Circular No. 23TC/TCT guides the procedures for tax exemption for production and business establishments exclusively for disabled workers.

CIRCULAR

DIRECTIVE OF THE MINISTRY OF FINANCE NO. 23 TC/TCT OF APRIL 26, 1996 GUIDING PROCEDURES FOR EXEMPTION FROM TAXES FOR ENTERPRISES DEDICATED TO DISABLED WORKERS

BASED ON CURRENT TAX LAWS AND LEGISLATIONS, AND DECREE NO. 81/CP OF NOVEMBER 23, 1995 OF THE GOVERNMENT GUIDING THE IMPLEMENTATION OF CERTAIN PROVISIONS OF THE LABOR CODE REGARDING DISABLED WORKERS, THE MINISTRY OF FINANCE GUIDES THE PROCEDURES FOR EXEMPTING TAXES FOR ENTERPRISES DEDICATED TO DISABLED WORKERS AS FOLLOWS:

1. Object and scope of application:

a. ENTERPRISES DEDICATED TO DISABLED WORKERS (INCLUDING WAR INVALIDS AND VETERANS), INCLUDING STATE ENTERPRISES, PRIVATE ENTERPRISES, LIMITED LIABILITY COMPANIES, JOINT-STOCK COMPANIES, COOPERATIVES, AND PRODUCTION GROUPS ESTABLISHED IN ACCORDANCE WITH THE LAW, WHICH SATISFY THE FOLLOWING CONDITIONS, ARE ELIGIBLE FOR TAX EXEMPTION UNDER ARTICLE 10 OF DECREE NO. 81/CP OF NOVEMBER 23, 1995 OF THE GOVERNMENT:

- RECOGNIZED BY THE PEOPLE'S COMMITTEE OF THE PROVINCE OR CITY DIRECTLY UNDER THE CENTRAL GOVERNMENT AS AN ENTERPRISE DEDICATED TO DISABLED WORKERS.

- STRICTLY COMPLY WITH THE REQUIREMENTS FOR MAINTAINING ACCOUNTING RECORDS AND USING PURCHASE AND SALE DOCUMENTS ACCORDING TO THE CURRENT REGULATIONS.

- POSSESS A BUSINESS LICENSE ISSUED BY THE AUTHORIZED GOVERNMENT AGENCY.

- EMPLOY AT LEAST 10 WORKERS, OF WHOM AT LEAST 51% MUST BE DISABLED WORKERS CONFIRMED BY THE AUTHORIZED HEALTH AGENCY. FOR PRIVATE ENTERPRISES, LIMITED LIABILITY COMPANIES, JOINT-STOCK COMPANIES, COOPERATIVES, AND PRODUCTION GROUPS, THE REMAINING WORKERS MUST MAINLY BE RELATIVES OF THE DISABLED WORKERS, AND SHAREHOLDERS MUST HAVE MANAGEMENT, SPECIALIZATION, PROFESSIONAL, SCIENCE AND TECHNOLOGY QUALIFICATIONS.

- HAVE A REGULATION OR CHARTER SUITABLE FOR DISABLED WORKERS AND THE MANAGEMENT OF AN ENTERPRISE MAINLY COMPOSED OF DISABLED WORKERS.

- REGISTER FOR TAX PAYMENT WITH THE TAX AUTHORITY.

b. THIS DIRECTIVE DOES NOT APPLY TO THE FOLLOWING CASES:

- ENTERPRISES OPERATED BY DISABLED PERSONS WHO DO NOT MEET THE CONDITIONS STATED IN POINT a OF SECTION 1 OF THIS DIRECTIVE.

- ENTERPRISES OPERATED BY DISABLED PERSONS ENGAGED IN TRADING.

- ENTERPRISES DEDICATED TO DISABLED WORKERS WITH FIXED BUSINESS LOCATIONS THAT VIOLATE THE REGULATIONS ON DOCUMENTATION FOR GOODS IN CIRCULATION AND ARE SUBJECT TO TAXATION AS TRADING ACTIVITIES.

