Circular No. 154/2011/TT-BTC guiding the Government's Decree No. 101/2011/NĐ-CP dated November 4, 2011 detailing the implementation of Resolution No. 08/2011/QH13 of the National Assembly on issuing additional measures regarding taxes to address difficulties for businesses and individuals.

CIRCULAR

Guidelines for Decree No. 101/2011/NĐ-CP dated November 4, 2011 of the Government

detailing the implementation of Resolution No. 08/2011/QH13 of the National Assembly

on issuing additional measures regarding taxes to address difficulties faced by businesses and individuals.

to remove difficulties for businesses and individuals.

----------------------------

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

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

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

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

Pursuant to Resolution No. 08/2011/QH13 dated August 6, 2011 of the National Assembly on issuing additional measures regarding taxes to address difficulties faced by businesses and individuals;

Pursuant to Decree No. 101/2011/NĐ-CP dated November 4, 2011 of the Government detailing the implementation of Resolution No. 08/2011/QH13 of the National Assembly on issuing additional measures regarding taxes to address difficulties faced by businesses 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;

The Ministry of Finance hereby provides guidance as follows:

PART I
ON CORPORATE INCOME TAX

Article 1. General Provisions

1. Reduce corporate income tax payable in 2011 by 30% for small and medium-sized enterprises.

a) Small and medium-sized enterprises referred to in this Clause are enterprises that meet 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-sized enterprises.

b) The capital basis for determining small and medium-sized enterprises eligible for reduced corporate income tax in 2011 is the total capital reflected in the Balance Sheet prepared on December 31, 2010 of the enterprise. In cases where small and medium-sized enterprises were newly established from January 1, 2011, the capital basis for determining such enterprises eligible for reduced corporate income tax in 2011 is the registered capital recorded in the Business Registration Certificate or Investment Certificate issued for the first time.

c) For enterprises engaged in multiple business activities, the determination of small and medium-sized enterprises shall be based on the main business activity recorded in the enterprise's business registration certificate. In cases where it is not possible to determine the main business activity of the enterprise, one of the following criteria shall be used to determine the main business activity of the enterprise in 2011:

- The number of employees working the most in each business activity of the enterprise.

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

If the above criteria still cannot determine the main business activity of the enterprise to identify small and medium-sized enterprises, the determination shall be based on the lowest criterion of capital or number of employees among the actual business activities of the enterprise in 2011 as stipulated in Clause 1, Article 3 of Decree No. 56/2009/NĐ-CP.

d) The reduction of corporate income tax shall not apply to small and medium-sized enterprises belonging to the following categories:

- Enterprises ranked at level 1, as provided for in 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 ranking and salary setting for full-time members of the board of directors, general managers, directors, deputy general managers, deputy directors, and chief accountants of state-owned companies.

- Special-class enterprises, as provided for in Decision No. 185/TTg dated March 28, 1996 of the Prime Minister on special-class state-owned enterprises and Decision No. 186/TTg dated March 28, 1996 of the Prime Minister on the list of special-class state-owned enterprises.

- Enterprises organized under the parent company-subcompany model where the parent company is not a small or medium-sized enterprise and holds more than 50% of the equity of the subsidiary.

- Economic organizations that are public service units.

e) The amount of corporate income tax reduced for small and medium-sized enterprises specified in this Clause does not include the tax calculated on income from the following activities: lottery sales, real estate transactions, securities trading, financial services, banking, insurance, and income from production of goods and provision of services subject to special consumption tax, income from mineral exploration and processing activities.

2. Reduce corporate income tax payable in 2011 by 30% for enterprises employing many workers in manufacturing, processing, and refining: agricultural products, forestry products, aquatic products, textiles, footwear, electronic components; enterprises employing many workers in infrastructure construction projects.

- Enterprises employing many workers eligible for tax reduction as specified in this Clause are those with an average of over 300 regular employees in 2011, excluding short-term contracts of less than three months.

- The amount of corporate income tax reduced is the tax calculated on income from manufacturing, processing, and refining: agricultural products, forestry products, aquatic products, textiles, footwear, electronic components and infrastructure construction projects.

