Resolution No. 200-NQ/TVQH on the issuance of the Business Tax Regulation

RESOLUTION

NATIONAL ASSEMBLY STANDING COMMITTEE

DETERMINING BUSINESS AND INDUSTRIAL TAX FOR

COOPERATIVES, COLLECTIVE ORGANIZATIONS, AND INDIVIDUAL HOUSEHOLDS

ENGAGED IN BUSINESS AND INDUSTRIAL ACTIVITIES

NATIONAL ASSEMBLY STANDING COMMITTEE

SOCIALIST REPUBLIC OF VIETNAM

Pursuant to the resolution of the National Assembly on April 10, 1965, delegating certain powers to the Standing Committee of the National Assembly in the new situation;

After hearing the Government Council's report and proposal regarding the amendment of business and industrial tax to be consistent with the new situation and tasks;

After hearing the comments from the National Assembly's Planning and Budget Commission,

Pursuant to …;

1. From now on, the business and industrial tax for cooperatives, collective organizations, and individual households engaged in business and industrial activities shall be determined according to the charter attached hereto.

2. The Government Council shall implement this decision.

CHARTER

ON BUSINESS AND INDUSTRIAL TAX

FOR COOPERATIVES, COLLECTIVE ORGANIZATIONS

AND INDIVIDUAL HOUSEHOLDS ENGAGED IN BUSINESS AND INDUSTRIAL ACTIVITIES

After the socialist transformation has been basically completed, there have been many changes in the business and industrial operations in the northern part of our country.

To ensure that the business and industrial tax policy is appropriate to these circumstances, while meeting the requirements of the revolutionary tasks in the current stage, we hereby promulgate this business and industrial tax charter to contribute to encouraging the development of small-scale industry and handicraft production, continuing to consolidate the socialist mode of production relations, strengthening management of production, circulation, distribution, price control, and market regulation, mobilizing fair and reasonable contributions from business and industrial enterprises, serving the needs of building material and technical foundations for socialism in the northern part of our country and the national anti-American rescue mission.

PART I

GENERAL PRINCIPLES

Article 1

The system of business and industrial tax for cooperatives, collective organizations, and individual households engaged in business and industrial activities is based on the following principles:

- Encouraging the development of small-scale industries and handicrafts in accordance with the Party and State's policies and guidelines, contributing to implementing sector planning, redistributing productive forces, establishing new economic zones; encouraging technological improvements to boost labor productivity and reduce costs; promoting the completion of new production relations and contributing to completing the socialist transformation of handicrafts;

- Contributing to strengthening market management and stabilizing prices, helping state-owned trade and cooperative sales to secure sources of goods, ensuring the provision of essential needs for the people; strengthening the management of private trade, promoting the transformation of small trade;

- Mobilizing fair and reasonable contributions to the state treasury, while allocating an appropriate portion for the accumulation of cooperatives to develop production, improve technology, and for the living standards of cooperative members and individual traders.

Article 2

All cooperatives, collective organizations, and individual households producing small-scale industries and handicrafts, engaging in transportation, architecture, service industries, food and beverage, trade, and agricultural businesses not subject to agricultural tax under the current agricultural tax charter (hereinafter referred to as agricultural businesses not subject to agricultural tax) must pay business and industrial tax.

Based on this charter, the Prime Minister will stipulate the collection system for trades subject to business and industrial tax not listed in this charter and for village-level cooperative sales.

Article 3

Business and industrial tax mentioned in this charter includes enterprise tax, corporate profit tax, and trading tax.

Regularly operating businesses must pay enterprise tax and corporate profit tax.

Businesses trading in single shipments must pay trading tax.

PART II

ENTERPRISE INCOME TAX

Article 4

Enterprise tax is calculated based on the revenue of the business according to the tax schedule attached to this charter.

Revenue for calculating enterprise tax is:

- For small-scale industry and handicraft sectors: money received from selling goods, processing fees, repair charges, or repair labor costs;

- For transportation sector: freight rates or transportation labor costs;

- For service sector: repair labor costs, service labor costs;

- For food and beverage and trade sectors: total sales revenue; if acting as an agent for sales or consignment purchases, revenue is the commission earned;

- For agricultural businesses not subject to agricultural tax: money received from selling products of those businesses.

