Circular No. 32-TC/TCT guides the implementation of tax exemption and reduction for vocational training institutions as stipulated in the Labor Code.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 32 TC/TCT ON JULY 6, 1996 GUIDING THE IMPLEMENTATION OF TAX EXEMPTIONS AND REDUCTIONS FOR VOCATIONAL TRAINING INSTITUTIONS AS PROVIDED BY LABOUR LAW

Pursuant to current tax laws and decrees; Pursuant to Decree No. 90/CP dated December 15, 1995 of the Government detailing and guiding the implementation of certain Articles of the Labour Law regarding vocational training, Decree No. 81/CP dated November 23, 1995 of the Government detailing regulations on the implementation of certain Articles of the Labour Law concerning disabled workers, and Decree No. 72/CP dated October 31, 1995 of the Government detailing and guiding the implementation of certain provisions of the Labour Law regarding employment;

The Ministry of Finance hereby provides detailed guidance on the implementation of tax exemptions and reductions for vocational training institutions as follows:

I. SCOPE OF APPLICATION:

1. Vocational training institutions eligible for tax exemptions and reductions under this Circular are defined in Article 17 of Decree No. 72/CP dated October 31, 1995, Article 10 and Article 13 of Decree No. 81/CP dated November 23, 1995, and Article 10 of Decree No. 90/CP dated December 15, 1995 of the Government, including:

a. Institutions of enterprises, organizations, and individuals providing vocational training and supplementary training to those seeking employment or self-employment.

b. Institutions of enterprises providing vocational training and supplementary training to workers to meet production and business development needs, changes in production structure, or technology.

c. Vocational training institutions linked with job creation at employment service centers.

The entities mentioned in points a, b, and c of Item I-1 of this Circular shall be eligible for tax exemptions and reductions only if they satisfy the conditions for establishing vocational training institutions as stipulated in Chapter II of Decree No. 90/CP dated December 15, 1995, and the following conditions:

- Conducting vocational training in accordance with the profession specified in the business license or registered with the competent labour and social affairs authority.

- Registering and paying taxes in accordance with the law.

- For vocational training institutions with legal personality, they must maintain and record accounting books and use accounting vouchers in accordance with the current system.

2. This Circular does not apply to the following entities:

- Regular vocational schools, long-term and short-term vocational training institutions managed by the Ministry of Education and Training and subject to tuition fee collection and utilization regulations as per Decision No. 241/TTg dated May 24, 1993 of the Prime Minister. Financial management for these entities is governed by Circular No. 01 TC/HCVX dated January 4, 1994 and Circular No. 25 TC/TCT dated March 28, 1994 of the Ministry of Finance regarding temporary financial management regulations for administrative agencies, public institutions, mass organizations, and associations with income-generating activities.

- Foreign vocational schools established in Vietnam pursuant to Decree No. 115/CP dated September 5, 1994 of the Government on the issuance of regulations governing foreign vocational schools operating in the Socialist Republic of Vietnam.

II. PROVISIONS ON TAX EXEMPTIONS AND REDUCTIONS FOR VOCATIONAL TRAINING INSTITUTIONS

Vocational training institutions mentioned in points a, b, and c of Item I-1 of this Circular shall be considered for tax exemptions and reductions according to the following provisions:

1. Exemption from business income tax and profit tax for vocational training activities conducted by institutions recognized by competent state authorities as dedicated vocational training institutions for specific groups such as disabled persons, orphaned children without guardians, ethnic minorities, and social delinquents.

2. Exemption from business income tax and profit tax for vocational training activities conducted by institutions that regularly have fewer than ten trainees and provide training through apprenticeship in workshops or homes.

3. Reduction of fifty percent of the business income tax payable for vocational training activities conducted by institutions that regularly have more than thirty-one percent of their trainees being disabled persons, orphaned children without guardians, ethnic minorities, social delinquents, but do not meet the criteria to be recognized as dedicated vocational training institutions for these groups.

4. Reduction of fifty percent of the business income tax payable for vocational training activities conducted by institutions that teach traditional crafts such as wood carving, mother-of-pearl inlay, lacquer painting, rattan and bamboo weaving, pottery, porcelain, and silk weaving. The tax reduction period shall not exceed two years.

III. PROCEDURES AND AUTHORITY FOR CONSIDERING TAX EXEMPTIONS AND REDUCTIONS:

1. Procedures for considering tax exemptions and reductions:

In addition to vocational training activities exempted or reduced from taxation as provided in Section II of this Circular, other vocational training activities, production and business operations, and sales of products or provision of services by trainees must comply with the tax regulations stipulated in current tax laws and decrees.

