Circular No. 30/TC/TCT guides the reduction of business income tax for 1995 for businesses operating in mountainous areas.

CIRCULAR

OF THE MINISTRY OF FINANCE

Guidelines for reducing business income tax

in 1995 for businesses operating in mountainous areas

Pursuant to Article 18 of the Business Income Tax Law and the Law amending and supplementing certain provisions of the Business Income Tax Law adopted by the National Assembly at its third session of the Ninth Term on July 5, 1993; Directive No. 525/TTg dated November 2, 1993 on some policies and measures to continue developing the economy and society in mountainous regions; and the opinions of the Prime Minister in Official Letter No. 287/KTTH dated January 21, 1994 from the Government Office, the Ministry of Finance guides certain points regarding the continued reduction of business income tax for businesses operating in mountainous regions to be implemented in 1995 as follows:

b) In cases where funds from organizations and individuals within and outside Vietnam are used for victim support work and victim support benefits, such activities shall be carried out in accordance with the regulations of the Ministry of Finance and the donor; in cases where there is no agreement between the donor or their authorized representative and the Ministry of Finance regarding the expenditure level, the expenditure level prescribed in this Circular shall apply.

a) The entities eligible for tax reduction under this Circular include organizations and individuals (referred to collectively as enterprises) of all economic sectors (including enterprises established and operating under the Law on Foreign Investment in Vietnam), which actually engage in production and business activities and generate revenue within the highland and mountainous region (excluding the entities mentioned in point 1b below) including:

Enterprises with a fixed place of business in the mountainous area and operating there or in another mountainous area.

Enterprises without a fixed place of business in the mountainous area but actually operating in the mountainous area (construction, artistic performance, film screening, etc.).

Trading activities originating from the mountainous area to other places.

b) The following entities shall not be considered for tax reduction under this Circular:

Households engaged in business that are subject to business income tax under the turnover tax system.

New enterprises established and exempted or granted tax reductions on business income tax in 1995 according to Clause 3 of Article 18 of the Business Income Tax Law; or granted tax reductions on business income tax under Article 10 of the Law on Encouraging Domestic Investment.

Enterprises belonging to units with full-sector accounting.

c) The mountainous area basis for tax reduction as stipulated in this Circular shall be determined based on the administrative boundaries of districts, towns, and cities (collectively referred to as districts) recognized as mountainous districts by the Committee for Ethnic Minorities in Mountainous Areas.

Some examples: County X is recognized as a mountainous county.

Enterprise A has a fixed production location in District X and a sales location in District Y (also a mountainous district) and Nam Dinh City (not a mountainous area).

According to Point 4 of Decree No. 55/CP dated August 28, 1993 of the Government, Enterprise A must pay business income tax on production activities at the production location and pay business income tax on commercial activities at the sales location. Therefore, Enterprise A will be eligible for a tax reduction on production activities in District X and a tax reduction on sales activities in District Y; however, it must fully pay business income tax on sales activities in Nam Dinh City.

b. Enterprise B engages in construction with a fixed business location in Nam Dinh City and undertakes a construction project in District X. Enterprise B will be eligible for a tax reduction on the construction project in District X.

c. Enterprise C has a fixed production location in Nam Dinh City and a sales location in District X. Enterprise C must pay business income tax on production activities in Nam Dinh City; and will be eligible for a tax reduction on sales activities in District X.

2. Level and duration of tax reduction:

The tax reduction rate is 50% for manufacturing, construction, and transportation industries, and 25% for other industries of the business income tax payable to the State budget.

The tax reduction period is one year, from January 1, 1995 to December 31, 1995. After the end of the year, the Ministry of Finance will review the actual situation and the opinions of localities to determine appropriate solutions for the following year.

3. Implementation:

To ensure that the tax reduction targets the correct entities and truly encourages and creates conditions for enterprises to serve the production and living needs of the mountainous people in accordance with Directive No. 525/TTg of the Prime Minister, the Ministry of Finance requests the Tax Departments:

To disseminate the government's policy on reducing business income tax to enterprises and guide them on necessary procedures to implement it.

To review and closely monitor both regular and irregular business operations within their jurisdictions, promptly incorporating them into tax management in accordance with the prescribed policies.

Adjust business revenue in accordance with the actual business situation of households paying taxes through the quota method at the specified time. At the same time, regularly guide and inspect accounting work of establishments to fully, promptly, and accurately reflect all activities arising, ensuring accurate tax reduction for the right subjects and preventing acts of exploiting to evade taxes.

b) Establishments engaged in business in mountainous areas that are eligible for tax reduction on business revenue under this Circular shall be responsible for:

Presenting the establishment registration certificate and business registration certificate to the tax authority in accordance with the regulations.

Declaring and registering payment of business revenue tax to the tax authority in accordance with the regulations.

Fully declaring generated business revenue according to the period stipulated by the tax authority. The tax reduction calculation will be directly calculated and reviewed by the head of the tax authority within the tax declaration form of the establishment in the tax ledger.

Establishments violating the declaration system, tax payment registration system, bookkeeping records, and accounting vouchers as prescribed shall not be entitled to business revenue tax reduction under this Circular; at the same time, they may be subject to penalties according to current regulations depending on the specific level of violation.

The tax reduction under this Circular shall be calculated after deducting all other tax reduction amounts regarding business revenue (if any).

The tax authority must clearly and comprehensively reflect the amount of business revenue tax due, the amount of business revenue tax reduced, the remaining business revenue tax due, and other indicators as prescribed on tax collection receipts, monthly tax declarations, tax ledgers, and accounting books.

By the end of the year, the tax authority must jointly with the Department of Finance compile comprehensively and clearly the amount of business revenue tax due, the amount reduced, and the remaining tax due for each enterprise in the locality (accompanied by tax payment receipts) and send them to the General Tax Department and the Ministry of Finance for consideration of the aforementioned exemptions and reductions.

This Circular takes effect from January 1, 1995, replacing Circulars No. 20 TC/TCT dated March 12, 1994, and Circular No. 07 TC/TCT issued by the Ministry of Finance. During implementation, if any difficulties arise, localities are requested to report them to the Ministry of Finance for timely consideration and resolution.