During implementation, the Prime Minister will adjust the classification of sectors and trades in the enterprise tax schedule based on the requirements of the situation and the development tasks at different times.

Article 5

If a business operates multiple sectors or trades with different tax rates, it is necessary to distinguish revenue from each sector or trade to calculate the tax.

Article 6

Enterprise tax is collected monthly. Taxable entities (excluding small businesses), within the first five days of each month, must submit to the industrial tax collection agency (hereinafter referred to as the collection agency) a declaration of the previous month's revenue for each type of activity and each trade, and pay the tax within the first ten days of the month.

Small businesses are exempted from the aforementioned declaration procedures and can pay taxes according to a simplified method prescribed by the Ministry of Finance.

, Clause 1, Clause 2 Article 7a of this Regulation.

Business and industrial enterprises must declare to the local collection agency at least ten days before starting, stopping, or changing their business operations (changing product lines, organizational changes such as mergers, divisions, etc.).

Article 8

Taxable entities must maintain accounting books in accordance with the regulations set by the State; for small households, the collection agency may allow simpler record-keeping.

Article 9

Agricultural cooperatives, salt-making and fishing cooperatives with handicraft production bases are exempt from enterprise tax on handicraft products used for production or construction of cooperative and communal public works (warehouses, drying yards, schools, etc.) as well as on products sold to cooperative members for production purposes.

Article 10

Elderly or disabled individuals engaged in petty trading sufficient only to ensure a minimum standard of living are exempt from enterprise tax.

Tax bases encountering difficulties due to natural disasters, enemy activities, or unexpected accidents may be considered for tax reduction or exemption by administrative committees at district level or higher, upon the proposal of the revenue collection agency, for a certain period.

CHAPTER III

ENTERPRISE INCOME TAX

Article 11

All cooperatives, cooperative organizations, and individual households engaged in commercial and industrial businesses that generate profits must pay enterprise income tax, except for itinerant traders who have already paid trading taxes.

Article 12

The collection of enterprise income tax is based on the differentiation of the following three types of industries:

- Small-scale industrial production, handicrafts, transportation, construction, and agricultural business not subject to agricultural tax;

- Service industry and food service industry;

- Fixed commercial trade (sitting trade).

For small-scale industrial production, handicrafts, transportation, construction, and agricultural business not subject to agricultural tax.

Article 13

For small-scale industrial and handicraft production units or those engaged in transportation, construction, and agricultural business not subject to agricultural tax, taxable income is the total revenue of each three-month or six-month business period as stated in Article 4, plus additional income (if any), minus material expenses, depreciation of fixed assets, legitimate costs, and the tax-free allowance as stated in Article 14.

Article 14

For cooperatives, when calculating taxable income, each member who actually participates in production during the business period (including direct and indirect labor) is entitled to a tax-free allowance.

The monthly tax-free allowance per person is determined according to the nature of the business and the locality (city, town, mountainous area, or other region) as follows:

Trades not listed in the table will be studied and added by the Ministry of Finance.

The Prime Minister shall adjust the classification of industries, trades, and regions in the table based on the requirements of the situation and the development tasks of production at different times.

Article 15

For cooperatives relocating their facilities according to local government guidance, if the tax-free allowance at the old location is higher than at the new location, the provincial administrative committee or the municipal administrative committee under the central government may decide to allow the continuation of the old tax-free allowance for a period of one to two years.

Article 16

Enterprise income tax for cooperatives engaged in small-scale industrial production, handicrafts, transportation, construction, and agricultural business not subject to agricultural tax is calculated according to the following progressive tax rate schedule:

If the average annual income subject to tax of cooperative members exceeds 1,600đ, in addition to paying taxes according to the above table, the taxable entity must pay an additional amount from 6% to 15% of the excess income, as decided by the Provincial People's Committee or the Municipal People's Committee under the central government, except in cases where such income levels are achieved through technological improvements or management improvements, without deduction.

