Circular No. 15/2000/TT-BTC supplements and amends certain points in Circular No. 39 TC/TCT dated June 26, 1997 of the Ministry of Finance guiding the implementation of Decree No. 05/CP dated November 20, 1995 and Decree No. 30/CP dated April 5, 1997 of the Government detailing the implementation of the Ordinance on income tax for high-income individuals.

CIRCULAR

Supplementing and amending certain points in Circular No. 39 TC/TCT dated June 26, 1997 of the Ministry of Finance guiding the implementation of Decree No. 05/CP dated January 20, 1995 and Decree No. 30/CP dated April 5, 1997 of the Government detailing the implementation of the Ordinance on income tax for high-income individuals.

Pursuant to the Ordinance amending certain Articles of the Ordinance on income tax for high-income individuals adopted by the Standing Committee of the National Assembly on June 30, 1999; Within 10 working days from the date of receipt of the dossier as mentioned in Sub-clause b, Clause 1, Article 3 above, the Ministry of Foreign Affairs will review and submit to the competent authority for decision (Issues exceeding the Ministry of Foreign Affairs' jurisdiction will be referred to the Prime Minister for consideration and decision).was approved by the Standing Committee of the National Assembly on June 30, 1999;

Pursuant to Decree No. 170/1999/NĐ-CP dated December 6, 1999 of the Government amending certain Articles of Decree No. 05/CP dated January 20, 1995 of the Government detailing the implementation of the Ordinance on income tax for high-income individuals;

The Ministry of Finance supplements and amends certain points of Circular No. 39 TC/TCT dated June 26, 1997 of the Ministry of Finance guiding the implementation of Decree No. 05/CP dated January 20, 1995 and Decree No. 30/CP dated April 5, 1997 of the Government detailing the implementation of the Ordinance on income tax for high-income individuals as follows:

1.Point 2, Section I is supplemented at the end of the content as follows:

In cases where the contract stipulates that the individual receives net income without income tax, the income without tax will be converted into taxable income to serve as the basis for determining taxable income. If the individual receives net income without tax, and if income from wages constitutes 70% or more, then the income from wages will be used to convert the net income into taxable income, and subsequently added (+) to the remaining income to determine the taxable income.

2.Point 4.1, Section I is amended as follows:

"Severance pay funded from the social insurance fund" shall be replaced with the following content: "Severance pay and unemployment assistance for eligible recipients as prescribed by the Labor Code".

3.Point 4.2, Section I is amended as follows:

"Income of individual household business owners already subject to corporate income tax (their income is not included in costs when determining taxable income)".

4.Point 1.2, Section II is amended as follows:

The tax rate applicable to regular income is applied according to the provisions of Clause 3, Article 1 of the Ordinance amending certain Articles of the Ordinance on income tax for high-income individuals adopted by the Standing Committee of the National Assembly on February 6, 1997 and Clause 2, Article 1 of the Ordinance amending certain Articles of the Ordinance on income tax for high-income individuals adopted by the Standing Committee of the National Assembly on June 30, 1999.

Regular income tax is calculated using the progressive tax method in each tax bracket; the calculation method for the progressive tax is detailed as follows: For a Vietnamese citizen with an average monthly income of 4,500,000 VND, the amount of tax payable is 450,000 VND, which is calculated as follows:

Bracket 1: Income up to 2,000,000 VND is exempted

Bracket 2: Income over 2,000,000 VND to 3,000,000 VND at a rate of 10%

The tax payable is: (3,000,000 VND - 2,000,000 VND) x 10% = 100,000 VND

- Bracket 3: Income over 3,000,000 VND to 4,000,000 VND at a rate of 20%

The tax payable is: (4,000,000 VND - 3,000,000 VND) x 20% = 200,000 VND

Bracket 4: Income over 4,000,000 VND at a rate of 30%

The tax payable is: (4,500,000 VND - 4,000,000 VND) x 30% = 150,000 VND

The total amount of income tax payable is 450,000 VND = (100,000 VND + 200,000 VND + 150,000 VND)

To simplify the procedure for calculating the amount of income tax payable under the progressive tax brackets, the following table provides guidance:

a. Calculation of regular income tax for Vietnamese citizens and other individuals residing in Vietnam.

