Circular No. 140/2012/TT-BTC guiding the Government's Decree No. 60/2012/NĐ-CP dated July 30, 2012 detailing the implementation of Resolution No. 29/2012/QH13 of the National Assembly on issuing certain tax policies to address difficulties for organizations and individuals.

CIRCULAR

Guidelines for Decree No. 60/2012/ND-CP dated July 30, 2012 of the Government detailing the implementation of Resolution No. 29/2012/QH13 of the National Assembly on issuing certain tax policies to address difficulties for organizations and individuals

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Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006;

Pursuant to the Law on Personal Income Tax No. 04/2007/QH12 dated November 21, 2007;

Pursuant to the Law on Value Added Tax No. 13/2008/QH12 dated June 3, 2008;

Pursuant to the Corporate Income Tax Law No. 14/2008/QH12 dated June 3, 2008;

Pursuant to Resolution No. 29/2012/QH13 dated June 21, 2012 of the National Assembly on issuing certain tax policies to address difficulties for organizations and individuals;

Pursuant to Decree No. 60/2012/ND-CP dated July 30, 2012 of the Government detailing the implementation of Resolution No. 29/2012/QH13 of the National Assembly on issuing certain tax policies to address difficulties for organizations and individuals;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Considering the proposal of the Director General of the State Tax Administration;

The Minister of Finance issues this Circular guiding Decree No. 60/2012/ND-CP dated July 30, 2012 of the Government detailing the implementation of Resolution No. 29/2012/QH13 of the National Assembly on issuing certain tax policies to address difficulties for organizations and individuals.

PART I
ENTERPRISE INCOME TAX

Article 1. Reduction of Corporate Income Tax

1. Reduce by 30% the Corporate Income Tax payable in 2012 for:

a) Small and medium enterprises, including cooperatives (hereinafter referred to collectively as small and medium enterprises).

b) Enterprises employing many workers in production, processing, manufacturing sectors: agricultural products, forestry products, aquatic products, textiles, footwear, electronic components; construction of economic and social infrastructure projects (hereinafter referred to collectively as enterprises employing many workers).

2. Small and medium enterprises as defined at point a Clause 1 of this Article are enterprises meeting the criteria regarding capital or labor as stipulated in Clause 1 Article 3 of Decree No. 56/2009/NĐ-CP dated June 30, 2009 of the Government on assistance for the development of small and medium enterprises.

a) The capital basis for determining small and medium enterprises eligible for Corporate Income Tax reduction in 2012 is the total capital reflected in the Balance Sheet prepared on December 31, 2011 of the enterprise. In cases where the enterprise has a fiscal year different from the calendar year, the capital basis for determining small and medium enterprises eligible for Corporate Income Tax reduction in 2012 is the total capital reflected in the Balance Sheet prepared on the last day of the fiscal year.

For newly established small and medium enterprises from January 1, 2012, the capital basis for determining small and medium enterprises eligible for Corporate Income Tax reduction in 2012 is the registered capital recorded in the Enterprise Registration Certificate or the first Investment Certificate.

b) The average annual number of employees (including employees of branches and subsidiaries) serving as the basis for determining enterprises eligible for tax reduction under point a Clause 1 of this Article is the total number of employees regularly employed by the enterprise in 2011, excluding short-term contracts under three months.

The average annual number of regular employees is determined according to the guidelines set out in Circular No. 40/2009/TT-BLDTBXH dated December 3, 2009 of the Ministry of Labor, Invalids and Social Affairs guiding the calculation of the number of regular employees as prescribed in Decree No. 108/2006/NĐ-CP dated September 22, 2006 of the Government detailing and guiding the implementation of certain provisions of the Investment Law.

For newly established enterprises from January 1, 2012, the total number of employees, excluding short-term contracts under three months, is the average number of regular employees from the date of establishment to December 31, 2012.

c) For enterprises operating in multiple fields, the determination of small and medium enterprises based on the main business activity recorded in the Enterprise Registration Certificate of the enterprise shall be based on the main business activity. In cases where the main business activity cannot be determined, one of the following criteria shall be used to determine the main business activity of the enterprise:

- The highest number of employees working in each business activity of the enterprise in 2011; or criterion

- The highest revenue generated in each business activity of the enterprise in 2011.