Article 17

Cooperatives engaged in small-scale industrial production, handicrafts, transportation, architecture, and agricultural trade that are not subject to agricultural tax, when purchasing machinery, tools, and constructing buildings or workshops for production purposes, may deduct a portion of their corporate income tax to be placed into the cooperative's reserve fund. The rate of tax deduction shall be equal to the ratio of the amount spent to the income subject to tax. The maximum deduction rates are specified as follows:

- High-level cooperatives:

Industries and trades: mechanical manufacturing, chemical, glass-making from sand, water transport and shipbuilding, ferry... 30%

Other industries and trades... 25%

- Medium-level cooperatives in all industries and trades... 15%

If cooperatives have plans to purchase machinery, tools, construct buildings or workshops for production purposes and have declared this to the tax collection agency but have not been able to implement these plans within the year, they must carry over to the next year. If the cooperative's current reserve fund is insufficient to cover the expenses, the maximum deduction rates are specified as follows:

- High-level cooperatives:

Industries and trades: mechanical manufacturing, chemical, glass-making from sand, water transport and shipbuilding, ferry... 50%

Other industries and trades... 40%

- Medium-level cooperatives in all industries and trades... 20%

The classification of cooperatives as high-level or medium-level to determine the deduction rate shall be decided by the Provincial People's Committee or the Municipal People's Committee under the central government, based on the proposal of the tax collection agency and the industry management agency.

The Prime Minister will adjust the classification of industries and trades listed in the corporate income tax deduction table based on the requirements of the situation and the development tasks at different times.

Article 18

Cooperatives utilizing waste materials to produce goods are exempt from tax on the income generated from such utilization; the exemption period is one year from the date the products made from waste materials are sold.

Cooperatives using locally sourced raw materials and materials obtained through exploitation to replace imported raw materials and materials provided by the State are exempt from tax on the income generated from such utilization; the exemption period is one year from the date the products made from replacement materials are sold.

To prevent fraud and abuse, the Ministry of Finance and relevant agencies need to define what constitutes waste materials and replacement materials in small-scale industry and handicrafts.

Article 19

Cooperatives relocating their facilities according to local authorities' guidance, if they encounter difficulties in production and reduced income at the new location, may be eligible for a reduction in corporate income tax for a period of three months to one year, as decided by the Provincial People's Committee or the Municipal People's Committee under the central government, upon the recommendation of the tax collection agency. Afterward, if difficulties persist, they may be eligible for another reduction period of three months to one year.

The tax reduction rate is as follows:

Relocation to mountainous areas or regions with many difficulties: reduction of 25% to 50% of corporate income tax;

- Relocation to other locations: reduction of 10% to 20%.

For special difficult cases, the Provincial People's Committee or the Municipal People's Committee under the central government may consider tax exemption for a period as specified above, upon the recommendation of the tax collection agency.

Article 20

War veterans participating in production in cooperatives are exempt from corporate income tax on their own income.

Cooperatives with 10% or more of their members being war veterans are entitled to a corresponding reduction in corporate income tax payable by the cooperative (after deducting the corporate income tax exemption for individual war veteran members). Cooperatives with 70% or more of their members being war veterans are exempt from corporate income tax. The tax exemption and reduction for cooperatives must be placed into the cooperative's reserve fund; the tax exemption for individual war veteran members shall be enjoyed by those members.

Article 21

Agricultural cooperatives, salt-making cooperatives, fishing cooperatives engaging in small-scale industrial production, handicrafts, or transportation, architecture, or agricultural trade not subject to agricultural tax, shall pay corporate income tax on their additional production and business activities at the lowest rate specified in the tax table in Article 16.

Such cooperatives are also entitled to the tax exemption allowance under Article 14 and tax reduction under Articles 17, 18, and 20.

Article 22

For individual households engaged in small-scale industrial production, handicrafts, transportation, architecture, or agricultural trade not subject to agricultural tax, the corporate income tax is calculated as specified in Article 16 plus an additional 25%.

