Circular No. 13/2001/TT-BTC guides the implementation of tax regulations for investment forms under the Law on Foreign Investment in Vietnam.

CIRCULAR

Guidelines for Implementing Tax Provisions on Various Forms of Investment

under the Law on Foreign Investment in Vietnam

_________________

Pursuant to the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on November 12, 1996; and the Law Amending and Supplementing Certain Articles of the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on June 9, 2000;

Pursuant to current tax Laws and Ordinances of the Socialist Republic of Vietnam; pursuant to Decrees of the Government detailing the implementation of these Laws and Ordinances;

Pursuant to Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to Decree No. 36/CP dated April 24, 1997 of the Government promulgating the regulations on industrial zones, export processing zones, and high-tech zones;

Pursuant to Decree No. 62/CP dated August 15, 1998 of the Government promulgating the regulations on Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO), and Build-Transfer (BT) contracts for foreign investment in Vietnam, and Decree No. 02/1999/NĐ-CP dated January 27, 1999 of the Government amending and supplementing certain articles of Decree No. 62/CP;

The Ministry of Finance issues guidelines for implementing tax provisions on various forms of investment under the Law on Foreign Investment in Vietnam as follows:

Part One:

GENERAL PROVISIONS

1. Scope of Application of this Circular:

- Joint ventures and wholly foreign-owned enterprises established under the Law on Foreign Investment in Vietnam (hereinafter referred to as foreign-invested enterprises).

- Joint venture banks between Vietnamese banks and foreign banks licensed by the competent state agencies managing foreign investment under the Law on Foreign Investment in Vietnam.

- Insurance companies and insurance brokerage firms with foreign investment established and operating under the Law on Foreign Investment in Vietnam and the Law on Insurance Business.

- Joint ventures established based on agreements signed between the Government of the Socialist Republic of Vietnam and foreign governments. If such agreements contain tax obligations for joint ventures that differ from the guidance provided in this Circular, they shall be implemented according to the provisions of those agreements.

- Foreign parties participating in business cooperation based on contracts (hereinafter referred to as foreign joint venture parties) under the Law on Foreign Investment in Vietnam.

- BOT, BTO, and BT enterprises established under the Law on Foreign Investment in Vietnam. In cases where the operational regulations of the enterprise issued by the Government or the BOT, BTO, or BT contracts approved by the Government contain different tax obligations than those provided in this Circular, such regulations shall apply.

All the above entities, depending on specific contexts, may be referred to as enterprises.

Tax obligations for entities conducting oil exploration and exploitation activities in Vietnam under the Petroleum Law will be separately guided.

2. Definitions:

-"Tax Year" means the calendar year starting from January 1 and ending on December 31 each year. In cases where the Ministry of Finance approves a fiscal year different from the calendar year, the tax year shall be the fiscal year.

-"First Profitable Year" means the first fiscal year in which the enterprise generates profit without considering the carryover of losses from previous years.

- "Non-Arm's Length Transaction Contract" refers to transaction contracts, including purchase and sale contracts, influenced by abnormal commercial relationships such as transactions between associated enterprises, where these enterprises are bound by conditions imposed differently from those between independent enterprises.

Enterprises are considered associated enterprises when:

(i) An enterprise participates directly or indirectly in the management, control, or statutory capital contribution or shareholding in another enterprise.

(ii) Two enterprises are both subject to direct or indirect management and control by another enterprise or two enterprises have another enterprise participating in their capital contributions.

Part Two:

GUIDELINES FOR IMPLEMENTING TAX PROVISIONS

I. ENTERPRISE INCOME TAX:

1. Taxpayers:

All income derived from any economic activity of the enterprise is subject to enterprise income tax.

2. Tax Collectors:

Enterprises are taxpayers of enterprise income tax.

In cases where a foreign organization or individual invests simultaneously in multiple joint venture contracts, enterprise income tax shall be calculated separately for each joint venture contract (including cases where a foreign company establishes a common management office in Vietnam).

3. Determination of Taxable Income:

When determining taxable income, enterprises may deduct losses from previous years as prescribed in Article 55 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam.

For foreign joint venture parties, losses arising from the fiscal year 2000 can be carried forward to subsequent years for each joint venture contract. For foreign joint venture parties using a fiscal year other than the calendar year, if the fiscal year 1999-2000 ends before July 1, 2000, and losses occur, the losses of the fiscal year 1999-2000 cannot be carried forward to subsequent years.

Loss carryforward shall be conducted according to the enterprise's plan. Based on its production and business plan, within 15 days from the date of preparing the final tax settlement report and identifying the losses incurred in that fiscal year, the enterprise shall proactively register with the tax authority its loss carryforward plan for that fiscal year to offset against taxable income in subsequent years (within five years from the year following the year in which the loss occurred) and implement the loss carryforward according to the registered schedule.

For example, in 2000, Enterprise A incurred a loss of 500,000 USD. According to projections, starting from 2001, Enterprise A will begin to make profits of 150,000 USD in 2001, 200,000 USD in 2002, 300,000 USD in 2003, 400,000 USD in 2004, and 550,000 USD in 2005. According to the Investment License, Enterprise A is exempt from corporate income tax for two years.

Therefore, according to Article 48 of Decree 24/2000/NĐ-CP, Enterprise A is exempt from corporate income tax for the years 2001 and 2002 (2001 being the first year of profitable business operations). năm đầu tiên kinh doanh có lãi. Enterprise A may choose to carry forward the 2000 losses to the years 2003 through 2005 to fully enjoy the two-year tax exemption period. The decision on which year to carry forward the losses is made by Enterprise A and registered (the entire 2000 loss can be carried forward to 2005 or evenly distributed over the three years from 2003 to 2005).

a) Business revenue for calculating taxable income in the tax year:

The business revenue for calculating taxable income of an enterprise includes all sales proceeds, service fees (excluding VAT), and other revenues of the enterprise in the tax year.

In specific cases, business revenue for calculating taxable income is determined as follows:

* For goods sold on installment basis, the business revenue is calculated based on the lump sum selling price, excluding late payment interest.

* For asset leasing activities such as renting houses, offices, and infrastructure leasing, the business revenue is the rental amount receivable each period according to the lease agreement. If advance payments are received for multiple years, the annual business revenue for calculating taxable income is determined by dividing the total advance payment by the number of years covered by the advance payment.

* For goods and services used for exchange, gift, or donation, the business revenue for calculating taxable income is based on the market price of similar products, goods, or services at the time of exchange or donation.

* For self-produced products, the business revenue for calculating taxable income is the cost of producing those products.

