Circular No. 23/TC-TCT guiding procedures for tax exemption for business establishments exclusively for disabled workers

CIRCULAR

OF THE MINISTRY OF FINANCE

Guidelines on procedures for tax exemption for production and business establishments exclusively for disabled workers for a production and business establishment exclusively for disabled workers

Pursuant to current tax laws, tax ordinances, and Decree No. 81/CP dated November 23, 1995 of the Government guiding the implementation of certain Articles of the Labor Code concerning disabled workers; the Ministry of Finance provides guidelines on tax exemption procedures for production and business establishments exclusively for disabled workers as follows:

1. Object and scope of application:

a. Production and business establishments exclusively for disabled workers (including war invalids and veterans), which are state-owned enterprises, private enterprises, Limited Liability Companies, Joint Stock Companies, Cooperatives, and production groups established in accordance with the law and meeting the following conditions, shall be eligible for tax exemption under Article 10 of Decree No. 81/CP dated November 23, 1995 of the Government:

Recognized by the People's Committee of the province or centrally-administered city as a production and business establishment exclusively for disabled workers.

Strictly implementing accounting books and using purchase and sale invoices and service supply vouchers in accordance with the current regulations.

Holding a business license issued by the competent state authority.

Having at least ten workers, of which fifty-one percent must be disabled workers confirmed by a competent health authority. For production and business establishments that are private enterprises, limited liability companies, joint stock companies, cooperatives, and production groups, in addition to the number of disabled workers, the remaining workers must mainly be relatives of disabled workers, and shareholders must have management, professional, vocational, scientific, and technical qualifications.

Having rules or charters suitable for disabled workers and managing the production and business establishment primarily staffed by disabled workers.

Registering for tax payment with the tax authority.

b. This Circular does not apply to the following cases:

Production and business establishments of disabled persons that do not meet the conditions specified in point a, Section 1 of this Circular.

Production and business establishments of disabled persons engaged in itinerant trade.

Production and business establishments exclusively for disabled workers with fixed business locations when purchasing goods, transporting goods for sale, or exchanging goods without complying with the regulations on circulation vouchers for goods subject to itinerant trade taxes.

2. Types of taxes exempted:

Production and business establishments exclusively for disabled workers (hereinafter referred to as production and business establishments) during the course of business operations, if they meet the conditions specified in point 1 above, shall be exempt from the following types of taxes:

Business income tax;

Profit tax;

Property tax;

Agricultural land use tax.

3. Procedures and authority for tax exemption:

a. Procedures and authority for business income tax and profit tax exemption:

The examination of tax exemption for business income and profit for production and business establishments exclusively for disabled workers is conducted annually. The production and business establishment can only be exempted from taxes for business activities listed in the business license; if there are other production activities not listed in the business license, taxes must be paid according to the current tax laws and tax ordinances. After the end of the production and business year, the production and business establishment must prepare a tax exemption application and submit it to the competent authority for resolution. The tax exemption application includes:

An application for tax exemption from the establishment accompanied by confirmation from the directly managing tax authority.

Business registration certificate.

Tax registration.

Decision of the People's Committee of the province or centrally-administered city confirming that the establishment is a production and business establishment exclusively for disabled workers.

Audit settlement report of the directly managing tax authority.

Annual settlement report of the production and business unit.

Within thirty days from the date of receipt of the application, the competent tax authority must issue a decision on tax exemption or notify the establishment of the reasons why it cannot be resolved. The tax exemption decision must clearly specify the amount of tax exempted for each type of tax and the total tax exempted for the production and business establishment in the year.

To ensure timely budget revenue and avoid difficulties for the production and business establishment, the directly managing tax authority has the responsibility to inspect the accounting books and actual production and business operations of the establishment and compare them with the tax exemption conditions stipulated in this Circular to decide temporarily not to collect taxes monthly for business activities listed in the production and business establishment's business license and manage taxes for other business activities outside the business license of the establishment.