If the above criteria still fail to determine the main business activity of the enterprise to identify small and medium enterprises, the criteria with the lowest capital or number of employees among the actual business activities in 2011 as stipulated in Clause 1 Article 3 of Decree No. 56/2009/NĐ-CP shall be applied.

d) In cases where the enterprise is organized in a parent company - subsidiary model, if the parent company is not a small and medium enterprise holding more than 50% of the subsidiary's equity, and the subsidiary meets the criteria regarding capital or labor as stipulated in Clause 1 Article 3 of Decree No. 56/2009/NĐ-CP and does not operate in industries ineligible for tax reduction, it also qualifies for a 30% reduction in Corporate Income Tax payable in 2012.

3. Enterprises employing many workers (including workers of branches and subsidiaries) in the fields eligible for tax reduction as guided in point b Clause 1 of this Article include:

a) Enterprises with an average annual number of regular employees in 2012 exceeding 300 people, excluding short-term contracts under three months for enterprises established before January 1, 2012.

The average annual number of regular employees is determined according to the guidelines set out in Circular No. 40/2009/TT-BLDTBXH dated December 3, 2009 of the Ministry of Labor, Invalids and Social Affairs guiding the calculation of the number of regular employees as prescribed in Decree No. 108/2006/NĐ-CP dated September 22, 2006 of the Government detailing and guiding the implementation of certain provisions of the Investment Law.

For newly established enterprises from January 1, 2012, the total number of employees, excluding short-term contracts under three months, is the average number of regular employees exceeding 300 people from the date of establishment to December 31, 2012.

In the case where a business is organized under the parent company-subcompany model, the number of employees serving as the basis for determining the parent company's eligibility for tax reduction shall not include the number of employees of the subcompanies, and vice versa.

b) The amount of corporate income tax to be reduced is the tax calculated on the income from production, processing, and manufacturing activities: agricultural products, forestry products, aquatic products, textiles, footwear (including leather shoes and various types of leather sandals), electronic components, and construction of economic and social infrastructure projects.

c) Production, processing, and manufacturing activities: agricultural products, forestry products, aquatic products, textiles, footwear (including leather shoes and various types of leather sandals), electronic components are determined based on the provisions of the System of Economic Sectors of Vietnam issued pursuant to Decision No. 10/2007/QD-TTg dated January 23, 2007 of the Government.

d) Construction activities of economic and social infrastructure projects include construction, installation: waterworks, power plants, transmission and distribution systems; water supply and drainage systems; roads, railways; airports, seaports, river ports; bus stations, railway stations; construction of schools, hospitals, cultural centers, cinemas, artistic performance venues, sports training and competition facilities; wastewater treatment systems, solid waste disposal systems; telecommunications infrastructure projects, irrigation projects serving agriculture, forestry, and fisheries.

4. The provisions on reducing corporate income tax as stipulated in point a Clause 1 of this Article shall not apply to the following entities:

a) Small and medium-sized enterprises operating in the following sectors: lottery; real estate; securities; finance; banking; insurance; production of goods and services subject to special consumption tax.

In the case where small and medium-sized enterprises engage in production and business activities in multiple sectors, the amount of corporate income tax to be reduced shall not include the tax calculated on the income derived from lottery, real estate, securities, finance, banking, insurance, production of goods and services subject to special consumption tax.

b) Enterprises classified as Category I according to Circular Joint Circular No. 23/2005/TTLT-BLDTBXH-BTC dated August 31, 2005 of the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance guiding the classification and salary levels for full-time members of the Board of Directors, General Director, Director, Deputy General Director, Deputy Director, Chief Accountant of state-owned companies.

c) Special-class enterprises as defined in Decision No. 185/TTg dated March 28, 1996 of the Prime Minister regarding special-class state-owned enterprises. and Decision No. 186/TTg dated March 28, 1996 of the Prime Minister regarding the list of special-class state-owned enterprises.

d) Economic organizations that are public service units.