* For processing activities, the business revenue for calculating taxable income includes the processing fee received, including labor costs, fuel, power, auxiliary materials, and other expenses related to the processing activity.

* For credit activities, the business revenue for calculating taxable income is the interest receivable on loans during the tax year.

* For insurance and reinsurance activities, the business revenue for calculating taxable income includes premiums receivable, agency fees, reinsurance receipts, commission on reinsurance, and other income.

* For Joint Venture Contracts under product-sharing arrangements, the revenue from product consumption is determined as follows:

+ If the shared products are consumed in the domestic market, the revenue is based on the domestic market selling price.

+ If the shared products are exported abroad, the revenue is based on the FOB price at Vietnamese customs ports.

When determining the tax liability of foreign joint venture parties, if the joint venture parties cannot provide the consumption price of the products or if the consumption does not follow market transaction principles, the business revenue shall be determined according to the principles set forth in Section IV, Part III of this Circular.

b) Reasonable expenses in the tax year:

Expenses related to the formation of taxable income in the tax year of the enterprise, regardless of the accounting system applied, include the following items:

b1. Depreciation and repair costs of fixed assets used for production and business operations, service provision. The depreciation rate of fixed assets is determined based on the enterprise's registration of the asset's useful life with the directly managing tax authority, following the straight-line method, consistent with Decision No. 166/1999/QĐ-BTC dated December 30, 1999, issued by the Minister of Finance.

b2. Raw material, material, fuel, energy, tools, and actual goods used in production and business-related services linked to revenue and taxable income in the tax year.

b3. Wages, salaries, and other amounts of a wage or salary nature; meal allowances and other subsidies paid to Vietnamese and foreign workers based on labor contracts or collective labor agreements, in compliance with labor laws applicable to enterprises established and operating under the Law on Foreign Investment in Vietnam.

b4. Research and development costs, technological innovation costs, environmental protection costs, warehouse preservation costs, fire prevention and firefighting costs, education and training costs, and health care costs, including support for external education and healthcare, such as contributions to educational funds, assistance to schools for disabled students, and homeless students.

b5. External service costs:

- Electricity, water, telephone, paper, ink, auditing fees, printing costs.

- Insurance costs for liability and property, according to contracts signed with Vietnamese insurance companies or other legally permitted insurance companies in Vietnam.

- For large-scale repair costs of fixed assets aimed at restoring the asset's capacity, which are recorded as production and business costs in the year. If a large repair cost occurs in one year, the enterprise may plan to allocate it over subsequent years. For special fixed assets that require periodic repairs, the enterprise may pre-deduct large repair costs into production and business costs based on the enterprise's budget for large repairs. If the pre-deduction amount is less than the actual repair cost, the enterprise may record the difference as additional costs; if higher, it reduces the costs in the year.

- Rent for office buildings and factory premises. If enterprises pay rent in advance for multiple years, the rent expense is allocated annually based on the number of years covered by the advance payment.

- The rental expenses for fixed assets (machinery, equipment, means of transportation) shall be recorded as production and business costs based on the actual amount paid according to the lease contract. In cases where the rental payment for fixed assets is made in one lump sum for multiple years, the rental expense shall be gradually allocated to production and business costs over the number of years of asset usage.

- Expenses for purchasing or paying for technical documents, services, and technology; expenses for using copyrights, technology transfer, and industrial property objects such as patents, trademarks, pursuant to technology transfer contracts and license agreements approved by the Ministry of Science and Technology or the competent authority.

- Consulting fees, management company hiring fees under management contracts approved by the Ministry of Planning and Investment, and other outsourcing service fees.

b6. Expenditures for female workers as prescribed by law; labor protection expenses, business premises security expenses; contributions to social insurance and health insurance funds for employees as required by enterprises, union dues as stipulated by regulations.

b7. Interest payments on loans within the ceiling interest rate for domestic loans published by the State Bank of Vietnam; bank fees and interest payments on foreign loans as stipulated in credit agreements accepted by the State Bank of Vietnam. If the credit agreement has not been accepted by the State Bank, the interest rate and fees shall be determined based on the actual amount paid in accordance with the credit agreement but shall not exceed the highest lending interest rate of state commercial credit institutions.

For joint venture banks, reasonable interest rates and discounts for deposits, borrowed funds, or other financial instruments.

Interest expenses related to statutory capital contributions or share capital (for banking activities) shall not be included in allowable expenses when determining taxable income.

b8. Provisions for inventory write-downs, bad debt provisions, and securities write-down provisions at enterprises in accordance with the guidelines of the Ministry of Finance.

b9. Severance pay for employees in accordance with current regulations.

b10. Expenditures related to the operations of the Board of Directors (such as meeting expenses of the Board of Directors) of joint venture enterprises in compliance with the Joint Venture Charter or resolutions of the Board of Directors.

Direct expenses related to the circulation, consumption of products, or provision of services such as storage, packaging, loading and unloading, transportation, warehouse rental, product warranty, and goods.

Advertising, marketing, promotional, reception, ceremonial, transaction, external relations, conference expenses, and other types of expenses that do not exceed the limits specified below:

- For newly established manufacturing, construction, and transportation industries operating within two years: not more than 7% of the total expenses of items b1 to b11 mentioned above; subsequent years: not more than 5% of the total expenses of items b1 to b11 mentioned above.

- For newly established trading, catering, and service businesses within two years: not more than 7% of the total expenses of items b1 to b11 mentioned above (excluding the purchase price of sold goods); subsequent years: not more than 5% of the total expenses of items b1 to b11 mentioned above (excluding the purchase price of sold goods).

- For newly established production and trading of electricity, natural gas, oil refining, petroleum products, postal and telecommunications, aviation industries within two years: not more than 5% of the total expenses of items b1 to b11 mentioned above (excluding the purchase price of sold goods for trading activities); subsequent years: 3% of the total expenses of items b1 to b11 mentioned above (excluding the purchase price of sold goods for trading activities).

In certain special cases, if this expense needs to exceed the aforementioned limit, it must be approved in writing by the Ministry of Finance, but shall not exceed 7% of the total expenses of items b1 to b11 mentioned above.

b13. Contributions to Vietnamese organizations for charitable and humanitarian purposes such as disaster relief, unexpected accidents, contributions to the fund supporting mothers of heroic soldiers, families of martyrs, people who have contributed to the revolution, disabled persons without support, funds for preventing social diseases.

b14. Taxes, fees, and charges of a tax nature related to the production and business of goods and services, excluding value-added tax, corporate income tax, and withholding tax on income repatriation.

For enterprises producing and trading in goods exempt from value-added tax or those paying VAT directly, the cost for calculating taxable income includes the value-added tax component in the purchase price of goods and services.

