment and approved planning for the Economic Zone, must be located outside the Economic Zone.
Article 2. Taxable Income Basis for Reduction
Taxable income serving as the basis for calculating the reduced personal income tax under this Circular includes:
1. Taxable income from salaries and wages received by individuals working in the Economic Zone, paid by the Management Board of the Economic Zone, state management agencies within the Economic Zone, or organizations or individuals having business establishments in the Economic Zone.
2. Taxable income from salaries and wages received by individuals assigned to work in the Economic Zone, paid by organizations or individuals outside the Economic Zone to implement economic contracts signed with the Management Board of the Economic Zone, state management agencies within the Economic Zone, or organizations or individuals conducting investment and business operations in the Economic Zone.
3. Taxable income from business activities conducted in the Economic Zone by individuals or groups of individuals holding business registration certificates issued for the Economic Zone.
4. Taxable income from salaries and wages received by individuals working in the hazardous waste treatment area of the Economic Zone located outside the Economic Zone.
The determination of taxable income from salaries and wages and business income shall be carried out in accordance with the provisions of the law on personal income tax.
Article 3. Determination of Tax Reduction Amount
1. For resident individuals:
a. In case resident individuals only have taxable income as guided in Article 2 of this Circular (hereinafter referred to as taxable income within the Economic Zone):
a.1. Determining the amount of provisional tax to be reduced:
|
Individual income tax provisional tax to be reduced |
= |
Individual income tax subject to withholding or provisional payment (monthly, quarterly, or each time it arises) |
x |
50% |
a.2. Determining the amount of tax payable to be reduced:
|
Reduced individual income tax |
= |
Total individual income tax payable for the tax year |
x |
50% |
Wherein: The total individual income tax payable (as mentioned above) is the amount of individual income tax payable as prescribed by the law on individual income tax.
b. In case resident individuals have both taxable income within the Economic Zone and income from salaries, wages, and business income outside the Economic Zone:
b.1. Determining the amount of provisional tax to be reduced:
|
Individual income tax provisional tax to be reduced |
= |
Individual income tax subject to withholding or provisional payment (monthly, quarterly, or each time it arises) corresponding to taxable income within the Economic Zone |
x |
50% |
b.2. Determining the amount of tax payable to be reduced:
|
Reduced individual income tax for the year |
= |
Total individual income tax payable for the year |
x |
Taxable income within the Economic Zone |
x |
50% |
|
Total taxable income for the tax year |
Wherein: The total individual income tax payable for the year is determined based on the total taxable income from wages, salaries, and business operations arising during the tax year as prescribed by the law on individual income tax.
2. For non-resident individuals:
|
Reduced individual income tax |
= |
Total taxable income within the Economic Zone |
x |
Individual income tax rate applicable to non-resident individuals |
x |
50% |
Article 4. Declaration, Payment, and Settlement of Tax
Individuals mentioned in Article 1 of this Circular who have taxable income as guided in Article 2 of this Circular shall declare, pay, and settle individual income tax in accordance with the provisions of the law on tax administration.
Article 5. Effective Date
1. This Circular takes effect from October 20, 2014, and replaces Circular No. 176/2009/TT-BTC dated September 9, 2009, of the Ministry of Finance.
2. Business individuals operating within the Economic Zone before January 1, 2009, who generate business income and are currently enjoying investment incentives under the Law on Corporate Income Tax until December 31, 2008, and are still within the period exempted from corporate income tax shall continue to enjoy exemption from individual income tax for the remaining exemption period, after which they will benefit from a 50% reduction in individual income tax as guided in this Circular.
3. During implementation, if there are any difficulties, organizations and individuals are requested to promptly report to the Ministry of Finance (General Department of Taxation) for research and resolution./.
DEPUTY MINISTER
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