In case the production and business establishment transports goods or raw materials to sell elsewhere (outside the province or centrally-administered city) where the buyer's address is unclear, when shipping goods, there must be a warehouse dispatch order, a dispatch invoice, and a certificate from the directly managing tax authority regarding the actual quantity and type of goods or raw materials dispatched. The production and business establishment must present all these documents to the tax authority at the sales location, and upon selling the goods, the establishment must issue an invoice to the buyer and apply for tax exemption with the tax authority at the sales location. The tax exemption application includes:

A tax exemption application from the production and business establishment accompanied by confirmation from the directly managing tax authority that the establishment qualifies for tax exemption and the goods or raw materials sold are consistent with the business activities listed in the business license;

Business license (certified copy);

Decision of the People's Committee of the province or centrally-administered city confirming that the establishment is a production and business establishment exclusively for disabled workers (certified copy).

The tax authority at the sales location is responsible for providing sales invoices, managing tax collection, and resolving tax exemptions for the production and business establishment within fifteen days from the date of receipt of the tax exemption application from the production and business establishment.

The production and business establishment shall only be exempted from tax on the actual quantity of goods and raw materials confirmed by the directly managing tax authority. In cases where the production and business establishment sells goods or raw materials outside the scope of business stated in the business license or exceeds the quantity confirmed by the directly managing tax authority, the establishment must declare and pay the full tax to the tax authority at the place of sale according to the law.

The tax authority with the power to issue decisions on exempting revenue tax and profit tax for production and business establishments exclusively for disabled workers shall do so according to the following分级制度：

The Director of the Tax Department shall examine and decide to exempt tax for production and business establishments managed by localities with an average monthly revenue exemption up to five million dong; and a profit exemption of fifty million dong per year.

The Director General of the State Tax Administration shall examine and decide to exempt tax for production and business establishments managed by the central government and those managed by localities with an average monthly revenue exemption exceeding five million dong but not more than fifty million dong; and a profit exemption exceeding fifty million dong but not more than one hundred million dong per year.

The Minister of Finance shall examine and exempt tax for all production and business establishments with an average monthly revenue exemption exceeding fifty million dong; and a profit exemption exceeding one hundred million dong per year.

b. Procedures and authority for exempting property tax and agricultural land use tax shall be carried out in accordance with the current laws and regulations on property tax and agricultural land use tax.

4. Implementation:

If there is a change in conditions during the production and business year that leads to the production and business establishment no longer meeting the conditions for tax exemption as stipulated in Section 1 of this Circular, the establishment must report to the directly managing tax authority within five days of the change to terminate the tax exemption process and the establishment must declare and pay taxes according to the law.

In cases where the production and business establishment engages in fraudulent behavior regarding the conditions for tax exemption, they will not be exempted from any taxes for the entire business year. In addition to not being granted tax exemptions, depending on the severity of the violation, the production and business establishment may also be subject to administrative penalties under the law on administrative penalties in the field of taxation or criminal liability under the law.

Tax officials and other individuals who abuse their positions or powers to intentionally confirm false information or cover up to allow production and business establishments to obtain tax exemptions as stipulated in this Circular, causing losses to the State budget, shall be subject to disciplinary action, administrative penalties, or criminal liability depending on the severity of the violation under the law.

The tax management authority directly managing production and business establishments exclusively for disabled workers must maintain records and retain all relevant documents related to tax exemptions. Annually, provincial and centrally-administered city tax departments must compile the total amount of tax exemptions granted to production and business establishments within their jurisdiction and submit reports to the State Tax Administration by the end of the first quarter of the following year.

This Circular takes effect from the date of issuance. Point 2, Section II of Circular No. 09-TT/LB issued by the Ministry of Labor, Invalids and Social Affairs, Ministry of Finance, and the State Planning Commission guiding the implementation of Decision No. 15-TTg dated October 20, 1992 of the Prime Minister on policies for production and business establishments of war invalids, wounded soldiers, and disabled persons is hereby abolished.

Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance for study and resolution./.