All expenses listed above must be supported by valid documentation. Any expense without documentation or invalid documentation shall not be included in the costs when determining taxable income. Enterprises may not record fines, expenses unrelated to revenue and taxable income such as basic construction investment expenses, expenses covered by other sources of funding. Enterprises established and operating in Vietnam under the Law on Foreign Investment in Vietnam shall not allocate parent company management costs from abroad.

c) Other Income:

Other income of enterprises includes:

c1. Interest from bank deposits, interest from loans (excluding enterprises engaged in the credit sector); interest from deferred sales.

c2. Differences from buying and selling foreign currencies; differences from buying and selling securities; exchange rate differences in accordance with the guidelines of the Ministry of Finance.

c3. Income from ownership and use of assets of the enterprise includes income from the transfer and liquidation of assets. In cases where the enterprise's assets are damaged or broken due to subjective reasons, the related losses must be determined as compensation objects according to the regulations rather than being recorded as other income.

c4. Income from debts previously written off but now recovered; debts owed to unidentified creditors; income from production and business activities of previous years that were overlooked and later discovered.

c5. The year-end balance of pre-paid expenses that were not fully utilized during the year.

c6. Income derived from joint ventures and share investments of the enterprise in other enterprises.

Income from business operations abroad shall be included in other income for determining taxable income.

If such income has been taxed abroad, the enterprise must determine the amount of income before tax paid abroad to calculate corporate income tax according to the Corporate Income Tax Law in Vietnam. When determining the amount of corporate income tax payable, the enterprise may deduct the corporate income tax already paid abroad, but the deductible amount shall not exceed the corporate income tax calculated according to the Corporate Income Tax Law of Vietnam on such income.

Income from joint ventures and collaborations with domestic enterprises after paying corporate income tax does not need to be included in other income when determining taxable income.

c7. Other income related to business but not included in revenue, including items such as customer bonuses, penalty fees for breach of contract, income from selling scrap materials (after deducting consumption costs), monetary gifts from organizations and individuals to the enterprise.

d) Method for calculating taxable corporate income tax for certain special cases:

For foreign joint venture parties, if the business license stipulates that the foreign joint venture party's tax payment is made through a turnover-based tax allocation, then the determination of taxable income and tax declaration shall be carried out according to the provisions of the business license.

If the foreign joint venture party signs a Business Cooperation Contract with the Vietnamese party under a profit-sharing method and one party is responsible for unified accounting, or both parties establish a Joint Accounting Coordination Board, then the foreign joint venture party or the Joint Accounting Coordination Board must declare and pay taxes arising from business operations, bear responsibility for accounting and determining taxable income according to the guidance above, and divide taxable income according to the Contract. If the Contract incurs losses, the annual losses of the Contract will also be shared among the parties, and foreign parties can offset their own losses against taxable income in subsequent years. After receiving income, foreign parties shall declare and pay corporate income tax to the local tax authority.

4. Determining the Amount of Tax Due:

Where:

- Taxable corporate income tax is determined as specified in point 3 above.

- The corporate income tax rate is specifically provided in the investment permit. If the investment permit does not specify the corporate income tax rate, a 25% corporate income tax rate shall apply.

During the course of operation, if an enterprise with foreign investment or a foreign joint venture party fails to meet the criteria for enjoying preferential corporate income tax rates and exemptions as stipulated in Article 46 and Article 48 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government, the enterprise shall not enjoy such preferences. The direct tax collection authority managing the enterprise shall base its determination of the preferential corporate income tax rate and settlement of corporate income tax on the actual conditions met by the enterprise each year, and report to the Ministry of Finance and the investment permit issuing authority.

For enterprises granted an Investment Permit before August 1, 2000, if they meet the criteria for enjoying preferential corporate income tax rates and exemptions as stipulated in Article 46 and Article 48 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government, these enterprises may request the investment permit issuing authority to adjust the Investment Permit. These enterprises will continue to enjoy benefits for the remaining period starting from the effective date of the adjusted permit.

5. Procedures for Registration, Declaration, and Payment of Corporate Income Tax:

a) Registration for Corporate Income Tax:

Enterprises have the responsibility to register for corporate income tax together with value-added tax registration with the direct management tax authority. Enterprises register for corporate income tax at the local tax office where the enterprise's main office is located.

b) Declaration of Corporate Income Tax:

By the latest on the first day of the first month of each fiscal year, enterprises are required to declare and submit the annual provisional tax return form (as per Appendix 1 issued along with this Circular) to the local tax office where the enterprise's main office is located. The basis for declaration is the results of the previous fiscal year's production and business activities and the forecasted business capacity for the following year.

After receiving the declaration, the tax authority will review and determine the annual provisional tax amount, dividing it into quarterly installments to notify the enterprise of the provisional tax amount. If the enterprise fails to declare or declares without sufficient basis for determining the annual provisional tax amount, the tax authority has the right to set the provisional tax amount.

In case there is significant fluctuation in taxable income during the year, the tax authority will adjust the provisional tax amount. Such adjustment will be made based on the enterprise's proposal after the enterprise submits the mid-year financial report.

c) Pay corporate income tax:

Enterprises shall temporarily pay corporate income tax quarterly starting from the first day of the tax year. The temporary payment shall be made according to the tax payment notice issued by the tax authority and must not be later than the end of the quarter. At the end of the tax year or at the end of the contract, the actual settlement shall be conducted.

For business cooperation contracts with a term of less than one year, corporate income tax shall be paid in two installments, the first installment being temporarily paid halfway through the contract period, and the final settlement shall be conducted upon expiration of the contract based on actual figures.

d) Corporate income tax settlement:

The annual corporate income tax settlement shall be carried out in accordance with Part Three of this Circular.

6. Refund of corporate income tax for reinvestment:

a) Foreign investors who have fully contributed the statutory capital as stipulated in the Investment License may use profits and other lawful revenues from their investment activities in Vietnam to reinvest in new projects or ongoing projects for three years or more, and shall be refunded part or all of the corporate income tax already paid related to the reinvested income in accordance with Article 51 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government.

In cases where foreign investors reinvest in projects licensed before November 23, 1996, the amount of corporate income tax to be refunded shall be as follows:

- 100% if invested in projects applying a corporate income tax rate up to 14%.

- 75% if invested in projects applying a corporate income tax rate from 15% to 20%.

- 50% if invested in projects applying a corporate income tax rate from 21% to under 25%.

b) The amount of corporate income tax to be refunded for reinvested profits shall be determined as follows:

Where:

T: is the amount of corporate income tax to be refunded.