Manufacturing, processing, and refining: agricultural products, forestry products, aquatic products, textiles, footwear, electronic components as specified in this Clause are determined based on the provisions of the Vietnam Economic Classification System issued together with Decision No. 10/2007/QĐ-TTg dated January 23, 2007 of the Prime Minister.

Infrastructure construction projects as specified in this Clause include construction, installation: water treatment plants, power plants, transmission and distribution systems; water supply and drainage systems; roads, railways; airports, seaports, river ports; construction of schools, hospitals, cultural centers, cinemas, artistic performance venues, sports training and competition facilities; wastewater and solid waste treatment systems; telecommunications and irrigation works serving agriculture, forestry, and fisheries.

3. Reduce corporate income tax payable from July 1, 2011 to December 31, 2011 (corporate income tax payable for the third and fourth quarters of 2011) by 50% for income from providing meal services to workers of enterprises engaged in meal service provision.

In the case where an enterprise engages in providing meal services for workers but also qualifies for a 30% reduction in corporate income tax payable in 2011 under Clause 1, Article 1 of this Circular and simultaneously qualifies for a 50% reduction in corporate income tax payable from July 1, 2011 to December 31, 2011 on income derived from providing meal services for workers as stipulated in Clause 3, Article 1 of this Circular, then for the same income, the enterprise may choose to apply the more favorable tax reduction rate.

Article 2. Conditions for applying tax incentives

1. The enterprises eligible for tax reductions as provided in Article 1 of this Circular are those established and operating in accordance with Vietnamese law; implementing accounting records, invoices, and documents in compliance with legal regulations and declaring taxes accordingly.

For small and medium-sized enterprises organized in a parent company-subcompany model, to qualify for tax reductions as guided by this Circular, additional documentation must be submitted to demonstrate the parent-child relationship and the proportion of capital owned by the subcompany held by the parent company, such as: A copy of the business registration certificate of the subcompany (certified by the enterprise) or the Articles of Association of the parent company (certified by the enterprise) or the Articles of Association of the subcompany (certified by the enterprise) when submitting the annual corporate income tax declaration form for 2011 as prescribed.

2. The average number of employees in a year serving as the basis for determining whether an enterprise qualifies for tax reduction under Clause 1 and Clause 2, Article 1 of this Circular is the number of employees regularly employed by the enterprise throughout 2011, excluding short-term contract employees with contracts less than three months.

The average number of regular employees in a year is determined according to the guidance provided in Circular No. 40/2009/TT-BLDTBXH dated December 3, 2009 issued by the Ministry of Labor, Invalids, and Social Affairs regarding the method of calculating the number of regular employees as stipulated 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.

In the case of enterprises organized in a parent company-subcompany model, the number of employees serving as the basis for determining whether the parent company qualifies for tax reduction does not include the number of employees of the subcompany.

3. Enterprises providing meal services for workers that are eligible for tax reduction must maintain stable meal service prices in 2011 at the average price level implemented in December 2010, while publicly posting the meal service prices at their business premises and submitting a written notice of the posted prices to the directly managing tax authority when filing the annual corporate income tax declaration form as prescribed. If the competent authority discovers that the enterprise has not adhered to its pricing commitment, it will not be eligible for tax reduction.

4. In cases where an enterprise is already benefiting from corporate income tax incentives as stipulated in the Corporate Income Tax Law or other tax-related regulatory documents, the amount of corporate income tax reduction specified in this Circular shall be calculated based on the remaining corporate income tax after deducting the amount of corporate income tax that the enterprise is currently enjoying under the stipulated incentives.

Article 3. Determination of Tax Reduction Amount

Enterprises must separately account for income from activities eligible for corporate income tax reduction and income from activities not eligible for corporate income tax reduction. In cases where the income from activities eligible for tax reduction cannot be specifically identified, the income for calculating the tax reduction amount shall be determined based on the percentage ratio between the revenue from activities eligible for tax reduction and the total revenue of the enterprise in 2011.