The process of considering tax exemptions and reductions for vocational training institutions shall be conducted annually. However, to ensure timely and lawful revenue collection and to avoid difficulties for the operation of vocational training institutions, the direct tax administration agency has the responsibility to inspect and verify against the conditions for tax exemptions and reductions outlined in Section I of this Circular, deciding temporarily not to collect taxes or reduce taxes monthly; managing taxes for other production and business operations of vocational training institutions. At the end of the fiscal year, the vocational training institution must submit an application for tax exemption and reduction to the competent tax authority for resolution. The application for tax exemption and reduction includes:

- An application for tax exemption or reduction from the vocational training institution, confirmed by the direct tax administration agency regarding the conditions for tax exemption and reduction; the amount of tax exempted or reduced by the institution; and a request for the competent tax authority to decide on tax exemption and reduction.

- A business registration certificate for vocational training or a confirmation letter from the Department of Labour, Invalids, and Social Affairs certifying the institution as a vocational training institution providing apprenticeship training in workshops or homes.

- A confirmation letter from the Department of Labour, Invalids, and Social Affairs certifying the institution as a dedicated vocational training institution for disabled persons, orphaned children without guardians, ethnic minorities, social delinquents, or a traditional craft vocational training institution.

- Tax registration

- A tax settlement report from the direct tax administration agency.

||| A list of trainees accompanied by confirmation from the directly managing tax authority regarding the ratio of trainees who are persons with disabilities, orphaned children without guardianship, ethnic minorities, and social delinquents (for cases eligible for tax reduction under Point 3, Section II of this Circular).

||| Within thirty days from the date of receipt of the application for tax exemption or reduction submitted by the vocational training institution, the competent authority must issue a decision on tax exemption or reduction, or notify the vocational training institution of the reasons for not processing or granting the tax exemption or reduction.

||| In the year, if there is a change leading to the vocational training institution no longer meeting the conditions for tax exemption or reduction under this Circular, within five days from the date of such change, the vocational training institution must report to the directly managing tax authority to terminate the temporary suspension of tax collection or tax reduction, and the institution must comply with the tax declaration and payment procedures as prescribed by law.

||| 2. Authority to grant tax exemptions and reductions:

||| Tax authorities at all levels are responsible for inspecting and deciding or recommending to higher-level tax authorities to decide on tax exemptions and reductions for business income and profit taxes for specific cases according to their respective authority as follows:

||| - The Director of the General Department of Taxation shall examine and decide on tax exemptions and reductions for vocational training institutions managed by localities with average monthly business income tax exemptions and reductions up to five million dong; and with annual profit tax exemptions and reductions up to fifty million dong.

||| - The Director-General of the State Revenue总局局长负责审查并决定中央管理以及地方管理的月平均营业收入免税额在50万至500万盾之间和年利润免税额在500万至1000万盾之间的职业培训机构的税收减免。

||| - The Minister of Finance shall examine and decide on tax exemptions and reductions for all vocational training institutions with average monthly business income tax exemptions and reductions over fifty million dong; and with annual profit tax exemptions and reductions over one hundred million dong.

IV. IMPLEMENTATION

||| 1. The directly managing tax authority is responsible for managing tax collection and guiding vocational training institutions to implement bookkeeping, accounting records, annual tax settlement, and the use of tax receipts, invoices, declarations, and registration for tax payments in accordance with regulations; guiding vocational training institutions to comply with the conditions and procedures for tax exemptions and reductions and confirming the applications for tax exemptions and reductions in accordance with the guidance of this Circular.

||| 2. Vocational training institutions are responsible for fully performing their obligations regarding tax declarations and payments, procedures for applying for tax exemptions and reductions in accordance with the guidance of this Circular; providing all necessary documents related to tax exemptions and reductions as required by the tax authority.

||| If a vocational training institution engages in fraudulent behavior to obtain tax exemptions or reductions as stipulated in this Circular and is discovered, in addition to being denied tax exemptions or reductions for vocational training activities, they may also be subject to administrative penalties according to the laws on administrative penalties in the field of taxation depending on the severity of the violation.

||| If tax officials or other individuals abuse their positions or powers to intentionally provide false confirmations or cover up to allow vocational training institutions to obtain tax exemptions or reductions as guided by this Circular, they will be subject to disciplinary action, administrative penalties, or criminal liability according to the laws depending on the severity of the violation.

||| In addition to the provisions of the Labor Code and detailed guidance provided in this Circular on tax exemptions and reductions for vocational training activities, if a vocational training institution has other production and business activities eligible for tax exemptions or reductions, they shall implement tax exemptions and reductions in accordance with the relevant Tax Laws, Tax Ordinances, and current guiding documents.

||| This Circular takes effect from the date of signature. During implementation, if there are any difficulties, vocational training institutions and tax authorities are advised to report them to the Ministry of Finance (State Revenue总局) for timely research and resolution.