L: Is the profit after corporate income tax that is used for reinvestment.

S: Is the corporate income tax rate applied to calculate tax on the profit used for reinvestment.

t: Is the percentage of corporate income tax to be refunded.

c) Procedures for refunding corporate income tax for reinvestment:

To receive the corporate income tax already paid for reinvested profits, foreign investors or authorized representatives must present the following documents to the local Tax Bureau where the headquarters of the enterprise with the reinvested profits is located:

- A letter or application requesting a refund of corporate income tax for reinvestment clearly stating the reasons for reinvestment and the commitment to use profits for reinvestment for three years or more by the foreign investor.

- A tax refund declaration form for reinvestment (pursuant to Appendix No. 2 issued together with this Circular).

- An Investment License or an amended Investment License or an approval document issued by the investment license issuing authority (a certified copy stamped by the enterprise), specifying that the investor is allowed to use profits for reinvestment.

- A confirmation document from the foreign side that has fully contributed the statutory capital, issued by the Board of Directors for joint ventures, a commitment from the foreign investor for wholly foreign-owned enterprises, and a confirmation from the foreign partner in a cooperative business contract regarding the full contribution of statutory capital or capital to implement the business cooperation contract (accompanied by an audit confirmation).

- Proof of tax payments made by the enterprise (a certified copy stamped by the enterprise), and a confirmation from the State Treasury about the corporate income tax paid.

Upon receipt of all the above documents, within 15 working days, the Tax Bureau will review and determine the corporate income tax paid by the enterprise and calculate the amount of corporate income tax to be refunded to the foreign investor, then submit the file to the Ministry of Finance (General Department of Taxation). Within 15 working days from receiving the complete file, the Ministry of Finance will examine and issue a decision to refund the tax to the foreign investor.

* Profits that foreign investors have transferred abroad or used for other investment purposes, now recovered for reinvestment, shall not be eligible for a refund of corporate income tax for reinvestment.

* If a foreign investor has been refunded corporate income tax but does not proceed with reinvestment, the foreign investor must repay the state budget the portion of the corporate income tax refunded, including interest calculated from the date the investor received the refunded tax amount until the date the investor repays the entire refunded tax amount to the state budget (calculated at the bank deposit interest rate) and shall be subject to legal penalties.

II/ WITHHOLDING TAX ON PROFIT REMITTANCE ABROAD

1. Taxpayers:

Profits obtained by economic organizations or individuals from participating in capital investment in any form prescribed in the Law on Foreign Investment in Vietnam (including the tax refunds for reinvested income and income from the transfer of capital) when remitted out of Vietnam or retained outside Vietnam are subject to withholding tax on profit remittance abroad.

In cases where the foreign party uses distributed profits to settle debts for the parent company or uses distributed profits for expenditures of the parent company's representative office in Vietnam, these actions are considered as remitting profits abroad and the foreign party must pay withholding tax on profit remittance abroad.

Economic organizations or individuals with profits remitted abroad must declare and pay withholding tax on profit remittance abroad.

2. Determination of the Amount of Tax Due:

The amount of withholding tax on profit remittance abroad due shall be determined by multiplying the amount of profits remitted abroad or deemed to be remitted abroad, or the amount of profits retained outside Vietnam by the withholding tax rate specified in the Investment License. In cases where the Investment License does not specify, the withholding tax rate on profit remittance abroad shall be implemented in accordance with Article 50 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government.

For cases where Investment Licenses were issued before August 1, 2000, with a higher profit tax rate than that stipulated in Article 50 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government, investors or businesses shall submit an application to the investment license issuing authority to adjust their investment licenses. While awaiting formal adjustment, if investors transfer profits abroad, they must submit an application to the local tax office detailing the conditions for enjoying the new tax rate and declare and pay taxes according to the new tax rate. The new profit tax rate will be applied to profits transferred out of the country from July 1, 2000 onwards.

3. Tax payment procedures:

- Profits transferred abroad are taxed on a per-transfer basis. In the case where investors retain profits outside Vietnam or remit them to parent companies for expenditures at the parent company's offices in Vietnam, monthly declarations and payments are required.

- Before transferring profits abroad or no later than five months after using profits for purposes considered as transferring profits abroad, retaining profits outside Vietnam’s territory, economic organizations or foreign individuals must file a tax declaration with the tax authority directly managing the enterprise in which they have invested (as per Appendix 3 attached to this Circular), and simultaneously deposit the declared tax amount into the State Treasury.

- Within five working days of receiving the tax declaration, the tax authority will review it. If errors are found in the tax declaration, the tax authority will issue a notice of the tax amount due to the foreign investor. The foreign investor is responsible for supplementing the unpaid tax amount into the State Treasury according to the tax authority's notice. In cases where the tax declaration is not submitted within the prescribed time limit, the tax authority has the right to estimate the provisional tax amount, issue a tax notice, and impose penalties for late declaration.

The State Treasury will return one copy of the tax payment receipt for profit transfers to the taxpayer for the purpose of transferring funds abroad.

- Annually, no later than 90 days after the end of the fiscal year, foreign investors must report to the tax authority directly managing the enterprise about the distributed profits, the use of profits, and the tax paid on profit transfers abroad for previous years. This report is submitted along with the annual corporate income tax settlement report of the enterprise.

- Where the annual corporate income tax declaration submitted to the tax authority (as provided in point 5b, Section I, Part II of this Circular) forecasts that the enterprise will have profits and the investors agree to distribute profits quarterly or semi-annually (with a written resolution of the Board of Directors of the enterprise), foreign investors may temporarily transfer profits abroad in installments during the year, based on the profits generated in the fiscal year and must declare and pay tax on each profit transfer. The maximum temporary transfer of profits abroad cannot exceed 70% of the distributable profits of foreign investors, determined based on the quarterly, semi-annual, and annual financial reports of the enterprise.

The enterprise and foreign investors must submit a written request to the tax authority directly managing the tax collection, requesting permission to temporarily transfer profits, accompanied by the provisional annual corporate income tax declaration form (to be submitted within 25 days from the end of the previous fiscal year). The content of the request includes:

i. Forecasted profits for the fiscal year, specifically for each quarter and half-year period;

ii. Forecasted profits to be distributed to the investors;

iii. Forecasted profits that foreign investors propose to temporarily transfer in installments (not exceeding 70% of the temporarily distributable profits);

iv. The Board of Directors' resolution on the profit distribution plan for the fiscal year (attached to the request).

Based on the above request from the enterprise and foreign investors, the tax authority will conduct a review and guide foreign investors in temporarily transferring profits abroad and collecting taxes in accordance with current tax laws and this Circular.