1. The amount of corporate income tax reduction specified in Clause 1 and Clause 2, Article 1 of this Circular refers to the quarterly provisional corporate income tax and the difference in corporate income tax still payable upon final settlement for 2011 compared to the total provisional quarterly tax paid.

In cases where enterprises eligible for tax reduction have declared and paid the reduced tax for the first, second, and third quarters of 2011 into the state budget, they can offset the reduced tax against the tax still payable for the fourth quarter of 2011 and the difference still payable upon final settlement. If the offset is not fully utilized, the enterprise may request to offset against other types of taxes or request a refund according to the Tax Administration Law and related implementing documents.

2. The amount of corporate income tax reduction specified in Clause 3, Article 1 of this Circular is determined as follows:

a) In cases where the enterprise can specifically determine the revenue, costs, and taxable income of the third and fourth quarters of 2011, the amount of corporate income tax reduction for the third and fourth quarters of 2011 shall be based on the actual corporate income tax payable for the third and fourth quarters of 2011 as determined by the enterprise.

b) In cases where the enterprise cannot specifically determine the revenue, costs, and taxable income of the third and fourth quarters of 2011, the amount of corporate income tax reduction for the third and fourth quarters of 2011 shall be determined according to the following principle:

c) In cases where the enterprise applies a different tax year than the calendar year, the amount of corporate income tax reduction for the calendar year is determined as follows:

+ If the revenue, costs, and taxable income of each quarter within the calendar year 2011 can be specifically determined, it shall be based on the actual declaration.

+ If the revenue, costs, and taxable income of each quarter within the calendar year 2011 cannot be specifically determined, it shall be evenly distributed over 12 months (if operating for 12 months) or evenly distributed over the actual number of months of operation (if operating for less than 12 months). Based on this, the amount of corporate income tax reduction corresponding to the period from July 1, 2011 to December 31, 2011 shall be determined.

The corporate income tax reduction amount for the income from providing meal services to workers does not include the tax calculated on income from providing meals to transportation and aviation companies, nor the tax calculated on income from other business activities.

Article 4. Tax Declaration

Enterprises eligible for tax reduction under Article 1 of this Circular shall declare the tax reduction amount in accordance with the provisions of the Law on Tax Administration and guiding documents.

Enterprises shall add one additional line after the declaration statement in the Quarterly Corporate Income Tax Return Form or the Annual Corporate Income Tax Settlement Return Form (issued pursuant to Circular No. 28/2011/TT-BTC dated February 28, 2011 of the Ministry of Finance), as follows:

Corporate income tax reduction amount according to Resolution No. 08/2011/QH13.

At the same time, enterprises shall declare the tax reduction amount in item code [31] on form 01A/TNDN or item code [30] on form 01B/TNDN, item code [C9] on form 03/TNDN, item code [09] on supplementary form 03-3A, and mark the "other incentives" item.

In cases where enterprises have declared in accordance with the regulations but have not yet declared to enjoy the tax reduction as stipulated in Article 1 of this Circular, they may submit supplementary tax declaration documents. Supplementary tax declaration documents can be submitted to the tax authority at any working day, regardless of the deadline for submitting the next tax declaration, but must be submitted before the tax authority announces the decision to inspect or audit the enterprise.

Article 5. Tax Settlement

1. Handling the difference in corporate income tax reduction amounts between the annual tax settlement declaration and the quarterly provisional tax declaration.

- If an enterprise self-settles its corporate income tax for the year 2011 and finds that the tax reduction amount is higher than the total provisional tax amount for the four quarters, the enterprise will continue to enjoy the tax reduction on the increased difference between the settlement amount and the total provisional tax amount for the four quarters of 2011.

Example: Company A's provisional quarterly corporate income tax declaration for the year 2011 is as follows:

Unit of measurement: million dong

When Company A settles its taxes, the figures are as follows:

Unit of measurement: million dong

Therefore:

The increase in the corporate income tax reduction amount of 30% between the tax settlement and the provisional declaration for the four quarters is: (360 - 300) = 60 (million dong)

In this case, Company A continues to enjoy the tax reduction on the additional tax amount of 60 million dong when settling the tax for the year 2011.