2. TYPES OF TAXES TO BE EXEMPTED:

ENTERPRISES DEDICATED TO DISABLED WORKERS (HEREINAFTER REFERRED TO AS ENTERPRISES) THAT SATISFY THE CONDITIONS STATED ABOVE WILL BE EXEMPT FROM THE FOLLOWING TAXES DURING THEIR BUSINESS OPERATIONS:

- BUSINESS INCOME TAX;

- PROFIT TAX;

- PROPERTY TAX;

- AGRICULTURAL LAND USE TAX.

3. PROCEDURES AND AUTHORITY FOR TAX EXEMPTION:

a. PROCEDURES AND AUTHORITY FOR EXEMPTING BUSINESS INCOME TAX AND PROFIT TAX:

THE CONSIDERATION OF EXEMPTING BUSINESS INCOME TAX AND PROFIT TAX FOR ENTERPRISES DEDICATED TO DISABLED WORKERS IS CONDUCTED ANNUALLY. ENTERPRISES ARE ONLY ELIGIBLE FOR TAX EXEMPTION FOR THE INDUSTRIES LISTED IN THEIR BUSINESS LICENSE. IF THEY ENGAGE IN OTHER PRODUCTION ACTIVITIES NOT LISTED IN THE LICENSE, THEY MUST PAY TAXES ACCORDING TO THE CURRENT TAX LAWS AND LEGISLATIONS. AFTER THE END OF THE BUSINESS YEAR, ENTERPRISES MUST PREPARE AND SUBMIT A TAX EXEMPTION APPLICATION TO THE AUTHORIZED AUTHORITY. THE APPLICATION INCLUDES:

- A REQUEST FOR TAX EXEMPTION FROM THE ENTERPRISE ACCOMPANIED BY A CONFIRMATION FROM THE DIRECTLY RESPONSIBLE TAX AUTHORITY.

- A BUSINESS LICENSE.

- TAX REGISTRATION.

- A DECISION FROM THE PEOPLE'S COMMITTEE OF THE PROVINCE OR CITY DIRECTLY UNDER THE CENTRAL GOVERNMENT CONFIRMING THE ENTERPRISE AS ONE DEDICATED TO DISABLED WORKERS.

- A FINAL AUDIT REPORT FROM THE DIRECTLY RESPONSIBLE TAX AUTHORITY.

- AN ANNUAL FINAL REPORT FROM THE PRODUCTION AND BUSINESS UNIT.

WITHIN 30 DAYS OF RECEIVING THE APPLICATION, THE AUTHORIZED TAX AUTHORITY MUST ISSUE A DECISION ON TAX EXEMPTION OR NOTIFY THE ENTERPRISE OF THE REASONS FOR NON-APPROVAL. THE DECISION ON TAX EXEMPTION MUST SPECIFY THE AMOUNT OF TAX EXEMPTED FOR EACH TYPE OF TAX AND THE TOTAL AMOUNT OF TAX EXEMPTED FOR THE ENTERPRISE IN THE YEAR.

TO ENSURE TIMELY BUDGET COLLECTION AND AVOID DIFFICULTIES FOR ENTERPRISES, THE DIRECTLY RESPONSIBLE TAX AUTHORITY MUST CHECK THE ACCOUNTING RECORDS AND ACTUAL BUSINESS OPERATIONS OF THE ENTERPRISE AND COMPARE THEM WITH THE TAX EXEMPTION CONDITIONS STATED IN SECTION 1 OF THIS DIRECTIVE TO TEMPORARILY SUSPEND MONTHLY TAX COLLECTION FOR THE ACTIVITIES LISTED IN THE ENTERPRISE'S BUSINESS LICENSE AND MANAGE TAXES FOR OTHER ACTIVITIES OUTSIDE THE LICENSE.