- In cases where foreign investors have paid tax on profit transfers abroad but have not actually transferred profits abroad or have not used them for purposes considered as transferring profits abroad, the paid tax will be refunded. The refund application package includes:

i- A request for refund of the paid tax. The application must clearly state the reasons for requesting a refund; the name, address, and bank account number of the investor requesting the refund.

ii- A list of the paid tax amounts, accompanied by copies of the tax payment receipts and confirmation from the State Treasury regarding the tax payment (specifying the tax amount paid under the budget chapter, type, item, and sub-item as per the budget classification).

iii- Confirmation from the bank managing the foreign investor's deposit account that the profits declared for tax on profit transfers abroad have not been transferred abroad.

The refund application is submitted to the local tax authority directly managing the tax collection for the enterprise. After reviewing and confirming that the application is complete and valid, the tax authority will forward the refund application to the Ministry of Finance (General Department of Taxation) for the Ministry of Finance to consider and issue a refund decision for the investor.

Within 15 days of receiving a complete and valid application, the Ministry of Finance will issue a refund decision for the investor.

III. EXPORT TAXES, IMPORT TAXES

All goods that foreign-invested enterprises and joint ventures are permitted to export and import through the Vietnam border, including goods from the Vietnamese market sold to enterprises within export processing zones and goods from enterprises within export processing zones sold into the Vietnamese market, are subject to export tax and import tax and must be paid according to the provisions of the Law on Export Tax and Import Tax.

1. Exemption and reduction of export tax and import tax:

a) Export tax:

Raw materials and semi-finished products sold by foreign-invested enterprises and joint ventures to export processing zone enterprises for production and processing of exported goods are exempt from export tax as stipulated in Article 8 of Decision No. 53/1999/QĐ-TTg dated March 26, 1999 of the Government.

Enterprises selling goods to export processing zone enterprises only need to declare the export goods form to the Customs of the Export Processing Zone when selling goods to export processing zone enterprises. The customs authority stamps "tax-exempt goods" on the export goods declaration after inspection.

b) Import tax:

- In addition to the exemptions and reductions provided for in the Law on Export Tax and Import Tax, foreign-invested enterprises and joint ventures are also exempted or reduced taxes according to Clause 57 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government.

Based on the Investment License, economic and technical justification, technical design of each project, and the list of domestically produced construction materials issued by the Ministry of Planning and Investment, the Ministry of Trade or authorized agency reviews the list of tax-exempt imported goods for each enterprise.

Based on the approved list of tax-exempt imported goods, the Customs Departments of provinces and centrally-administered cities monitor the imports of foreign-invested enterprises. Quarterly, the Customs Departments must compile reports to the Ministry of Finance and General Department of Customs on the value and quantity of major imported and exported goods of foreign-invested enterprises.

Specifically, the procedures for exemption of import tax on raw materials for production in projects manufacturing mechanical parts, electrical components, electronics, projects invested in areas with special difficulties in socio-economic conditions, and projects included in the list of particularly encouraged investment projects shall be implemented according to Circular No. 40/2000/TT-BTC dated May 15, 2000 and Circular No. 117/2000/TT-BTC dated December 21, 2000 of the Ministry of Finance.

- Enterprises producing goods for export may temporarily defer payment of import tax on raw materials and supplies imported for the production of exported goods for a period of nine months (rounded to 275 calendar days) from the date the enterprise receives the official tax notification from the customs authority regarding the amount of tax due. For certain products due to production requirements or production cycles, the deferral period may exceed nine months.

Conditions and procedures for temporary deferral of import tax payment, determination of a longer deferral period than nine months for raw materials and supplies imported for the production of exported goods shall be carried out according to the guidance in Circular No. 172/1998/TT-BTC dated December 22, 1998 of the Ministry of Finance guiding the implementation of the Law on Export Tax and Import Tax.

- In cases where an enterprise sells its own products to other enterprises for direct production of export products, it is exempt from import tax on raw materials imported corresponding to these products according to Article 58 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government. The tax exemption procedure is as follows:

When importing materials and raw materials for production of products sold to other enterprises for export production, the enterprise must pay the full import tax as prescribed. After the export production enterprise has exported the product, the raw material importing enterprise will process a request to the Ministry of Finance for refund of the import tax on raw materials imported for the production of products sold to the export production enterprise. The refund request procedure includes:

- A letter from the enterprise requesting a tax refund, which includes a detailed calculation of the amount of import tax on raw materials to be refunded;

- The quota of material and raw material consumption for production;

- The customs declaration for import and receipt of import tax for materials and raw materials used for production;

- The sales contract between the enterprise and another enterprise for the sale of products used for export production;

- The sales invoice from the enterprise to the other enterprise engaged in export production;

- The customs declaration for export of the export production enterprise confirmed by the customs authority that the goods have been actually exported (certified copy);

- An inventory report from the export production enterprise detailing the quantity and value of semi-finished products produced and used for exported goods. The director of the export production enterprise is responsible for this inventory report.

Based on the above documents, the Ministry of Finance will issue a decision to refund the import tax to the raw material importing enterprise.

2. Declaration and recovery of export and import taxes:

- In cases where export processing zone enterprises purchase goods, materials, and raw materials from the domestic market without using them for production and processing but exporting them abroad, they must pay export tax according to the current Law on Export Tax and Import Tax.

- Goods imported by foreign-invested enterprises or joint ventures that have been exempted from import tax under the aforementioned circumstances, if used for purposes other than those for which the import tax was exempted, or resold in the Vietnamese market, must be approved by the Ministry of Trade and must repay the import tax that was exempted.

For goods subject to special consumption tax under the Special Consumption Tax Law on October 28, 1995, the Special Consumption Tax Law No. 05/1998/QH10 on May 20, 1998, which were imported before these laws came into effect and were exempted from import tax, but when used for purposes other than those originally intended, or resold in the Vietnamese market at the time the Special Consumption Tax Law became effective, in addition to having to pay back the import tax (at the current rate at the time of payment), foreign-invested enterprises or foreign joint venture parties must also pay the special consumption tax on goods subject to such tax.

- Within two working days from the date of using the goods for purposes other than those for which they were exempted from import tax, or from the date of reselling the goods, foreign-invested enterprises or joint venture parties shall be responsible for declaring to the customs authority of the province or city where the enterprise's main office is located, or to the customs authority where the goods are resold, or to the customs authority where the enterprise declared the import of the goods (as per Appendix No. 4 issued together with this Circular). Failure to declare within the above period will result in penalties for tax evasion according to the Export Tax Law, Import Tax Law, and Special Consumption Tax Law.