- If an enterprise self-settles its corporate income tax for the year 2011 and finds that the tax reduction amount is lower than the total provisional tax amount for the four quarters, the tax reduction amount will be determined based on the settlement amount.

2. If the competent authority discovers during inspection or audit that the corporate income tax amount for the period subject to tax reduction under Article 1 of this Circular is higher than the amount declared by the enterprise (including cases where the enterprise is eligible for corporate income tax reduction under this Circular but has not declared the tax reduction amount), the enterprise will enjoy the tax reduction on the additional corporate income tax amount. Depending on the level of violation by the enterprise, the competent authority will apply penalties for tax law violations as prescribed.

3. If the competent authority discovers during inspection or audit that the corporate income tax reduction amount under Article 1 of this Circular is lower than the amount declared by the enterprise, the enterprise will only enjoy the tax reduction on the corporate income tax amount discovered through inspection or audit. Depending on the level of violation by the enterprise, the competent authority will apply penalties for tax law violations as prescribed.

PART II
REGARDING VALUE ADDED TAX

Article 6. Reduce the amount of turnover tax on value-added tax by 50%

1. From July 1, 2011 to December 31, 2011, reduce the amount of turnover tax on value-added tax by 50% for:

- Households and individuals operating boarding houses and dormitories rented to workers, students, and pupils;

- Households and individuals operating the provision of meals for workers.

2. Households and individuals eligible for a 50% reduction in the amount of turnover tax on value-added tax under Clause 1 of this Article must:

- Maintain stable prices and provide a written commitment to maintain stable rental prices for boarding houses and dormitories, and meal prices at the level implemented in December 2010 for households and individuals who have been engaged in business since before 2010; for households and individuals starting their business operations in 2011, the rental prices for boarding houses and dormitories, and meal prices shall not exceed the level implemented in December 2010 by households and individuals who have been engaged in business since before 2010 in the same locality.

- Publicly display rental prices for boarding houses and dormitories and meal prices at their business premises and submit a written notice to the direct tax management agency by December 31, 2011, to announce the displayed prices while also sending them to the People's Committee of the commune or ward where they operate.

The direct tax management agency shall coordinate with the People's Committee of the commune or ward to review households and individuals operating in the locality. If households and individuals eligible for tax reduction under Clause 1 of this Article have provided a written commitment to maintain stable prices and publicly display prices (as mentioned above), the tax management agency shall cooperate with the Tax Advisory Council of the commune or ward to compile a list of eligible households and individuals, publicize the list at the People's Committee of the commune or ward and the tax office, and issue a Notice regarding the 50% reduction in the amount of turnover tax on value-added tax to be sent to the households and individuals.

In cases where inspections and audits reveal that households and individuals have not complied with their price commitments, such households and individuals will not be eligible for tax reduction.

3. In cases where households and individuals eligible for a 50% reduction in the amount of turnover tax on value-added tax under Clause 1 of this Article have fully paid (100%) the turnover tax on value-added tax from July 2011 to December 2011 into the state budget, it will be determined that they have overpaid the turnover tax on value-added tax; households and individuals may resolve the excess tax payment according to the regulations on tax administration.

Article 7. Reduce the amount of value-added tax payable by enterprises providing meals for workers by 50%

1. From July 1, 2011 to December 31, 2011, reduce the amount of value-added tax payable by 50% for the activity of providing meals for workers by enterprises (excluding activities of providing meals for transportation and aviation businesses and other business activities of the enterprise).

2. In cases where enterprises providing meals for workers engage in multiple types of goods and services, they must separately declare revenue, input VAT, and output VAT for the activity of providing meals for workers to determine the amount of VAT payable that can be reduced for the activity of providing meals for workers.

The amount of VAT payable that can be reduced is determined as follows:

Where:

a) The output VAT of the activity of providing meals for workers equals the total VAT recorded on the VAT invoice for the sale of meals for workers.

VAT recorded on the VAT invoice equals the taxable value of the meals for workers sold multiplied by the VAT rate (10%).

b) Determining the deductible input VAT

- Input VAT on goods and services used for the activity of providing meals for workers can be fully deducted.