For industries and trades deemed unnecessary to organize into cooperatives by the Provincial People's Committee or the Municipal People's Committee under the central government, only an additional 10% is added.

When calculating income subject to tax, individual households are also entitled to the tax exemption allowance specified in Article 14.

REGARDING SERVICE INDUSTRIES AND FOOD AND DRINK INDUSTRIES

Article 23

For cooperative groups or individual households engaged in service industries and food and drink businesses, the income subject to tax is: total monthly revenue as stated in Article 4 plus any additional profits (if any) and minus the cost of goods purchased, legitimate management fees, and the tax exemption allowance. The monthly tax exemption allowance for each person actually participating in business operations in the cooperative group is specified as follows:

Individual households are entitled to deduct up to two tax exemption allowances for persons actually participating in business operations within the household.

"d) Within no more than one working day from the date of receiving the dossier submitted for administrative procedures by the specialized agency assigned by the Provincial People's Committee, the Chairman of the Provincial People's Committee shall issue a notification of the result of the inspection of plant-based food exports or a certificate at the request of the importing country."

Corporate income tax for individual households engaged in service industries and food and drink businesses is calculated according to the following progressive tax table:

If the annual taxable income exceeds 1,500đ, in addition to paying tax according to the above tax schedule, there must be an additional payment of from 8% to 18% on the excess income, as decided by the Provincial People's Committee or the Municipal People's Committee under the central government.

Article 25

For business cooperatives in the service and food industry sectors, corporate income tax is calculated based on the average annual taxable income of each member participating in business activities, according to the tax schedule specified in Article 24, minus 5%.

Business cooperatives that are used by state trading enterprises and cooperative trading enterprises, if purchasing stalls, cabinets, or repairing shops, shall be granted a reduction in corporate income tax equal to the ratio of the amount spent to the taxable income, but not exceeding 10% of the corporate income tax payable.

FOR THE BUSINESS SECTOR

Article 26

For business cooperatives or individual households engaged in the business sector, the taxable income is the total monthly revenue mentioned in Article 4 plus any additional income (if any) and minus the cost of goods purchased, legitimate management expenses, and the monthly exemption allowance. The monthly exemption allowance for individual households and each person in the cooperative who actually participates in business operations is stipulated as follows:

- AT Hanoi, Haiphong: 24đ

- AT other cities and towns: 20đ

- AT other areas: 16đ

Article 27

Corporate income tax for individual households engaged in the business sector is calculated according to the following progressive tax schedule:

If the annual taxable income exceeds 1,400đ, in addition to paying tax according to the above schedule, the taxpayer must pay an additional 10% to 20% on the excess income, as decided by the Provincial People's Committee or the Municipal People's Committee under the central government.

Article 28

For business cooperatives engaged in the business sector, corporate income tax is calculated based on the average annual taxable income of each member who actually participates in business activities, according to the tax schedule specified in Article 27, minus 5%.

Business cooperatives that are used by state trading enterprises and cooperative trading enterprises, if purchasing stalls, cabinets, or repairing shops, shall be granted a reduction in corporate income tax equal to the ratio of the amount spent to the taxable income, but not exceeding 10% of the corporate income tax payable.

Article 29

Business cooperatives engaged in the business and food service sectors, if they have a small-scale industrial production unit or handicraft unit, or a farming business unit not subject to agricultural tax, such units will be exempt from corporate income tax for one year from the date products start being sold. After this period, if there are difficulties, they may be granted an additional exemption period of up to one year by the Provincial People's Committee or the Municipal People's Committee under the central government. The exempted tax amount must be placed into the accumulation fund of the production or business unit. Upon expiration of the tax exemption period, the cooperative must pay tax on the income of that unit. When calculating the tax on the unit, it should be done separately according to the provisions of Article 16.

Business cooperatives engaged in the business and food service sectors, if they have a production or business unit as mentioned above, can deduct a portion of the corporate income tax equal to the ratio of the amount spent on purchasing production equipment to the taxable income, but not exceeding 10% of the corporate income tax payable.