- For enterprises producing spare parts and components in the machinery, electrical, and electronics industries, investment projects in areas with particularly difficult socio-economic conditions, and special encouragement investment projects, they must declare and settle the import tax exemption for raw materials used in production according to Circular No. 40/2000/TT-BTC dated May 15, 2000, issued by the Ministry of Finance.

declare and settle the import tax exemption for raw materials used in production according to Circular No. 40/2000/TT-BTC dated May 15, 2000, issued by the Ministry of Finance.

For enterprises encouraged for special investment according to the export standard of over 80% of products and currently exempted from import tax on raw materials for five years under Article 57 of Decree No. 24/2000/NĐ-CP, if the enterprise produces various types of products, only those products that actually achieve an export ratio of over 80% can enjoy the aforementioned import tax exemption. For products that do not meet the export ratio of over 80%, the enterprise is only exempted from import tax on raw materials for the actual exported portion, and the enterprise must pay back the temporarily exempted import tax for the portion consumed in Vietnam.

For enterprises investing in areas with particularly difficult socio-economic conditions but have production facilities in other regions not included in the list of areas with particularly difficult socio-economic conditions, they are only exempted from import tax on raw materials under Article 57 of Decree No. 24/2000/NĐ-CP for the amount of raw materials imported and used for production at the production facility located in an area with particularly difficult socio-economic conditions.

During the process of managing tax collection from enterprises, the tax administration agency has the responsibility to monitor the use of imported and exported goods that are exempt from tax. When discovering cases of reselling goods that were exempt from tax, in addition to collecting value-added tax according to the Value-Added Tax Law, the Director of the Provincial or City Tax Bureau may issue a decision to collect back the import tax and impose penalties according to the provisions of the Export Tax Law and Import Tax Law.

IV. TAX ON INCOME FROM TRANSFER OF CAPITAL

Foreign investors transferring their capital contribution in a joint venture enterprise, wholly foreign-owned enterprise, or cooperation agreement shall pay tax on income from the transfer of capital according to the provisions of this Circular.

1. Corporate Income Tax:

Income from the transfer of capital is subject to corporate income tax under the Law on Foreign Investment in Vietnam.

1.1. Taxable income:

Where:

+ The transfer price is determined as the total actual value received by the transferring party according to the transfer contract. In cases where the transfer contract does not specify a payment price or the tax authority has grounds to believe that the payment price was not determined based on market prices, the tax authority has the right to review and set the transaction price based on market prices or prices that could be sold to third parties and similar transfer contracts.

+ The initial value of the transferred capital is determined based on accounting records and documents regarding the investor's capital contribution at the time of capital transfer, recognized by the board of directors of the joint venture enterprise, or the audit results of the auditing agency for a wholly foreign-owned enterprise, or recognized by the parties involved in the joint venture in accordance with current Vietnamese law.

If the investors subsequently transfer their capital contributions again, the initial value of the capital transferred each subsequent time is determined by adding the transfer price of the immediately preceding transfer contract to the actual additional capital contribution (if any) determined according to the principles stated herein.

+ Transfer costs include actual expenses directly related to the transfer, supported by original documents recognized by the tax authority. In cases where transfer costs arise abroad, the original documents must be certified by a notary or independent auditor in the country where the costs occurred.

Transfer costs include: costs for necessary legal procedures for the transfer; fees and charges required for the transfer procedures; transaction, negotiation, and contract signing costs for the transfer contract, and other costs supported by evidence.

1.2. Corporate income tax rate:

The corporate income tax rate on income from the transfer of capital is 25%.

2. Tax on Repatriation of Profits:

Foreign investors who have profits from capital transfer, after paying income tax on capital transfer as stipulated in point 1 above, when transferring such profits out of the country or retaining them abroad, must pay the profit repatriation tax. The rate of the profit repatriation tax shall be as specified in the Investment License.

In cases where foreign investors have not fully contributed the statutory capital as per the Investment License but cease to invest and transfer capital, and earn profits from such capital transfer, when transferring the profits obtained from the capital transfer out of the country, they must determine the rate of the profit repatriation tax based on the actual statutory capital contribution at the time of transfer, in accordance with Article 50 of Decree No. 24/2000/NĐ-CP.

3.1. Tax declarants:

3.1. Declaration and payment of corporate income tax on income from capital transfer:

The transferee is responsible for withholding the tax payable by the transferor and remitting it to the State Budget.

Within no more than five working days from the date the competent authority approves the capital transfer, the transferee must submit a declaration form regarding the capital transfer to the local tax authority managing the enterprise (pursuant to Appendix No. 5 issued together with this Circular), along with the transfer agreement, the decision approving the capital transfer by the competent authority, proof of capital contribution, and original receipts of expenses; simultaneously, they must deposit the full amount of tax due to the National Treasury and send a copy of the tax payment receipt to the authority that approved the capital transfer.

If discrepancies in the declaration or calculation of the tax payable are discovered within five working days from receiving the declaration, the tax authority must notify the taxpayer of the tax payable or request the taxpayer to provide necessary documents to accurately determine the tax payable.

3.2. Declaration and payment of profit repatriation tax: in accordance with the guidance provided in point 3, Section II, Part of this document.

V. OTHER TAXES AND FINANCIAL OBLIGATIONS

Other taxes and financial obligations such as value-added tax, special consumption tax, business registration tax, natural resource tax, land, water, and sea rental fees... applicable to enterprises with foreign investment and foreign joint venture parties shall be implemented in accordance with current laws and regulations.

Part III:

SETTLEMENT OF TAXES AND INSPECTION OF TAX PAYMENT SITUATION AT ENTERPRISES

I. ANNUAL TAX SETTLEMENT

At the end of each fiscal year, enterprises must prepare a tax settlement report to submit to the tax authority. Annual tax settlement shall be conducted according to the provisions set forth below:

1/ Not later than ninety days from the end of the fiscal year, the enterprise must submit a report on production and business operations, an audited accounting report by an independent auditing organization permitted to operate in Vietnam, a declaration form for annual corporate income tax settlement (pursuant to Appendix No. 6 issued together with this Circular) and a report on the settlement of taxes payable during the year (pursuant to Appendix No. 7 issued together with this Circular) to the provincial tax office where the enterprise's headquarters is located.

Within ten working days from the deadline for submitting the annual tax settlement report, enterprises must pay any outstanding tax to the State Budget. If payment is not made within ten days, in addition to paying the full amount of outstanding tax, enterprises will also be subject to late payment penalties as prescribed.

Enterprises are not allowed to offset excess payments of one type of tax against shortfalls of another type of tax when preparing the annual tax settlement.