- Input VAT on fixed assets, goods, and services used simultaneously for the activity of providing meals for workers and other taxable business activities must be separately accounted for as deductible input VAT for the activity of providing meals for workers. If separate accounting is not possible, the deductible input VAT will be calculated based on the ratio of the sales volume of the activity of providing meals for workers to the total sales volume subject to VAT. At the same time, for the provision of meal services to workers and other taxable business activities, separate accounting for input VAT deductions related to the provision of meal services must be conducted. In cases where separate accounting is not possible, the deductible input VAT shall be calculated based on the ratio (%) of the turnover from providing meal services to workers compared to the total turnover subject to VAT from goods and services sold.

In cases where enterprises providing meals for workers engage in multiple types of goods and services and cannot separately account for revenue, input VAT, and output VAT for the activity of providing meals for workers and other business activities, making it impossible to accurately determine the amount of VAT payable that can be reduced, the amount of VAT reduced will be determined as follows:

Where:

In cases where enterprises do not generate a positive VAT payable amount according to the above formula (i.e., the enterprise has a negative VAT balance), no reduction in VAT will be applied.

3. Enterprises providing meals for workers eligible for a 50% reduction in the amount of VAT under Clause 1 of this Article must:

- Be established and operating in accordance with Vietnamese law; implement accounting, invoices, and documents as prescribed by law and file taxes based on declarations.

- Provide a written commitment to maintain stable meal prices at the level implemented in December 2010 for enterprises that have been engaged in business since before 2010; for enterprises starting their business operations in 2011, meal prices shall not exceed the level implemented in December 2010 by enterprises providing meals for workers that have been engaged in business since before 2010 in the same locality.

- Publicly display meal prices at their business premises and submit a written notice to the direct tax management agency to announce the displayed prices.

4. An enterprise supplying meals to workers is eligible for tax reduction if it has not declared a 50% reduction in the value-added tax payable arising from July 1, 2011 to December 31, 2011; such enterprise shall adjust the reduced value-added tax amount into the value-added tax payable for subsequent months.

An enterprise supplying meals to workers that is eligible for tax reduction must account for the reduced value-added tax payable as part of other income when determining the taxable income for corporate income tax.

5. In cases where an audit or inspection reveals that an enterprise supplying meals to workers does not comply with the agreed price, such enterprise will not be eligible for a reduction in the value-added tax payable.

6. Declaration of reduced value-added tax

The procedures and documents for declaring value-added tax are carried out according to the guidelines set forth in Circular No. 28/2011/TT-BTC dated February 28, 2011, and Appendix 01-7/GTGT "Table for Determining Value-Added Tax Reductions under Resolution No. 08/2011/QH13" attached hereto, including:

- Item 4 "Goods and services subject to a 10% tax rate" on Appendix 01-1/GTGT issued pursuant to Circular No. 28/2011/TT-BTC: For invoices and documents related to sales activities of supplying meals to workers, please clearly indicate "Considered for NQ08 benefit" in Column 10 "Notes".

- On Appendix 01-2/GTGT issued pursuant to Circular No. 28/2011/TT-BTC:

+ Item 1 "Goods and services exclusively for production and business operations subject to VAT and eligible for deduction": For invoices and documents related to purchases for activities of supplying meals to workers, please clearly indicate "Considered for NQ08 benefit".

+ Column 11 "Notes..." under Item 3 "Goods and services shared for production and business operations subject to VAT and non-VAT, eligible for deduction": For fixed assets used jointly for activities subject to VAT and non-VAT, please clearly indicate "Fixed assets considered for NQ08 benefit"; for goods and services (excluding fixed assets) used simultaneously for activities of supplying meals to workers and non-VAT business operations, please clearly indicate "Goods and services considered for NQ08 benefit".

- Item 16 "Value-added tax reduction for meal supply activities to workers" on Appendix 01-7/GTGT should be consolidated into Item 38 "Adjustment of previous periods' VAT reductions" on the Value-Added Tax Declaration Form No. 01/GTGT issued pursuant to Circular No. 28/2011/TT-BTC.