Article 2. Exemption from Corporate Income Tax

Exempt from corporate income tax payable in 2012 on the income from providing meal services to workers of businesses and organizations engaged in providing meal services.

Article 3. Conditions for Applying Tax Reduction and Exemption

1. Businesses and organizations eligible for tax reduction and exemption as provided in Articles 1 and 2 of this Circular must be established and operate in accordance with Vietnamese law; implement accounting records, invoices, and certificates in compliance with legal regulations and declare taxes accordingly.

2. For businesses currently enjoying preferential corporate income tax benefits under the Law on Corporate Income Tax or other legal documents governing corporate income tax, the amount of corporate income tax to be reduced as stipulated in Article 1 of this Circular shall be calculated based on the remaining corporate income tax after deducting the amount of corporate income tax that the business is currently enjoying preferential benefits under the regulations.

3. Businesses and organizations providing meal services to workers who are exempted from corporate income tax as provided in Article 2 of this Circular must commit to maintaining stable meal service prices in 2012 at no higher than the December 2011 price level. If the competent authority discovers through inspection or audit that the business or organization does not comply with the price commitment, the business or organization will not be entitled to the tax exemption as provided in Article 2 of this Circular.

In the case where a business or organization provides meal services to workers and is simultaneously eligible for a 30% reduction in corporate income tax payable in 2012 as stipulated in point a Clause 1 of Article 1 of this Circular and also eligible for exemption from corporate income tax payable in 2012 on the income from providing meal services to workers, for the same income, the business or organization may choose to apply the most favorable tax benefit.

Article 4. Determination of Tax Reduction and Exemption Amounts

1. Enterprises and organizations must separately account for income from production and business activities that are subject to tax reduction and exemption of corporate income tax and those that are not subject to such reductions and exemptions. In cases where it is impossible to determine the income from activities eligible for tax reduction and exemption, the income for calculating the tax reduction and exemption amount shall be determined based on the percentage ratio between the revenue from activities eligible for tax reduction and exemption and the total revenue of the enterprise or organization in 2012.

2. The amount of corporate income tax reduction specified in Clause 1, Article 1 of this Circular is the provisional quarterly corporate income tax payable and the difference in corporate income tax payable according to the final settlement of the 2012 corporate income tax compared to the total provisional quarterly tax calculated.

3. The amount of corporate income tax exemption specified in Article 2 of this Circular shall be determined as follows:

a) In cases where enterprises and organizations can specifically determine the revenue, expenses, and taxable income from providing meal services to workers in 2012, the corporate income tax exemption amount for 2012 for the activity of providing meal services to workers shall be based on the actual corporate income tax payable in 2012 that has been determined.

b) In cases where during the 2012 tax period, enterprises and organizations do not separately account for income from providing meal services to workers and income from non-eligible production and business activities, the exempted income from providing meal services to workers in 2012 shall be equal to the total taxable income from production and business activities (excluding other income) multiplied by the percentage ratio of revenue from providing meal services to workers to the total revenue of the enterprise or organization in 2012.

c) The corporate income tax exemption amount for income from providing meal services to workers does not include the tax calculated on income from providing meals to transportation and aviation businesses for customers and the tax calculated on income from other business activities.

Article 5. Declaration of Tax

1. Enterprises and organizations subject to tax reduction and exemption as stipulated in Articles 1 and 2 of this Circular shall declare the tax reduction and exemption amounts in accordance with the Law on Tax Administration and guiding documents.

Enterprises and organizations must prepare the Corporate Income Tax Exemption and Reduction Appendix (Form No. 01/MGT-TNDN issued together with this Circular) and submit it to the direct tax authority, clearly identifying whether they are eligible for corporate income tax reduction and exemption and the amount of corporate income tax reduction and exemption. At the same time, they must declare the total tax reduction and exemption in item code [31] on Form 01A/TNDN or item code [30] on Form 01B/TNDN, and item code [C9] on Form 03/TNDN (issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance).

2. In cases where enterprises and organizations have declared according to regulations but have not declared to enjoy tax reduction and exemption as stipulated in Articles 1 and 2 of this Circular, they may supplement their tax declaration forms.