Article 30.

Small-scale industrial cooperatives, handicraft cooperatives, transportation cooperatives, architectural cooperatives, and agricultural cooperatives not subject to agricultural tax must maintain accounting books according to the regulations set by the State, must settle profits and losses every three or six months, must declare taxable income within ten days after the settlement period, must temporarily pay corporate income tax monthly, and must settle the tax within five days after receiving notification from the tax authority.

Other taxpayers subject to corporate income tax may be allowed by the tax authority to maintain simpler accounting records and must pay corporate income tax monthly.

Article 31

In cases of merger, division, or cessation of operations, taxpayers subject to corporate income tax must settle profits and losses, declare, and pay taxes within the time limit determined by the tax authority.

Article 32

Taxpayers subject to corporate income tax with low income or facing difficulties due to natural disasters, enemy attacks, or unexpected accidents may be granted a reduction or exemption from corporate income tax for a certain period by the People's Committee at the district level or higher, upon the recommendation of the tax authority.

PART IV

TRAVELING TAX

Article 33

Traveling tax must be paid by:

- Individuals selling goods on a single trip;

- Business establishments in the business sector that are subject to corporate income tax but sell goods outside the permitted trading area or sell goods not registered for trade.

Article 34

Traveling tax is collected based on the revenue of each trip according to the tax schedule attached to these regulations.

During implementation, the Prime Minister will adjust the classification of goods listed in the traveling tax schedule based on the requirements of the situation and the development tasks of production at different times.

Article 35

If multiple types of goods with different tax rates are sold in one trip, the revenue of each type of good must be distinguished when calculating the tax.

Article 36

Farmers selling agricultural products they produce themselves, livestock they raise themselves, fishermen selling their catch, hunters selling their game caught in the designated area by the local People's Committee do not need to pay traveling tax; if they sell outside that area, they must pay traveling tax.

Individuals selling personal items without the purpose of doing business do not need to pay traveling tax. In cases where many items or items with high value are sold, a certificate from the local authority or workplace is required.

Article 37

For food items subject to a 5% tax rate, if the value of the trip is less than 10đ, traveling tax is exempted.

Article 38

For goods listed in the tariff schedule, in localities where it is deemed necessary to utilize private traders to contribute to the promotion of commodity circulation, the Ministry of Finance, upon the proposal of the Provincial People's Committee or the Municipal People's Committee under the central government, may decide to apply a tax rate one level lower; however, the lowest tax rate shall not be less than 5%.

For goods listed in the tariff schedule, in localities where it is deemed necessary to restrict private traders, the Ministry of Finance, upon the proposal of the Provincial People's Committee or the Municipal People's Committee under the central government, may decide to increase the tax rate by one level; however, the highest tax rate shall not exceed 12%.

Article 39

Private traders must prepay the trading tax before transporting goods and must settle the tax immediately after completing the sale.

In cases where goods are damaged due to accidents during transportation, if certified by the local authority or the police station where the accident occurred, the tax collection agency will reassess the tax according to the actual situation.

CHAPTER V

GENERAL PROVISIONS

Article 40

The task of collecting commercial and industrial taxes is assigned to the tax collection agencies at various levels under the Ministry of Finance.

Tax collection agencies may delegate the collection of commercial and industrial taxes in communes to the Commune People's Committee, and in wards to the Ward People's Representative Council.

Article 41

While performing their duties, tax collectors must strictly adhere to tax policies and regulations, uphold frugality, integrity, impartiality, and maintain appropriate conduct and attitude.

Tax collectors must have identification issued by the tax collection agency and present it when necessary.

Article 42 |||

Taxable entities have the duty to truthfully declare, provide necessary documents, facilitate easy inspection of books, vouchers, goods, warehouses by tax officers, and may not refuse or delay such inspections.

1. The "Labor Medal" second class shall be awarded or posthumously awarded to individuals meeting one of the following criteria:

All citizens have the duty to assist tax collection agencies in enforcing commercial and industrial tax policies and to identify fraudulent tax practices. Those who contribute to assisting tax collection agencies will be rewarded according to current regulations.