2/ Based on the production and business reports and the financial settlement reports of the enterprise, the provincial tax offices calculate again the taxes the enterprise must pay for the fiscal year, and compare these calculations with periodic tax declarations throughout the year to verify the accuracy of the tax declarations and settlement reports. If the enterprise's tax settlement report is inaccurate, the tax office will conduct an inspection of the enterprise's tax payment situation.

II. INSPECTION OF TAX PAYMENT SITUATION AT ENTERPRISES

During the process of tax administration for enterprises, the provincial tax office is responsible for organizing regular or spot inspections at enterprises as needed. The tax office must organize an inspection once a year for the following situations:

- Enterprises newly operating and continuously incurring losses for three years or more.

- Key revenue-generating enterprises.

- Enterprises whose tax settlement reports are inaccurate, unclear, or incomplete in terms of indicators required for tax calculation.

- Enterprises that fail to submit tax settlement reports or submit them late.

- Enterprises experiencing significant financial fluctuations in the tax year compared to previous years.

Prior to inspecting enterprises with foreign investment or foreign joint venture parties, the tax authority must issue an inspection decision specifying the scope and duration of the inspection. This decision must be sent to the enterprise with foreign investment or the representative of the foreign joint venture party at least three working days before the start of the inspection. If additional inspection items need to be added or the inspection period extended, the tax authority must issue a supplementary inspection decision.

Upon completion of the inspection, the tax authority must prepare an inspection record signed by the tax officer in charge of the inspection team and send it to the enterprise. The tax authority is responsible for sending this inspection record and a copy of the enterprise's financial report to the Ministry of Finance (General Department of Taxation).

The authorized representative of the enterprise is responsible for signing the inspection report. In cases where there are contents that do not agree with the conclusions of the tax authority stated in the inspection report, the enterprise has the right to express its opinion and record it in the inspection report to appeal to the direct tax collection management agency or appeal to the General Department of Taxation and the Ministry of Finance. During the period awaiting resolution of the appeal, the enterprise or the foreign joint venture partner must strictly comply with the conclusions already issued by the tax authority.

III. SETTLEMENT OF TAXES WHEN THE ENTERPRISE REACHES THE END OF ITS OPERATING PERIOD OR DISSOLUTION

When the parties to the joint venture terminate the contract or when a foreign-invested enterprise reaches the end of its operating period or dissolves according to the Law on Foreign Investment in Vietnam, within 45 days from the date the investment license issuing agency issues the dissolution decision, the foreign-invested enterprise must submit a final tax settlement report to the tax authority. The tax authority needs to immediately carry out the following tasks:

1. Conducting the inspection work on the final tax settlement report.

2. Determining the rights and responsibilities of each party in foreign-invested enterprises and business cooperation contracts. The main content of this work is:

- Determining the amount of capital invested by the investors currently held in the enterprise's account, including monetary capital, fixed assets, materials, and goods. Confirming for foreign investors the amount of investment capital that can be repatriated abroad.

- For cases where the foreign party commits to无偿转让资产给越南国家，但因非不可抗力原因提前终止合同时，若外国方未按承诺移交资产，则需退还因其无偿转让承诺而获得的所有优惠。税务机关根据企业的实际情况，并参照第24/2000/NĐ-CP号议定的第46、47、48和49条的规定，确定企业应缴纳的税款，并按照规定向清算组和投资许可证颁发机构通报。

- Determining the profits or losses and the rights and responsibilities of the investors related to such profits or losses. Confirming the income that foreign investors may repatriate abroad. The tax on such repatriated income will be immediately collected for the state budget, except in cases where foreign investors present documents proving that such income was not repatriated due to one of the following reasons:

+ Used for reinvestment in Vietnam as decided by the investment license issuing agency.

+ Used for personal expenses in Vietnam outside other declared incomes.

+ Used for other purposes in Vietnam.

IV. METHODS FOR DETERMINING MARKET PRICES IN RELATIONSHIPS BETWEEN ASSOCIATED ENTERPRISES

To ensure the correct determination of tax obligations of enterprises, during regular inspections or inspections of final tax settlement reports of enterprises, if unreasonable issues regarding prices or profit margins in transactions between associated enterprises are discovered, the tax authority shall apply the following measures to determine the taxable income of enterprises:

1. Market price comparison method:

The tax authority may use market prices for products, goods, and services to set prices for internal exchanges and sales between associated enterprises. Conditions for applying the market price comparison method:

(i) There should be no differences between the two business operations being compared that affect the transaction price, such as quality of goods, brand, delivery conditions, payment terms.

(ii) If there are differences in comparing the two business operations, calculation methods can be used to eliminate factors affecting the transaction price.

Example: An overseas lubricant company sells 1,200 liters of lubricant to Joint Venture Enterprise A in Vietnam (Enterprise A is a joint venture between the overseas lubricant company and a Vietnamese company) at $1,500, payable six months later. At the same time, the overseas lubricant company sells 1,000 liters of lubricant to independent Enterprise B in Vietnam at $1,000 with immediate payment terms. Assuming the commercial credit interest rate for a six-month term on the market is 5%. When determining the income of Joint Venture Enterprise A, the Vietnamese tax authority may re-determine the price of lubricant in the contract based on the comparative price of Enterprise B as follows:

Price per liter of lubricant under deferred payment terms for six months:

The determined price for the contract between Joint Venture Enterprise A and the overseas lubricant company is: 1,200 liters of lubricant x $1.05/liter = $1,260.

2. Method of using selling price to determine purchase price:

In cases where a trading unit purchases goods from an overseas associated enterprise and cannot determine the actual purchase price on the free market, the tax authority may use the selling price of the trading unit to determine the purchase price according to the following formula:

The average gross profit margin of the trading industry can be determined based on the gross profit margin data of other items purchased from independent enterprises and sold to independent enterprises by the unit or the gross profit margin of other independent trading units. The gross profit margin is calculated according to the following formula:

(Based on the enterprise's business results report)

The method of using selling price to determine purchase price will not be applied in the following cases:

- Goods or products have been processed, manufactured, assembled, transformed, or increased in value before sale;

- Goods or products have been branded with trademarks or trade names with high market value before sale.

The period between the time of purchase and the time of sale exceeds one year, during which there is significant price fluctuation in the market.

Example: Enterprise A, a wholly foreign-owned enterprise invested by Company B, a foreign alcohol company, operates exclusively in the Vietnamese market for Company B's products. In 1999, Enterprise A imported 10,000 liters of alcohol from Company B, paid import duties and special consumption taxes totaling 75,000 USD, and sold all the alcohol with a revenue of 185,000 USD. At the end of 1999, the tax authority determined the purchase price of Enterprise A's alcohol products as follows:

Net Revenue = Sales Revenue - Import Duties.