In cases where enterprises and organizations have supplemented declarations for the first quarter of 2012 and the second quarter of 2012, the supplementary tax exemption and reduction declaration documents include: the Corporate Income Tax provisional declaration form for the first quarter of 2012 and the second quarter of 2012, which have been supplemented with the tax reduction and exemption amounts; and the Corporate Income Tax Exemption and Reduction Appendix for the first quarter of 2012 and the second quarter of 2012 as mentioned above.

Supplementary tax declaration documents can be submitted to the tax authority at any working day, regardless of the deadline for submitting the next declaration, but before the tax authority or competent authority announces the decision to inspect or audit taxes at the taxpayer's premises.

3. In cases where enterprises eligible for tax reduction under the stipulations have declared and paid the reduced tax amount for the first quarter and second quarter of 2012 into the state budget, they can offset the reduced tax amount against the remaining tax payable for the third quarter and fourth quarter of 2012 and the difference still payable after the 2012 final settlement. If the offset is not completed with the additional payment after the 2012 final settlement, the enterprise may request to offset against the payment due in the following year or request a refund according to the Law on Tax Administration and guiding documents.

4. In cases where enterprises and organizations eligible for tax exemption under the stipulations have declared and paid the exempted tax amount for the first quarter and second quarter of 2012 into the state budget, they can offset the exempted tax amount against the remaining tax payable for the third quarter and fourth quarter of 2012 and the difference still payable after the 2012 final settlement of other business activities. If the offset is not completed with the additional payment after the 2012 final settlement, the enterprise or organization may request to offset against the payment due in the following year or request a refund according to the Law on Tax Administration and guiding documents.

5. Handling of the difference in corporate income tax reduction between the final settlement declaration and the provisional quarterly declaration

a) In cases where enterprises self-settle the 2012 corporate income tax and generate a higher corporate income tax reduction amount than the total provisional quarterly tax reduction amount of four quarters, the enterprise will continue to enjoy the tax reduction on the additional difference between the tax reduction amount according to the final settlement and the total tax reduction amount according to the provisional calculation of the four quarters of 2012.

b) In cases where enterprises self-settle the 2012 corporate income tax and generate a lower corporate income tax reduction amount than the total provisional quarterly tax reduction amount of four quarters, the tax reduction amount shall be determined based on the final settlement tax.

6. In the case where the competent authority discovers that the corporate income tax amount eligible for reduction or exemption under Articles 1 and 2 of this Circular during the period of reduced or exempted tax is greater than the amount declared by the entity (including cases where enterprises or organizations eligible for reduced or exempted corporate income tax under this Circular have declared but not yet determined the amount of reduced or exempted corporate income tax), such enterprises or organizations must pay according to this Circular (including the additional increased corporate income tax discovered and the corporate income tax subject to reduction or exemption under this Circular but not yet determined the amount of reduction or exemption).

In the case where the competent authority discovers that the corporate income tax amount eligible for reduction or exemption under Articles 1 and 2 of this Circular is less than the amount declared by the entity, the enterprise or organization shall only be entitled to reduced or exempted corporate income tax based on the amount of corporate income tax discovered through inspection and audit.

Depending on the degree of violation by enterprises or organizations, the competent authority conducting inspections and audits shall apply penalties for violations of tax laws as prescribed.

Chapter II
VALUE ADDED TAX

Article 6. Exemption from Value Added Tax (VAT) installment tax for 2012 for households and individuals engaged in business operations

1. Exemption from VAT installment tax for 2012 for:

a) Households and individuals operating rented accommodation for workers, employees, students, and pupils;

b) Households and individuals providing childcare services;

c) Households and individuals supplying meal services for workers.

2. Conditions for exemption

Households and individuals engaged in business activities eligible for tax exemption under Clause 1 of this Article must meet the following conditions:

- They are subject to VAT under the turnover tax method;

- Commitment to maintain stable rental prices for dormitories and rooms, childcare fees, and meal service prices for workers in 2012 at no higher levels than those in December 2011. For households and individuals starting their business operations in 2012, the rental prices for dormitories and rooms, childcare fees, and meal service prices must not exceed the levels implemented in December 2011 by households and individuals in the same industry and locality that had been operating before 2012.

