The Circular No. 24/2002/TT-BTC providing guidelines on the implementation of tax obligations for financial leasing activities (Content Attached)

CIRCULAR

Guidelines for the fulfillment of tax obligations regarding financial leasing activities

Based on the Value Added Tax Law; the Corporate Income Tax Law; the Export and Import Tax Law; the Fee and Charge Ordinance; detailed implementing regulations issued by the Government; and guidance provided by the Ministry of Finance;

Based on Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of Financial Leasing Companies;

To be consistent with the business characteristics of financial leasing activities, the Ministry of Finance provides guidelines for tax and fee implementation for Financial Leasing Companies, specifically as follows:

 I. Regarding Value Added Tax and Corporate Income Tax:

Implemented according to the Value Added Tax Law; the Corporate Income Tax Law; detailed implementing regulations issued by the Government; and guidance provided by the Ministry of Finance;

II. Regarding Export and Import Taxes:

1. General principle: implemented according to the Export and Import Tax Law and detailed implementing regulations issued by the Government, along with guidance provided by the Ministry of Finance;

2. To align with the business characteristics of financial leasing activities, certain points are specified as follows:

a: For machinery, equipment, transportation means, and other chattels that Financial Leasing Companies import for leasing purposes, they shall be treated similarly to cases where the lessee directly imports such assets; specifically as follows:

In the case where the lessee is a foreign-invested enterprise: if the machinery, equipment, and transportation means leased are imported goods exempt from import duties under the list of duty-free imported goods approved as stipulated in Article 57 of Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam, and Point 1.b., Section III, Part II of Circular No. 13/2001/TT-BTC dated March 8, 2001 of the Ministry of Finance guiding the implementation of tax regulations for investment forms under the Law on Foreign Investment in Vietnam, then those machinery, equipment, and transportation means will be exempt from import duties. If these assets are recovered before the end of the lease period and the lessor leases them to another foreign-invested enterprise, they will also be exempt from import duties.

In the case where the lessee is a domestic investor implementing a project in industries listed in Category A or projects carried out in areas listed in Categories B and C as stipulated in Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government detailing the implementation of the Law on Encouraging Domestic Investment, if the machinery, equipment, and transportation means leased are imported goods not yet produced domestically or produced but not meeting quality requirements, they will be exempt from import duties. If these assets are recovered before the end of the lease period and the lessor leases them to another domestic investor implementing a project in industries listed in Category A or projects carried out in areas listed in Categories B and C as stipulated in Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government, they will also be exempt from import duties.

In the case where the lessee is an overseas enterprise, the imported assets mentioned above shall be handled according to the temporary importation and re-export mechanism. If the leased asset is recovered as stipulated in Clause 1, Article 28 of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government, the lessor must pay import duties according to current regulations.

b: For leased assets recovered as stipulated in Clause 1, Article 28 of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government, if the recovered assets are imported from abroad, when exporting, no export tax needs to be paid and the previously paid import tax will be refunded based on the remaining value of the asset, procedures and documents for non-payment and refund of taxes are regulated in Circular No. 172/1998/TT-BTC dated December 22, 1998 of the Ministry of Finance.

III. Regarding Stamp Duty:

1. General principle: implemented according to the Fee and Charge Ordinance, detailed implementing regulations issued by the Government, and guidance provided by the Ministry of Finance;

2. To align with the business characteristics of financial leasing activities, certain points are specified as follows:

According to Clause 3, Article 22 of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government: when transferring ownership of leased assets of Financial Leasing Companies to the lessee at the end of the lease term, the lessee does not need to pay stamp duty.

Regarding procedures: implemented according to the guidance in Item 4, Part II of Circular No. 28/2000/TT-BTC dated April 18, 2000 of the Ministry of Finance guiding the implementation of Decree No. 176/1999/NĐ-CP dated December 21, 1999 of the Government on stamp duty. When registering and declaring stamp duty with the tax authority, the unit must present:

The leasing finance contract and the settlement agreement between both parties, confirmed by the competent state agency.

Documents transferring assets between both parties.

Certificate of ownership of the leased asset of the Financial Leasing Company.

IV. Implementation Organization.

This Circular takes effect fifteen days from the date of signature. In case of any difficulties, units should promptly report to the Ministry of Finance for research and resolution./.