= 185,000 USD - 75,000 USD = 110,000 USD

Assuming the average gross profit margin in the alcohol business is 10%

Purchase Price = 11 USD/liter - 11 USD/liter x 10% = 9.9 USD/liter.

3. Method of using total cost to determine taxable income.

In the case where a production unit sells semi-finished products entirely to a related enterprise without selling any product on the market to determine a comparable price, the tax authority may base on the accounting records of the unit's costs to determine the income of that unit according to the following formula:

 

The average net profit margin of the industry can be determined based on the net profit margin data of other independent manufacturing enterprises.

The net profit margin is determined according to the following formula:

(Data based on the business results report of enterprises).

Example: Enterprise A, a joint venture between a foreign company B and a Vietnamese company, engages in garment processing and transfers all products to company B abroad. Assuming in 1999, Enterprise A transferred 10,000 sets of clothing to company B at a fixed price of 10 USD/set. The accounting records of Enterprise A in 1999 show the following figures:

Enterprise A and company B abroad are related enterprises, the tax authority may prescribe the taxable income as follows:

Assuming the tax authority determines the average net profit margin of the garment manufacturing industry to be 10%.

Prescribed Income = 98,000 USD x 10%.

In cases where unreasonable prices are discovered but conditions for applying the above measures are not met, the tax authority must notify the enterprise to present relevant documents and require the enterprise to provide a written assurance of the legality of the provided documents.

PART FOUR:

TAX PAYMENT CURRENCY AND OTHER GUIDELINES

I. TAX PAYMENT CURRENCY

Enterprises with foreign investment capital and foreign joint ventures pay taxes in Vietnamese Dong.

For enterprises permitted by the Ministry of Finance to use foreign currency in accounting, when declaring taxes, they must convert to Vietnamese Dong at the declaration time.

The conversion from foreign currency to Vietnamese Dong or vice versa is carried out according to the actual average exchange rate on the inter-bank foreign exchange market published daily in the People's Army Newspaper by the State Bank of Vietnam. In cases where the People's Army Newspaper does not publish or publishes but does not announce the exchange rate, the conversion rate shall apply the rate of the previous day.

Revenue from state budget from enterprises with foreign investment capital is recorded in the state budget ledger according to current regulations.

II. RESPONSIBILITIES OF ENTERPRISES

1. Enterprises with foreign investment capital must comply with the procedures for registering tax identification number and tax registration with the directly managing tax authority according to current regulations.

2. Within no more than five days from the date of change in business items or change in the location of the headquarters, enterprises and dependent business units of the enterprise or foreign joint ventures must complete tax registration procedures with the provincial or municipal tax authority where the headquarters is located (according to the form issued together with Circular No. 79/1998/TT-BTC dated June 12, 1998 of the Ministry of Finance).

3. During the course of production and business operations, strictly comply with regulations on tax declaration.

4. Present all accounting books, accounting vouchers, and necessary documents related to tax calculation and settlement when requested by the tax authority.

5. Pay taxes fully and on time as prescribed.

6. When there is a decision to dissolve or terminate the project's operation period, notify the tax authority and submit the final settlement report on time.

III. RESPONSIBILITIES AND LIMITATIONS OF THE TAX AUTHORITY

1. Guide taxpayers to complete tax registration and declaration according to established regulations.

2. Inspect tax declarations, accounting books, accounting vouchers, and necessary documents for tax calculation, and have the right to request taxpayers to clarify issues related to tax calculation.

3. Calculate taxes and notify the taxpayer of the amount due. Have the right to prescribe the amount due in cases where the taxpayer fails to declare voluntarily within the prescribed time limit, declares incompletely or inaccurately, or fails to provide sufficient and accurate information related to tax calculation, or in cases where revenues are affected by abnormal financial and commercial relationships between related enterprises.

4. Prepare records and handle tax violations within the scope prescribed by law.

5. Be responsible for strictly enforcing tax laws, ensuring accuracy, objectivity, and fairness.

6. Inspect the implementation of accounting systems by enterprises and inspect the implementation of registered accounting systems.

7. Confirm tax payments made by foreign investors upon request by foreign investors.

IV. VIOLATIONS AND DISPUTE RESOLUTION

1. Tax law violations shall be penalized as follows:

- Failure to comply with tax registration regulations as stipulated in Point 1, Section II, Part IV of this Circular shall be subject to penalties as prescribed in Decree No. 22/CP dated April 17, 1996 of the Government on administrative penalties in the field of taxation.

- Failure to comply with tax declaration and payment regulations shall be subject to fines as prescribed in the Ordinance on Handling Administrative Violations, Decree No. 22/CP dated April 17, 1996 of the Government, and current guiding documents.

- False declaration or fraud involving tax amounts shall be subject to a fine up to five times the amount of false declared or fraudulent tax.

- Late payment of taxes beyond the prescribed deadline shall result in a daily penalty of 0.1% (one thousandth) of the overdue tax amount.

2. Authority for handling violations and disputes:

- The authority to handle tax violations lies with the tax agency directly responsible for tax collection.

- Taxpayer disputes regarding taxes shall be examined and resolved by the tax agency directly collecting the taxes. If the party disagrees with the resolution of the dispute, they have the right to appeal to a higher-level tax agency, the Ministry of Finance, or bring a lawsuit to court in accordance with the provisions of the Law.

In cases where appeals are made to higher-level tax agencies or the Ministry of Finance, the decision of the Minister of Finance is final. While awaiting resolution of the appeal by the higher-level tax agency or the Ministry of Finance, the appellant must strictly adhere to the resolution of the lower-level tax agency or the General Department of Taxation.

V. IMPLEMENTATION

Provincial and municipal tax bureaus are responsible for disseminating and guiding foreign-invested enterprises and foreign joint venture parties to strictly implement the provisions of this Circular.

The tax bureau is responsible for assigning a dedicated staff force to manage the collection of various types of taxes from foreign-invested enterprises and foreign joint venture parties. This specialized management unit is required to report monthly, quarterly, and annually to the Ministry of Finance (General Department of Taxation) on tax collection situations and other reports serving the general management requirements for foreign-invested enterprises and foreign joint venture parties operating within their jurisdiction.

This Circular takes effect fifteen days from the date of signature and replaces Circular No. 63/1998/TT-BTC dated May 13, 1998, and Circular No. 89/1999/TT-BTC dated July 16, 1999, issued by the Ministry of Finance./.