IF THE ENTERPRISE BRINGS GOODS OR RAW MATERIALS TO SELL IN ANOTHER LOCATION (OUTSIDE THE PROVINCE OR CITY DIRECTLY UNDER THE CENTRAL GOVERNMENT) WITHOUT A CLEAR BUYER ADDRESS, THEY MUST HAVE A STOCK REMOVAL ORDER, A STOCK REMOVAL FORM, AND A CERTIFICATE FROM THE DIRECTLY RESPONSIBLE TAX AUTHORITY ABOUT THE QUANTITY AND TYPE OF GOODS AND RAW MATERIALS REMOVED FROM STOCK. THE ENTERPRISE MUST PROVIDE ALL THESE DOCUMENTS TO THE LOCAL TAX AUTHORITY WHERE THE SALES TAKE PLACE. WHEN SELLING, THE ENTERPRISE MUST ISSUE AN INVOICE TO THE BUYER AND APPLY FOR TAX EXEMPTION FROM THE LOCAL TAX AUTHORITY. THE APPLICATION FOR TAX EXEMPTION INCLUDES:

- A REQUEST FOR TAX EXEMPTION FROM THE ENTERPRISE ACCOMPANIED BY A CONFIRMATION FROM THE DIRECTLY RESPONSIBLE TAX AUTHORITY THAT THE ENTERPRISE IS ELIGIBLE FOR TAX EXEMPTION AND THAT THE GOODS AND RAW MATERIALS SOLD ARE CONSISTENT WITH THE INDUSTRIES LISTED IN THE LICENSE;

- A COPY OF THE BUSINESS LICENSE (CERTIFIED TRUE COPY);

- A DECISION FROM THE PEOPLE'S COMMITTEE OF THE PROVINCE OR CITY DIRECTLY UNDER THE CENTRAL GOVERNMENT CONFIRMING THE ENTERPRISE AS ONE DEDICATED TO DISABLED WORKERS (CERTIFIED TRUE COPY).

THE LOCAL TAX AUTHORITY MUST PROVIDE SALES INVOICES, MANAGE TAX COLLECTION, AND PROCESS THE TAX EXEMPTION APPLICATION FROM THE ENTERPRISE WITHIN 15 DAYS OF RECEIVING THE APPLICATION.

The production and business establishment shall only be exempted from tax on the actual quantity of goods and raw materials confirmed to have been dispatched from the warehouse 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 in accordance with the law.

The tax authority has the power to issue decisions to exempt revenue tax and profit tax for production and business establishments exclusively for disabled workers as follows:

- The Director of the Tax Department examines and decides to grant tax exemption for production and business establishments managed by localities with an average monthly revenue tax exemption up to five million VND; and a profit tax exemption of fifty million VND per year.

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

- The Minister of Finance examines and grants tax exemption for all production and business establishments with an average monthly revenue tax exemption exceeding fifty million VND; and a profit tax exemption exceeding one hundred million VND per year.

b. Procedures and authorities for granting exemptions on real estate tax and agricultural land use tax shall be carried out in accordance with the current laws and regulations on real estate tax and agricultural land use tax.

4. Implementation:

During the production and business year, if there are changes in conditions that lead to the production and business establishment no longer meeting the criteria for tax exemption as stipulated in Section 1 of this Circular, then within no later than five days from the date of change, the establishment must report to the directly managing tax authority to terminate the tax exemption process and the establishment must comply with the declaration and payment of taxes according to the law.

If the production and business establishment engages in fraudulent activities regarding the conditions for tax exemption, they will not be granted any tax exemptions for the entire business year. In addition to not being granted tax exemptions, depending on the severity of the violation, the establishment may also face administrative penalties under the law on administrative sanctions in the field of taxation or criminal liability as prescribed by 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, will be subject to disciplinary action, administrative penalties, or criminal liability as prescribed by law, depending on the severity of the violation.

The direct management tax authority responsible for production and business establishments exclusively for disabled workers must maintain records and retain all relevant documents related to tax exemptions. Annually, provincial and municipal 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 no later than 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 veterans, and disabled persons is hereby repealed.

In the course of implementation, if there are difficulties, units are requested to promptly reflect them to the Ministry of Finance for research and resolution.