Article 44 |||

The handling of violations concerning commercial and industrial taxes is stipulated as follows:

1- If conducting business without registration, in addition to being processed according to the current business registration regulations, regular businesses must pay corporate tax at the rate specified in the corporate tax schedule plus:

- 1% for industries and professions subject to corporate tax from 1% to 3%,

- 2% for industries and professions subject to corporate tax above 3%.

Businesses engaged in trading must pay trading tax at the rate specified in the trading tax schedule plus an additional 2%.

2- If violating declaration procedures or accounting recordkeeping regulations as stipulated in Articles 6, 7, 8, 30, 31, 39, and 42, they may be criticized or warned; if repeated or first-time violation with intent, they may be fined up to 100 dong.

3- If failing to pay taxes within the prescribed period as stipulated in Articles 6, 30, 31, and 39, an additional 0.5% of the overdue tax amount must be paid for each day of delay.

4- If misdeclaring or evading taxes, they may be fined from one to five times the amount of the fraudulent tax.

5- If committing serious violations, such as repeated offenses, falsifying documents, opposing tax collection, etc., they may be prosecuted before the people's court.

Individuals interfering with the collection of commercial and industrial taxes may be criticized, warned, or prosecuted before the people's court, depending on the severity of the offense.

Article 45 |||

The authority to handle violations of declaration procedures, accounting recordkeeping regulations, and misdeclaration or evasion of commercial and industrial taxes is stipulated as follows:

- Head of the tax collection station: criticize, warn, fine according to Point 2, Article 44: not exceeding 10 dong; fine for misdeclaration or evasion of taxes according to Point 4, Article 44: one time the amount of fraudulent tax but not exceeding 10 dong;

- Head of the tax collection department, head of the county finance department, or equivalent administrative unit at the county level: fine according to Point 2, Article 44: not exceeding 50 dong; fine for misdeclaration or evasion of taxes according to Point 4, Article 44: two times the amount of fraudulent tax but not exceeding 50 dong. If the fine exceeds 50 dong to 100 dong, it must be decided by the County People's Committee or the equivalent administrative unit at the county level.

- Head of the tax collection branch or head of the provincial finance department: fine from three times the amount of fraudulent tax upwards, but not exceeding 200 dong. If the fine for misdeclaration or evasion of taxes exceeds 200 dong, it must be decided by the Provincial People's Committee or the Municipal People's Committee under the central government.

For complex violation cases, regardless of the fine amount, the tax collection agency must seek the opinion of the same-level People's Committee.

Article 46 |||

The authority to review appeals regarding the handling stipulated in Article 45 is stipulated as follows:

- Appeals against decisions on fines by the head of the tax collection station, the head of the tax collection department, or the head of the county finance department are reviewed and decided by the County People's Committee or the equivalent administrative unit at the county level. If there is still an appeal against this decision, it is reviewed and finally decided by the Provincial People's Committee or the Municipal People's Committee under the central government.

- Appeals against decisions on fines by the head of the tax collection branch, the head of the provincial finance department, or the County People's Committee or the equivalent administrative unit at the county level are reviewed and decided by the Provincial People's Committee or the Municipal People's Committee under the central government. If there is still an appeal against this decision, it is reviewed and finally decided by the Minister of Finance.

- Appeals against decisions on fines by the Provincial People's Committee or the Municipal People's Committee under the central government are reviewed and finally decided by the Minister of Finance.

While waiting for the appeal to be resolved, the person fined must still pay the fine according to the decision of the imposing agency.

Article 47 |||

This Charter shall take effect from January 1, 1966.

Article 48

This Charter replaces all previous regulations on business license tax, enterprise tax, corporate income tax, and trading tax applicable to cooperatives, cooperative organizations, and individual traders engaged in commercial and industrial activities.

This Charter was approved by the Standing Committee of the National Assembly on January 18, 1966.

BUSINESS INCOME TAX TABLE

TRADING TAX TABLE