Directive No. 202/TTg guiding the implementation of the Ordinance dated June 23, 1980 on amending and supplementing certain points regarding commercial and industrial tax policies and slaughter tax.

 DIRECTIVE

GUIDELINES FOR THE IMPLEMENTATION OF THE LEGISLATION OF JUNE 23, 1980 ON

AMENDING AND SUPPLEMENTING CERTAIN POINTS REGARDING INDUSTRIAL AND COMMERCIAL TAX POLICY AND LIVESTOCK SLAUGHTER TAX

INDUSTRY AND BUSINESS TAX AND LIVESTOCK SLAUGHTER TAX

In order to enhance the effectiveness of the industrial and commercial tax policy, encourage production development, expand business activities in accordance with the state's economic policies and planning directions, and ensure fair and reasonable contributions among collective and individual industrial and commercial enterprises, on June 23, 1980, the Standing Committee of the National Assembly issued a decree amending and supplementing certain points in the Tax Regulation for Industrial and Commercial Enterprises issued pursuant to Resolution No. 200-NQ/TVQH dated January 18, 1966, and the Livestock Slaughter Tax issued pursuant to Resolution No. 489-NQ/QHK4 dated September 26, 1974.

To implement the above decree of the Standing Committee of the National Assembly, the Prime Minister provides specific guidelines as follows.

1. Regarding the tax exemption threshold for business profits for collective and individual industrial and commercial enterprises.

To ensure that the tax exemption threshold for business profits is appropriate to the new situation and maintains a reasonable relationship between industries, between the collective and individual economic sectors and the state-owned sector, the Standing Committee of the National Assembly's decree of June 24, 1980, stipulates as follows:

"The tax exemption threshold for small-scale industrial production, handicrafts, transportation, construction, and agricultural trade not subject to agricultural tax shall be equivalent to the average basic wage of workers in state-owned enterprises in the same industry in the locality."

"The tax exemption threshold for service and food industries shall be 10% lower than the tax exemption threshold for small-scale industrial and handicraft production."

"The tax exemption threshold for commerce shall be 20% lower than the tax exemption threshold for small-scale industrial and handicraft production."

Based on the principle of calculating the tax exemption threshold mentioned above and following the guidance of the Minister of Finance, provincial People's Committees and municipalities directly under the central government shall determine the specific tax exemption threshold for producers and traders in the same industry within the collective and individual economic sectors based on the average basic wage of state-owned enterprises in the locality, and determine the tax exemption threshold for service and food industries at 10% lower and for commerce at 20% lower than the tax exemption threshold for small-scale industrial and handicraft production. The determination of the tax exemption threshold must ensure uniformity in principle nationwide, maintain a reasonable relationship between localities, reflect the specific conditions of each locality, and differentiate between industries that need encouragement and those that do not.

When there is a change in wages in the state-owned sector, the Minister of Finance will provide specific guidance on adjusting the tax exemption threshold for production and trading activities in the collective and individual sectors.

2. Regarding the application of the business profit tax rate table for individual households engaged in small-scale industrial production, handicrafts, transportation, construction, and agricultural trade (not subject to agricultural tax).

To encourage individual producers and traders to gradually move towards collective production, the Standing Committee of the National Assembly has amended Article 22 of the Tax Regulation for Industrial and Commercial Enterprises as follows: "The business profit tax for individual households engaged in small-scale industrial production, handicrafts, transportation, construction, and agricultural trade not subject to agricultural tax shall be calculated on the taxable profit of the entire household according to the tax rate table specified in the newly revised Article 16, plus an additional 5% or 10% of the tax already calculated; for industries deemed unnecessary to organize into collective production, no additional tax rate shall apply."

The additional 10% tax rate applies to industries and areas where it is necessary and feasible to guide producers and traders towards collective production, and where local authorities have plans to mobilize them into collective organizations.

For establishments, industries, and areas that fall within the scope of being organized into collective production but where local authorities have not yet developed plans to mobilize and organize producers and traders into collective operations, the additional 5% tax rate shall apply.

For establishments, industries, and areas where it is deemed unnecessary to organize into collective production and where decentralized production and trade can achieve higher labor productivity or better serve the public, no additional tax rate shall apply.

Following the guidance of the Ministry of Finance, provincial People's Committees and municipalities directly under the central government shall base their specific application of the additional tax rate or non-application thereof on the actual situation of production and trade activities in the locality and the socialist transformation policy for industry and commerce.

3. Regarding the traveling trade tax.

To enhance the effectiveness of the traveling trade tax in market management and support the state's procurement of goods, Article 3 of the Standing Committee of the National Assembly's decree of June 23, 1980, supplements the traveling trade tax rate table with an additional 15% tax rate applied to large-scale traveling trade. Thus, the current traveling trade tax policy includes five tax rates: 5%, 7%, 10%, 12%, and 15%. The Minister of Finance will specify the types of goods and revenue levels subject to the 15% tax rate.

4. Regarding the livestock slaughter tax - Article 4 of the Standing Committee of the National Assembly's decree of June 23, 1980, amends Point 1 of Resolution No. 489-NQ/QHK4 dated September 26, 1974, as follows:

"The livestock slaughter tax on cattle, buffalo, and pigs for meat shall be levied at a rate of 10% of the value of the animal, based on the state-directed purchase price."

To enhance the effectiveness of the livestock slaughter tax, encourage farmers to increase the weight of livestock before slaughtering, and fulfill their obligation to sell products to the state, the Prime Minister specifies certain points regarding the implementation of this policy as follows:

a) The weight (for pigs) to calculate the slaughter tax for each pig for meat is a maximum of 60 kg and a minimum of 40 kg; pigs weighing more than 60 kg do not have to pay additional slaughter tax, while pigs weighing less than 40 kg must pay tax as if they were 40 kg.

Based on customs and breeding conditions in each locality, the Minister of Finance shall provide specific guidance to provinces and cities regarding the determination of the weight of pigs, cattle, and buffalo for meat and prices for calculating the slaughter tax.

b) For farming households that have the obligation to sell pigs after fulfilling all state obligations, and non-farming households that have fully utilized their capacity for breeding, when slaughtering pigs they breed for consumption, they are entitled to a 25% reduction in the slaughter tax on the portion kept for personal use, with no reduction on the portion sold outside.

To encourage localities to develop breeding and promote the purchase of pigs, cattle, and buffalo for meat to meet state requirements, from now on, state-owned commerce engaged in food trade must pay the slaughter tax at the place where animals are purchased; the entire amount of the slaughter tax collected shall be retained for the local budget supporting the supply of meat animals, including 15% for the communal budget.

5. The Minister of Finance is responsible for explaining and providing detailed guidance on the implementation of the entire commercial and industrial tax regulations issued pursuant to Decision No. 200-NQ/TVQH and the supplementary and amended provisions according to the Ordinance dated June 23, 1980 of the Standing Committee of the National Assembly.

This Directive shall be uniformly implemented throughout the country from July 1, 1980.