Circular No. 18/1999/TT-BTC guides the method for calculating additional revenue collection due to lower value-added tax payments compared to previous business income tax payments for lottery companies.

CIRCULAR

Guidelines for calculating additional revenue collection due to lower value-added tax payment compared to previous business income tax payments for lottery companies

The guidelines aim to calculate additional revenue collection due to lower value-added tax payment compared to previous business income tax payments for lottery companies

Based on the Value Added Tax Law; Decree No. 28/1998/ND-CP dated May 15, 1998 of the Government detailing the implementation of the Value Added Tax Law;

Based on Decree No. 102/1998/ND-CP dated December 21, 1998 of the Government amending and supplementing certain points of Decree No. 28/1998/ND-CP dated May 15, 1998 of the Government detailing the implementation of the Value Added Tax Law (VAT); Circular No. 89/1998/TT-BTC dated June 27, 1998 and Circular No. 175/1998/TT-BTC dated December 24, 1998 of the Ministry of Finance;

The Ministry of Finance issues this Circular guiding the calculation method for additional revenue collection due to lower VAT payment compared to previous business income tax payments for lottery companies as follows:

 I. General Provisions

1. Lottery companies are state-owned enterprises operating in the lottery sector, responsible for implementing the Value Added Tax Law and the Corporate Income Tax Law like other state-owned enterprises.

2. In addition to revenue contributions to the State budget according to the Value Added Tax Law, the Corporate Income Tax Law, and other taxes and revenues as currently regulated by the State, lottery companies must also pay additional revenue from remaining corporate income due to lower VAT payments compared to previous business income tax payments without adjusting the components forming the ticket price (prize payout ratio, agent commission).

3. The additional revenue from remaining corporate income of lottery companies is a revenue of the State budget, declared and paid into the State budget by lottery companies as with corporate income tax and in accordance with the guidance provided in this Circular.

II. Specific Provisions

1. Costs of lottery companies

1.1. To ensure additional revenue sources for the State budget, the Ministry of Finance stipulates the maximum issuance costs of lottery companies in each region as follows:

For lottery companies belonging to the Southern Association area (from Binh Thuan and Lam Dong provinces southward), it is 19% of sales revenue.

For lottery companies belonging to the two Central Association areas (North and South), it is 22% of sales revenue.

For lottery companies belonging to the Northern Association area, it is 24% of sales revenue.

(The aforementioned sales revenue includes VAT)

1.2. Based on the issuance cost levels specified in this Circular, lottery companies may implement expenses as stipulated in Section III Part B of Circular No. 99/1998/TT-BTC dated July 14, 1998 of the Ministry of Finance.

For special expense items in lottery operations, refer to the guidance in Circular No. 06/1998/TT-BTC dated January 10, 1998 of the Ministry of Finance and the content of document No. 410TCDN/NV4 dated March 26, 1998 of the State Capital Management and Asset Administration Agency at enterprises for implementation.

1.3. Within the issuance cost levels specified in this Circular, any savings made by lottery companies can be fully allocated to the development fund.

If actual issuance costs exceed the limit, the excess amount must be deducted from the remaining income of the unit. In exceptional cases due to objective reasons such as newly established companies, companies with very low initial income when implementing this mechanism compared to other companies in the same region and complying well with agent commission regulations, the company should report to the Ministry of Finance for consideration and handling of reasonable expenses exceeding the issuance cost levels specified in this Circular.

2. Additional Revenue Collection from Remaining Corporate Income of Lottery Companies into the State Budget.

2.1. The higher income resulting from lower VAT payments compared to previous business income tax payments must be further submitted to the State budget at a rate of 90% based on the remaining income as follows:

Corporate Income Tax payable under the Law is determined by the following formula:

The corresponding Corporate Income Tax payable on the higher income over 12% of capital is determined as follows:

Corporate Income Tax Supplement = Remaining Income - 12% of Capital

D.N Supplement = Remaining Income (After paying Corporate Income Tax) - Corresponding to 12% of Capital

(25%)

Additional Corporate Income Tax payable to the State budget is determined as follows:

(Previous Corporate Income Tax payable) - (VAT payable)

Ratio = ---------------------------------------------------------------------

Corporate Income Tax Payable

Remaining Income is income after deducting Corporate Income Tax and supplementary income:

Additional Revenue to be Paid = Remaining Income x 90% Ratio

Example 1: Company A's lottery sales in 1999 had taxable income of 30 billion VND, of which the difference between lower VAT payable and previous business income tax was 18 billion VND, equivalent to 60% of total taxable income (18 billion / 30 billion x 100%); Capital is 8 billion VND.

Corporate Income Tax payable under the Law:

30 billion VND x 32% = 9.6 billion VND.

Remaining Income after paying Corporate Income Tax:

30 billion VND - 9.6 billion VND = 20.4 billion VND

The corresponding Corporate Income Tax payable on the higher income over 12% of capital is determined as follows:

Income corresponding to 12% of capital is:

8 billion VND x 12% = 0.96 billion VND

Corporate Income Tax Supplement payable is:

(20.4 billion VND - 0.96 billion VND) x 25% = 4.86 billion VND.

Remaining Income after paying Corporate Income Tax and Corporate Income Tax Supplement:

30 billion VND - (9.6 billion VND + 4.86 billion VND) = 15.54 billion VND, of which the change in tax is: 15.54 billion VND x 60% = 9.324 billion VND

Additional Amount to be Paid: 9.324 billion VND x 90% = 8.392 billion VND

Total Corporate Income Tax, Corporate Income Tax Supplement, and Additional Amount to be Paid into the State Budget is:

9.6 billion VND + 4.86 billion VND + 8.392 billion VND = 22.852 billion VND

2.2. The establishment of enterprise funds shall be carried out in accordance with the provisions of Circular No. 70TC/TCDN dated November 5, 1996, issued by the Ministry of Finance, guiding the distribution regime of post-tax profits and the management of state-owned enterprise funds.

2.3. Declaration and payment of additional income tax on the remaining portion of the enterprise's income:

Based on the annual lottery business plan and the guidance for calculating and determining the additional income tax on the remaining portion of the income as stipulated in Point 2.1, Section II of this Circular, the Lottery Construction Company shall be responsible for preparing and submitting a provisional declaration for the payment of the additional income tax on the remaining portion of the income to the Department of Finance and Price Control and the Provincial Tax Office along with the declaration and payment of the provisional annual declaration of the remaining income. Based on the declaration submitted by the Lottery Construction Company, the Tax Department shall cooperate with the Department of Finance and Price Control at the provincial level to verify and determine the amount of additional income tax on the remaining portion of the income provisionally paid annually by the enterprise and allocate it quarterly so that the Tax Department can issue a notice to the Lottery Construction Company to pay this tax quarterly into the State Budget.

2.4. The submission, settlement, and accounting of the additional income tax on the remaining portion of the enterprise's income shall be carried out in accordance with the regulations governing the submission, settlement, and accounting of corporate income tax.

III. Implementation Organization

1. This Circular shall take effect fifteen days from the date of signature.

2. In case of difficulties during implementation, please report to the Ministry of Finance for study, consideration, and supplementary guidance./.