Chapter III
REGARDING PERSONAL INCOME TAX

Article 8. Scope of Application

Personal income tax from salaries and wages; from business operations; from dividends received from stock market investments and capital contributions to purchase shares of enterprises; from securities transfers of individuals who are exempted, reduced, and declared or deducted taxes according to the provisions of this Chapter.

Article 9. Exemption and exemption period for income from salaries and wages and income from business operations

1. Personal income tax is exempted from August 1, 2011 to December 31, 2011 for individuals and households engaged in business operations whose taxable income from salaries and wages and from business operations falls within the first tax bracket of the progressive tax rate table stipulated in Article 22 of the Law on Personal Income Tax No. 04/2007/QH12 dated November 21, 2007.

2. Individuals and households engaged in business operations whose taxable income from salaries and wages and from business operations falls within the second tax bracket or higher of the progressive tax rate table stipulated in Article 22 of the Law on Personal Income Tax No. 04/2007/QH12 dated April 21, 2007 are not eligible for exemption in the first tax bracket of the progressive tax rate table.

Article 10. Rate and exemption period for personal income tax reduction and exemption for income from renting accommodation, childcare, and providing meals to workers

1Reduce 50% of the personal income tax rate from July 1, 2011 to December 31, 2011 for individuals and households renting accommodations and rooms to workers, employees, students, and pupils; providing childcare; and supplying meals to workers whose taxable income from business operations falls within the second tax bracket or higher of the progressive tax rate table, provided that they maintain stable rental prices for accommodations and rooms; childcare prices; and meal supply prices at the levels announced and actually collected in December 2010.

2. Reduce 50% of the personal income tax rate in July 2011 and exempt personal income tax from August 1, 2011 to December 31, 2011 for individuals and households renting accommodations and rooms to workers, employees, students, and pupils; providing childcare; and supplying meals to workers whose taxable income from business operations falls within the first tax bracket of the progressive tax rate table, provided that they maintain stable rental prices for accommodations and rooms; childcare prices; and meal supply prices at the levels announced and actually collected in December 2010.

Article 11. Exemption period for personal income tax on income from dividends

1. Personal income tax is exempted for income from dividends received from August 1, 2011 to December 31, 2012 due to investments in the stock market and capital contributions to purchase shares of enterprises.

If an individual transfers stocks (received instead of dividends) during the period from August 1, 2011 to December 31, 2012, such individual is exempted from personal income tax on income from dividends.

2. Dividends received from joint-stock banks, investment funds, and credit organizations are not exempted according to the provisions of Clause 1 of this Article.

Article 12. Reduce 50% of the personal income tax on income from securities transfer activities of individuals during the period from August 1, 2011 to December 31, 2012.

Article 13. Declaration and deduction for income from salaries and wages

1. For organizations and individuals paying income:

From August 1, 2011 to December 31, 2011, organizations and individuals paying income from monthly salaries and wages must still declare taxes but temporarily do not calculate or withhold personal income tax for individuals whose taxable income from salaries and wages falls within the first tax bracket (taxable income not exceeding 5 million VND/month) as stipulated in Article 22 of the Law on Personal Income Tax. For individuals with taxable income in the second bracket or higher (taxable income exceeding 5 million VND/month), the paying organization shall declare, withhold, and pay personal income tax according to the first tax bracket of the progressive tax rate table specified in Article 22 of the Law on Personal Income Tax.

Organizations and individuals paying income shall record the amount of tax withheld at the reduced rate in items [33], [34], [35] of the Model 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 August 2011 amounting to 9,200,000 VND. Mr. A only has a deduction for himself of 4,000,000 VND, social insurance contributions of 200,000 VND, and no charitable donations or deductions for dependents.

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 tax bracket of the progressive tax rate table, so Mr. A temporarily does not need to pay personal income tax for August 2011.

Example 2: Mr. B has income from salaries and wages in August 2011 amounting to 21,200,000 VND. Mr. B only has a deduction for himself of 4,000,000 VND, social insurance contributions of 318,000 VND, and no charitable donations or deductions for dependents.