- Publicly display the rental prices for dormitories and rooms, childcare fees, and meal service prices at the place of business and notify the local commune or ward authorities and the direct tax management agency about the implementation of prices no higher than those in December 2011 as of January 1, 2012, before November 1, 2012.

3. Based on the approved 2012 tax ledger, the tax authority is responsible for compiling a list of individual households providing room rentals, childcare services, and meal services for workers, along with the amount of tax exempted, and reporting it to the same-level People's Committee and the superior tax authority for monitoring and inspection. At the same time, they must publicly display the list at the tax office premises before November 15, 2012, and inform the individual households.

In the case where households and individuals engaged in business operations eligible for exemption from VAT installment tax for 2012 have already paid the VAT installment tax for each month of 2012 into the state budget, they will be considered to have overpaid VAT and will be refunded the amount of VAT installment tax paid or offset against the VAT installment tax payable in the following year.

In the case of refunding taxes, the tax authority compiles a list of individual households eligible for tax refunds by locality and issues a Decision on Refund of Taxes for each individual household.

The tax authority is responsible for publicly displaying the list of individual households providing room rentals, childcare services, and meal services for workers eligible for tax refunds at the tax office premises before November 15, 2012.

4. In the event of inspection or audit revealing that households and individuals engaged in business operations have not complied with the price commitments mentioned above, they will not be eligible for tax exemption and will be required to make up the tax payment and pay late payment penalties as stipulated by the laws on tax administration.

Article 7. Exemption from value-added tax payable arising in 2012 for the provision of meal services to workers by enterprises and organizations.

1. Exemption from value-added tax payable arising in 2012 for the provision of meal services to workers by enterprises and organizations (excluding the provision of meal services to transportation and aviation businesses for customer service and other business activities).

2. Enterprises and organizations providing meal services eligible for exemption from value-added tax under Clause 1 of this Article must:

- Be established and operate in accordance with Vietnamese law; implement accounting records, invoices, and documents in compliance with legal regulations and declare taxes accordingly;

- Pay value-added tax using the deduction method;

- Commit to maintaining stable meal service prices in 2012 not higher than the price in December 2011 for enterprises and organizations that have been operating since 2011 or earlier; for enterprises and organizations starting operations in 2012, the meal service price shall not exceed the price implemented in December 2011 by enterprises and organizations that have been operating since 2011 or earlier in the same locality.

- Publicly display meal service prices at their business premises and notify the local commune or ward authorities and directly managing tax authority before November 1, 2012.

3. In cases where enterprises and organizations providing meal services to workers engage in multiple business activities, they must separately declare revenue, input value-added tax, and output value-added tax of the meal service activity to determine the amount of value-added tax payable arising in 2012 that is exempted for the meal service activity.

The amount of value-added tax payable arising each month in 2012 that is exempted is determined as follows:

Where:

a) The output value-added tax of the meal service activity for workers equals the total value-added tax on meal services sold recorded on the value-added tax invoice.

Value-added tax recorded on the value-added tax invoice equals the taxable value of meal services sold multiplied by the value-added tax rate (10%).

b) Determining the deductible input VAT

- Input value-added tax on goods and services used for the meal service activity for workers is fully deductible.

- Input value-added tax on fixed assets, goods, and services used for the meal service activity for workers if separately accounted for, the deductible input value-added tax is determined based on the separate accounting entries. If separate accounting is not possible, the deductible input value-added tax is calculated as a percentage of the sales volume of the meal service activity for workers relative to the total sales volume subject to value-added tax of goods and services sold.

In cases where enterprises and organizations providing meal services to workers engage in multiple business activities and cannot separately account for revenue, input value-added tax, and output value-added tax of the meal service activity and other goods and services activities, thus unable to accurately determine the amount of value-added tax payable that is exempted for the month arising, the exempted value-added tax amount is determined as follows:

Where:

In cases where enterprises and organizations do not generate a payable value-added tax amount according to the above formula (meaning enterprises and organizations have a negative value-added tax payable amount), they will not be eligible for value-added tax exemption.