                                                                                                Unit: VND       

c) The Reorganization Enterprise Fund at the state-owned holding corporation level is centralized in a separate account of the state-owned holding corporation, managed by the Board of Directors, to support the reorganization and ownership conversion of enterprises under the state-owned holding corporation as stipulated in Article 2 of this Decision and is responsible for settling accounts with the Ministry         TNCT: Taxable Income

                                    (x): Multiply by tax rate

                                    (-): Subtract

Vietnamese citizens residing in Vietnam and other individuals residing in Vietnam, after paying income tax according to this schedule, if their remaining income exceeds 8,000,000 VND/month, they must pay additional income tax at a rate of 30% on the excess over 8,000,000 VND.

Example: Individual A has an average monthly income of 20,000,000 VND, then the income tax is determined as follows:

Income tax payable according to the schedule = 20,000,000 VND x 60% - 3,300,000 VND = 8,700,000 VND.

Remaining income after paying tax according to the progressive tax schedule: 11,300,000 VND = (20,000,000 VND - 8,700,000 VND)

Additional income tax: 990,000 VND = 11,300,000 VND x 30%

Total income tax payable for one month is 9,690,000 VND = 8,700,000 VND + 990,000 VND

b. Calculation of regular income tax for foreigners residing in Vietnam and Vietnamese citizens working abroad.

                                                                                                Unit: VND       

c) The Reorganization Enterprise Fund at the state-owned holding corporation level is centralized in a separate account of the state-owned holding corporation, managed by the Board of Directors, to support the reorganization and ownership conversion of enterprises under the state-owned holding corporation as stipulated in Article 2 of this Decision and is responsible for settling accounts with the Ministry         TNCT: Taxable Income

                        (x): Multiply by tax rate

                        (-): Subtract

Example: For a foreigner with regular income of 70 million VND/month, the income tax is calculated as follows:

Regular income of 70 million VND/month falls into Bracket 4, the income tax payable is:

                        (70 million VND x 30%) - 7,8 million VND = 13.2 million VND

5.Point 3.1, Section III is supplemented as follows:

For regular income outside of wages and salaries such as income from participating in non-taxable business services like long-term consulting contracts, teaching, training, cultural performances, due to the irregularity of monthly payments, to ensure timely collection, withholding tax at a rate of 10% on total income should occur after each payment. The tax authority is responsible for issuing receipts to organizations and individuals paying income so that they can issue tax receipts to each individual after withholding tax. At the end of the year, individuals are responsible for declaring total income and settling taxes with the tax authority according to the progressive tax schedule.

For non-regular income: Organizations and individuals paying income are responsible for withholding tax before payment.

6.Point 1, Section VI is amended as follows:

Violations of the Income Tax Ordinance for High-Income Individuals shall be specifically handled in accordance with Decree No. 22/CP dated April 17, 1996 of the Government on administrative penalties for tax violations and Circular No. 128/1998/TT-BTC dated September 22, 1998 of the Ministry of Finance.

7.Implementation organization:

This Circular takes effect from July 1, 1999.

The phrase "Clause 2 Article 10 of the Income Tax Ordinance" in Circular No. 39TC/TCT dated June 26, 1997 shall be replaced by the phrase "Clause 2 Article 1 of the Amended Income Tax Ordinance for High-Income Individuals approved by the National Assembly Standing Committee on June 30, 1999."

Other provisions not guided by this Circular shall still be implemented in accordance with Circular No. 39TC/TCT dated June 26, 1997 of the Ministry of Finance.

In the course of implementation, if there are any difficulties, organizations and individuals are requested to report them to the Ministry of Finance for study, consideration, and resolution./.