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 tax bracket or higher (up to the third bracket) of the progressive tax rate table, so Mr. B must pay personal income tax according to Article 22 of the Law on Personal Income Tax.

The amount of personal income tax that Mr. B must pay is calculated as follows:

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

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

+ Third Bracket: (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 who declare directly

From August 1, 2011 to December 31, 2011, individuals whose taxable income falls within the first tax bracket (taxable income not exceeding 5 million VND/month) of the progressive tax rate table specified in Article 22 of the Law on Personal Income Tax are temporarily exempted from declaring and paying personal income tax on their salaries and wages.

Individuals whose taxable income falls within the second tax bracket or higher (taxable income exceeding 5 million VND/month) must declare and pay personal income tax according to the first tax bracket of the progressive tax rate table specified in Article 22 of the Law on Personal Income Tax.

Article 14. Tax declaration for individuals and households engaged in business

1. Individuals and households engaged in business who pay taxes through declaration shall declare taxes as follows:

a) Individuals and households whose taxable income falls within the first tax bracket of the progressive tax rate table (taxable income not exceeding 5 million VND/month) must still declare taxes quarterly and are temporarily exempted from paying 2/3 of the tax due for the third quarter of 2011 and the entire tax due for the fourth quarter of 2011.

Individuals and households shall declare the remaining tax after deducting the exempted tax into item [33] (temporary advance payment of personal income tax) of the Model 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's taxable income for the third quarter is 22.8 million VND. Mr. A has one dependent.

The household deduction for himself and one dependent for the third quarter is:

(4 million VND x 3 months) + (1.6 million VND x 3 months) = 16.8 million VND.

Taxable income for the third quarter = 22.8 million VND - 16.8 million VND = 6 million VND.

Temporary average monthly taxable income = 6 million VND / 3 months = 2 million VND (less than 5 million VND).

Therefore, Mr. A's taxable income falls within the first tax bracket of the progressive tax rate table, so he is temporarily exempted from paying 2/3 of the tax due for the third quarter.

The tax due before exemption for the third quarter = (2 million VND x 5% x 3 months) = 0.3 million VND.

The tax exempted for the third quarter = 0.3 million VND x 2/3 = 0.2 million VND.

The tax due for the third quarter after exemption = 0.3 million VND - 0.2 million VND = 0.1 million VND.

Assuming in the fourth quarter of 2011, Mr. A has the same revenue and expenses as in the third quarter, Mr. A will be exempted from all tax due for the fourth quarter.

b) For the group of individuals engaged in business

The group of individuals engaged in business shall declare the remaining tax after the tax exemption according to point a of this Clause into item [35] (temporary advance payment of personal income tax) of the Model Declaration Form No. 08A/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011, of the Ministry of Finance.

2. Tax declaration for individuals and households engaged in business who pay taxes through assessment and are subject to reduction or exemption of tax.

a) Individuals and households engaged in business who pay taxes through assessment and have annual taxable income within the first tax bracket of the progressive tax rate table (taxable income not exceeding 60 million VND/year) are exempted from paying 2/3 of the tax due for the third quarter and the entire tax due for the fourth quarter of 2011 according to the tax notification at the beginning of the year from the tax authority.

b) Individuals and households engaged in renting rooms, caring for children, and providing meals to workers as stipulated in Clause 1, Article 10 of this Circular, if their annual taxable income falls within the second tax bracket or higher of the progressive tax rate table, are entitled to a 50% reduction in the assessed tax for the third and fourth quarters of 2011 according to the tax notification at the beginning of the year from the tax authority.

c) Individuals, households operating boarding houses, rental rooms; childcare services; providing meals for workers according to Clause 2, Article 10 of this Circular, if their annual taxable income falls within the first tax bracket of the progressive tax rate table, shall be granted a 50% reduction in personal income tax for one month and exemption from personal income tax for two months in Quarter III; exemption from personal income tax for the entire Quarter IV of 2011 based on the tax notification issued by the tax authority at the beginning of the year.