4. Enterprises and organizations providing meal services to workers eligible for exemption who have not declared the exemption of payable value-added tax from January 1, 2012, must supplementally declare and adjust. After declaring the exempted tax amount, if there is excess tax paid, it can be offset against the payable value-added tax of other activities or the payable value-added tax of subsequent tax periods or request a refund according to legal provisions.

Enterprises and organizations providing meal services to workers eligible for exemption must record the exempted value-added tax payable amount as other income when determining corporate income tax payable income.

5. In cases where through inspection and examination, it is found that enterprises and organizations providing meal services to workers fail to comply with the price commitment, they will not be eligible for value-added tax exemption. In cases where exemption has already been declared but is not eligible, they will be required to pay back the tax and face late payment penalties according to legal provisions on tax management.

6. Procedures and documentation for declaring value-added tax are carried out in accordance with Circular No. 28/2011/TT-BTC dated February 28, 2011, issued by the Ministry of Finance and Appendix on Value-Added Tax Exemption (Form No. 02/MT-GTGT attached to this Circular).

Item 07 "Value-added tax of the meal service activity for workers exempted" on Form No. 02/MT-GTGT is consolidated into Item 38 "Adjustment to reduce value-added tax of previous periods" on the Value-Added Tax Declaration Form No. 01/GTGT issued pursuant to Circular No. 28/2011/TT-BTC dated February 28, 2011, issued by the Ministry of Finance.

- In cases of supplementary declaration of exempted value-added tax for previous months, consolidate Item 07 of Form No. 02/MT-GTGT for previous months into Item 38 "Adjustment to reduce value-added tax of previous periods" on the Value-Added Tax Declaration Form No. 01/GTGT issued pursuant to Circular No. 28/2011/TT-BTC dated February 28, 2011, issued by the Ministry of Finance.

Chapter III
INCOME TAX

Article 8. Exemption from personal income tax and the period of exemption for income from salaries, wages, and business income (excluding individuals and households operating boarding houses, rental rooms; childcare and child care services; providing meal services for workers who are exempted from tax according to Article 9 of this Circular)

1. Personal income tax is exempted from July 1, 2012 to December 31, 2012 for individuals and households with taxable income from salaries, wages, and business income up to the level subject to personal income tax at the first rate of the progressive tax table prescribed in Article 22 of the Law on Personal Income Tax No. 04/2007/QH12 dated November 21, 2007.

2. Individuals and households with taxable income from salaries, wages, and business income up to the level subject to personal income tax at the second rate or higher of the progressive tax table prescribed in Article 22 of the Law on Personal Income Tax No. 04/2007/QH12 dated November 21, 2007 shall pay personal income tax at the first rate of the progressive tax table.

Article 9. Exemption from fixed-rate personal income tax in 2012 for individuals and households operating boarding houses, rental rooms; childcare and child care services; providing meal services for workers

Fixed-rate personal income tax is exempted from January 1, 2012 to December 31, 2012 for individuals and households providing accommodation services for workers, employees, students, and pupils renting boarding houses, rental rooms; childcare and child care services; providing meal services for workers under the condition that the rental price for boarding houses and rental rooms; childcare service prices; and meal service prices for workers do not exceed the prices in December 2011.

In cases where individuals and households start their business operations in 2012, the rental prices for boarding houses and rental rooms; childcare service prices; and meal service prices for workers must not be higher than the prices in December 2011 of individuals and households in the same industry and area that have been operating before 2012.

Article 10. Declaration and withholding of personal income tax on income from salaries and wages

1. For organizations and individuals paying income:

From July 1, 2012 to December 31, 2012, organizations and individuals paying monthly salaries and wages still need to declare taxes but temporarily do not calculate or withhold personal income tax for individuals whose taxable income from salaries and wages is up to the level subject to personal income tax at the first rate (taxable income less than or equal to 5 million VND/month) of the progressive tax table prescribed in Article 22 of the Law on Personal Income Tax. For individuals whose taxable income from salaries and wages is subject to personal income tax at the second rate or higher (taxable income greater than 5 million VND/month), organizations and individuals paying income shall declare, withhold, and pay personal income tax at the first rate of the progressive tax table prescribed in Article 22 of the Law on Personal Income Tax.

Organizations and individuals paying income shall record the amount of tax withheld (excluding the temporarily exempted tax) in item [33] of the Declaration Form No. 02/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance.

Example 1. Mr. A has income from salaries and wages in July 2012 of 9,200,000 VND. Mr. A is entitled to a deduction for dependents of 4,000,000 VND, social insurance contributions of 200,000 VND. Mr. A does not have any dependents and does not make any charitable donations.

Mr. A's taxable income is:

9,200,000 VND - 4,000,000 VND - 200,000 VND = 5,000,000 VND.

Mr. A's taxable income falls within the first rate of the progressive tax table, so he is temporarily not subject to withholding of personal income tax for July 2012.

Example 2. Mr. B has income from salaries and wages in July 2012 of 21,200,000 VND. Mr. B is entitled to a deduction for dependents of 4,000,000 VND, social insurance contributions of 318,000 VND. Mr. B does not have any dependents and does not make any charitable donations.

- Mr. B's taxable income is:

21,200,000 VND - 4,000,000 VND - 318,000 VND = 16,882,000 VND.

Mr. B's taxable income falls within the second rate or higher of the progressive tax table prescribed in Article 22 of the Law on Personal Income Tax, so he must pay tax as follows:

- The amount of personal income tax that Mr. B must pay is:

+ First Rate: 5,000,000 VND x 5% = 250,000 VND.

+ Second Rate: (10,000,000 VND - 5,000,000 VND) x 10% = 500,000 VND.

+ Third Rate: (16,882,000 VND - 10,000,000 VND) x 15% = 1,032,300 VND.

The total amount of personal income tax that Mr. B must pay is: 1,782,300 VND (250,000 VND + 500,000 VND + 1,032,300 VND).

2. For individuals declaring personal income tax directly:

From July 1, 2012 to December 31, 2012, individuals with taxable income from salaries and wages up to the level subject to personal income tax at the first rate (taxable income less than or equal to 5 million VND/month) of the progressive tax table prescribed in Article 22 of the Law on Personal Income Tax are temporarily exempted from declaring and paying monthly personal income tax.

In cases where individuals' monthly taxable income reaches the level subject to personal income tax at the second rate or higher (taxable income greater than 5 million VND/month), they must declare and pay personal income tax at the first rate of the progressive tax table prescribed in Article 22 of the Law on Personal Income Tax.

Article 11. Declaration of personal income tax for individuals and households

1. Individuals and households paying tax through declaration shall declare as follows:

a) Individuals and households with average monthly taxable income up to the level subject to personal income tax at the first rate of the progressive tax table (taxable income less than or equal to 5 million VND/month) still need to declare quarterly and are temporarily exempted from all tax payments for the third and fourth quarters of 2012.

Individuals and households shall declare the amount of tax payable (excluding the temporarily exempted tax) in item number [33] (Temporary personal income tax paid) of the Declaration Form No. 08/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance.

Example 3: Mr. A had taxable income for the third quarter of 2012 amounting to 22.8 million VND. Mr. A has one dependent and does not have any social insurance contributions, health insurance contributions; nor contributions to charitable funds.

- Mr. A is entitled to a personal and dependent deduction for the third quarter as follows: (4 million VND x 3 months) + (1.6 million VND x 3 months) = 16.8 million VND

- Mr. A's taxable income for the third quarter is 6 million VND (22.8 million VND - 16.8 million VND).

- Mr. A's provisional monthly average taxable income for the third quarter is 2 million VND (6 million VND ÷ 3 months).

Therefore, Mr. A's monthly average taxable income falls within the first tax bracket of the progressive tax table, thus he is temporarily exempt from paying any provisional tax for the third quarter.

Assuming that Mr. A's monthly average taxable income for the fourth quarter of 2012 is the same as the third quarter, Mr. A will be exempt from paying any provisional tax for the fourth quarter.

b) For individual business operators

Individual business operators declare the tax payable (excluding the temporarily exempted tax) according to point a of this Clause in item [35] (Provisional Personal Income Tax Paid) of Form 08A/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance.