For cases of tax exemption and reduction under this Clause, individuals and household businesses must display prices according to the levels set on the last day of 2010 at their business premises, and simultaneously notify the direct managing tax authority and the local ward or commune authorities in writing. If inspections find that individuals or household businesses have not displayed prices correctly or collected money according to the displayed prices but have already received tax reductions, they will not only lose the right to tax reduction but also face administrative penalties for tax violations.

Individuals, households, and groups of individuals conducting business under the fixed-rate method do not need to resubmit declarations. Based on the provisions of Points a, b, and c of this Clause, the tax authority will renotify the amount of tax payable by individuals, households, and groups of individuals conducting business after deducting the exempted and reduced taxes.

Article 15. Declaration and withholding of tax on income from securities transfer activities and dividends.

1. Regarding securities transfer activities:

From August 1, 2011 to December 31, 2012, organizations (Securities Companies, commercial banks, etc.) are responsible for withholding personal income tax on securities transfer activities of individuals at a rate of 0.05% (a 50% reduction from the 0.1% tax rate) on the total selling price of securities per transaction.

The organization responsible for withholding personal income tax shall record the total amount of personal income tax withheld at the reduced rate in Item [24] of the Form 03/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011, of the Ministry of Finance.

Example 4: On September 1, 2011, Mr. A transferred 10,000 shares of stock code Z at a transfer price of 31,000 VND per share. As Mr. A has a trading account with Securities Company X, Securities Company X is responsible for withholding personal income tax from Mr. A as follows:

Tax due = 10,000 x 31,000 VND x 0.05% = 155,000 VND

2. Regarding income from dividends:

From August 1, 2011 to December 31, 2012, organizations and individuals paying dividends to individual investors in securities; or contributions to purchase shares of enterprises (excluding dividends from joint-stock banks, financial investment funds, credit institutions) shall not withhold personal income tax on dividend income of individuals.

Organizations paying income shall record zero (= 0) in Item [22] of Form 03/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011, of the Ministry of Finance.

Example 5: In 2010, Mr. A purchased 2% of the shares of Joint Stock Company X.

On August 1, 2011, Mr. A received a dividend of 100 million VND, which is exempt from personal income tax.

Article 16. Declaration and settlement of personal income tax Settlement of personal income tax for taxable income from salaries and wages and from business operations of individuals in the first tax bracket of the progressive tax rate table.

1. Declaration and settlement of personal income tax Settlement of personal income tax for taxable income from salaries and wages and from business operations of individuals in the first tax bracket of the progressive tax rate table.

a) Determination of the full-year tax exemption amount for income from salaries and wages; from business operations of individuals whose taxable income falls within the first tax bracket of the progressive tax rate table is as follows:

b) Individuals and household businesses declare the personal income tax after deducting the exempted tax amount in Item [32] (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. Declaration and settlement of personal income tax for individuals transferring registered securities subject to a 20% tax rate.

a) Determination of the full-year tax reduction amount for individuals transferring registered securities subject to a 20% tax rate is as follows:

b) Individuals declare the personal income tax after deducting the reduced tax amount in Item [26] (Tax payable during the period) of the Personal Income Tax Settlement Declaration Form No. 13/KK-TNCN issued together with Circular No. 28/2011/TT-BTC dated February 28, 2011, of the Ministry of Finance.

3. When settling personal income tax, organizations and individuals who are exempted or reduced in tax must submit the Appendix according to Form No. 25/MGT-TNCN issued together with this Circular along with their tax settlement documents, clearly reflecting the total tax payable, the total tax exempted or reduced.

Chapter IV
IMPLEMENTATION

Article 17. Effective Date

This Circular takes effect from December 26, 2011, and is implemented in accordance with Resolution No. 08/2011/QH13 of the National Assembly.

Article 18. Responsibility for Implementation

1. Tax authorities at all levels are responsible for disseminating and guiding organizations, individuals, and taxpayers to implement the contents of this Circular.

2. Organizations, individuals, and taxpayers subject to the regulations of this Circular shall implement according to 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./.