2. Declaration of tax for individuals and households engaged in business activities subject to tax on a presumptive basis who are exempt from tax:

a) Individuals and households engaged in business activities on a presumptive basis (excluding individuals and households operating boarding houses, dormitories; childcare services; providing meal services for workers who are exempt from tax under Article 9 of this Circular) with annual taxable income up to the level at which they must pay personal income tax at the first rate of the progressive tax table (taxable income less than or equal to 60 million VND/year) shall be exempt from the entire tax payable for the third and fourth quarters of 2012 as stated in the tax notice issued by the tax authority.

b) Individuals and households renting boarding houses, dormitories to workers, students, and pupils; providing childcare services; and supplying meal services for workers who are exempt from tax under Article 9 of this Circular shall be exempt from the entire tax payable for the year 2012.

In the case of exemption under point b above, individuals and households must publicly display rental prices for boarding houses and dormitories; childcare service prices; and meal service prices for workers at their business premises not exceeding the price level in December 2011. Individuals and households must notify the direct tax management authority and the local government of the ward or commune in writing before November 1, 2012, about having implemented prices not higher than the December 2011 level since January 1, 2012.

Individuals and households exempt from tax are not required to resubmit their tax declaration forms. The tax authority is responsible for compiling a list of individuals and households renting boarding houses and dormitories; providing childcare and meal services for workers; and the amount of tax exempted, reporting it to the People's Committee at the same level and the higher-level tax authority for monitoring and inspection. At the same time, they must publicly display the list at the tax office's premises before November 15, 2012, and inform the individuals and households concerned.

If the tax authority and other state agencies with the function of inspection and supervision discover during 2012 that individuals and households did not comply with the prices, these individuals and households will not be exempt from tax or refunded any tax already paid to the State Budget. Any tax that was exempted or refunded will be recovered and penalties for tax violations will be imposed according to the laws governing tax administration.

Article 12. Declaration and Settlement of Personal Income Tax

1. Declaration declaration and settlement of personal income tax for taxable income from salaries, wages, and business operations up to the first rate level of the progressive tax rate table.

a) Determination of the total tax exemption amount for individuals with taxable income from salaries, wages, and business operations up to the first rate level of the progressive tax rate table shall be as follows:

b) Individuals and households engaged in business must declare the personal income tax after deducting the exempted tax amount into item [32] (Total personal income tax generated during the period) of the Personal Income Tax Settlement Declaration Form No. 09/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011, of the Ministry of Finance.

2. In cases where individuals and households operating boarding houses, rental rooms, childcare services, and meal provision for workers who are eligible for tax exemption according to Article 9 of this Circular have already paid personal income tax for the first and second quarters of 2012 (including cases where they have paid tax for the third quarter of 2012 due to not receiving the tax exemption notice from the tax authority), they will be refunded the taxes paid. The direct managing tax authority shall prepare a list of individuals and households eligible for tax refunds by locality and issue a refund decision for each individual and household.

The tax authority is responsible for publicly displaying the list of individual households providing room rentals, childcare services, and meal services for workers eligible for tax refunds at the tax office premises before November 15, 2012.

3. When settling personal income tax, individuals with income from salaries and wages, and those with business income that are exempt from tax must declare and submit the annex form No. 26/MT-TNCN, and organizations and individuals paying income on behalf of the recipient must declare and submit the annex form No. 27/MT-TNCN issued along with this Circular.

Chapter IV
IMPLEMENTATION

Article 13. Effective Date

This Circular takes effect from October 5, 2012.

1. The Minister, Heads of Ministries equivalent to ministries, Heads of government agencies, Chairmen of provincial People's Committees under the central government, and related agencies, units, and individuals are responsible for implementing this Circular.

1. People's Committees of provinces and centrally governed cities shall instruct relevant agencies to implement in accordance with the Government's regulations and the guidance of the Ministry of Finance.

2. Tax authorities at all levels shall be responsible for disseminating and guiding organizations and individuals to implement the contents of this Circular.

3. Organizations and individuals subject to the regulations of this Circular shall comply with the guidance provided in this Circular.

During the implementation process, if there are difficulties, organizations and individuals are requested to promptly reflect to the Ministry of Finance for research and resolution./.