Ordinance No. 35/2001/PL-UBTVQH10 on Income Tax for High-Income Individuals

ORDINANCE

Income Tax for High-Income Individuals

To contribute to social equity and mobilize a portion of the income of high-income individuals for the state budget;

Pursuant to the Constitution of the Socialist Republic of Vietnam in 1992;

Based on the Resolution of the 10th National Assembly, 8th Session regarding the Law and Ordinance Building Program for 2001;

This Ordinance stipulates income tax for high-income individuals.

PART I

GENERAL PROVISIONS

Article 1

Vietnamese citizens residing in Vietnam or working abroad and other individuals residing in Vietnam with income; foreign nationals working in Vietnam with income must pay income tax as prescribed in this Ordinance.

Article 2

The taxable income includes:

1. Regular income in various forms: salaries, wages, allowances, bonuses; additional income outside of salaries and wages from participating in production and business activities, services not subject to corporate income tax, except for the types of income specified in Article 3 of this Ordinance,

2. Irregular income in the form of:

a) Gifts and presents in kind from abroad;

b) Technology transfer, usage rights for patents, trademarks, technical secrets, architectural designs, industrial designs, and other services, except for gifts and presents;

c) Lottery winnings.

Article 3

1. Temporary exemption from taxation on interest income from bank deposits, savings accounts, purchase of treasury bills, bonds, promissory notes, stocks.

2. Non-taxable income includes:

a) Night shift allowance; hazardous work allowance; regional allowance; service length allowance for military forces; special allowance for certain remote islands and border areas with particularly difficult living conditions; attraction allowance; travel expenses; rationed meal money, special allowances for certain professions as prescribed by the State; allowances for civil servants and other allowances from the state budget;

b) Awards for technological improvements, inventions, national and international prizes, bonuses accompanying state-awarded titles, bonuses or incentives from the state budget;

c) Social assistance payments, insurance compensation, severance pay, relocation allowances to production units as prescribed by law;

d) Income of individual household business owners subject to corporate income tax;

đ) Income generated in Vietnam of foreigners considered non-residents in Vietnam for less than 30 days,

e) Payments to social insurance and health insurance from salaries and wages as prescribed by law.

Article 4

In cases where international treaties to which Vietnam is a party provide different provisions regarding the payment of income tax compared to this Ordinance, such treaties shall be applied.

Article 5

Individuals subject to income tax have the obligation to pay taxes fully as prescribed by this Ordinance.

Article 6

All acts of tax evasion, delaying tax payments, and other violations of the provisions of this Ordinance are strictly prohibited.

, Clause 1, Clause 2 Article 7a of this Regulation.

State agencies, social organizations, people's armed forces units, and all citizens have the responsibility to supervise and assist tax authorities and tax officials in performing their duties to collect income tax.

Chapter II

BASIS FOR TAX CALCULATION AND TAX SCHEDULE

Article 8

The basis for calculating tax is taxable income and tax rate.

Article 9

Regular income subject to tax as prescribed in Clause 1, Article 2 of this Ordinance is the total amount of money received by each individual on average per month during the year exceeding 3,000,000 VND for Vietnamese citizens and other individuals residing in Vietnam; exceeding 8,000,000 VND for foreigners residing in Vietnam and Vietnamese citizens working or employed abroad. For foreigners considered non-residents in Vietnam, regular income subject to tax is the total income earned from working in Vietnam.

Foreigners are considered residents in Vietnam if they stay in Vietnam for 183 days or more within a 12-month period from the date of entry into Vietnam; they are considered non-residents if they stay in Vietnam for less than 183 days.

Article 10

The progressive tax rate table for regular income is as follows:

1. For Vietnamese citizens and other individuals residing in Vietnam:

Unit: 1,000 VND

For individuals, after paying income tax according to the tax table, if the remaining income averages over 15,000,000 VND/month, an additional 30% of the amount exceeding 15,000,000 VND must be paid.

2. For foreigners residing in Vietnam and Vietnamese citizens working abroad:

Unit: 1,000 VND

3. For foreigners considered non-residents in Vietnam, a tax rate of 25% of the total income applies.

Article 11

Irregular income subject to tax is the amount of income of each individual in each occurrence exceeding 2,000,000 VND as prescribed in Clause 2, Article 2 of this Ordinance.

Article 12

1. The progressive tax rate table for irregular income, except for the cases prescribed in Clauses 2, 3, and 4 of this Article, is as follows:

Unit: 1,000 VND

2. Income from technology transfer exceeding 2,000,000 VND per occurrence is taxed at a rate of 5% of the total income.

3. Income from lottery winnings exceeding 12,500,000 VND per occurrence is taxed at a rate of 10% of the total income.

4. Income from gifts and presents in kind from abroad exceeding 2,000,000 VND per occurrence is taxed at a rate of 5% of the total income.

Article 13

Income in kind or in foreign currency must be converted to Vietnamese Dong as the basis for calculating tax.

Goods are valued at market prices at the time of receipt of income in kind.

Foreign currency is valued at the average exchange rate on the inter-bank foreign exchange market published by the State Bank of Vietnam at the time of receipt of income in foreign currency.

Chapter III

DECLARATION AND PAYMENT OF TAX

Article 14

Income tax on regular income is calculated monthly on an annual average basis. Declarations and provisional payments are made monthly. At the end of the year or upon expiration of the contract, all taxable income must be summarized and final settlement with the tax authority must be completed no later than February 28 of the following year or within thirty days after the contract expires.

Foreigners subject to income tax before leaving Vietnam must present proof of income tax payment.

Article 15

Income tax on irregular income is paid per occurrence of income.

Article 16

Taxpayers must declare and pay taxes fully and on time as prescribed by the Ministry of Finance.

Article 17

The Ministry of Finance organizes the collection of income tax. Organizations and individuals paying income have the responsibility to withhold tax before making payments.

Organizations and individuals paying income shall deduct from the income tax paid to the state budget a percentage ranging from 0.5% to 1% according to the regulations of the Ministry of Finance.

Article 18

Organizations and individuals paying income shall be responsible for:

1. Fully declaring to the tax authority the number of persons within their unit who are subject to taxation, regular and irregular income subject to tax;

2. Maintaining accounting books and vouchers related to taxable income of those earning income paid by the unit and presenting them when requested by the tax authority;

3. Receiving tax declarations from taxpayers and submitting them to the tax authority;

4. Deducting and reporting the amount of income tax due for each individual and remitting it to the state budget as prescribed.

Article 19

The tax authority shall have the following duties and powers:

1. Directing, inspecting, and urging the declaration and payment of income tax;

2. Calculating the tax payable, collecting income tax, and issuing receipts for tax payments;

3. Preparing records and imposing administrative penalties within its jurisdiction or referring cases involving violations of the Income Tax Ordinance for criminal prosecution;

4. Considering and resolving complaints and reports regarding income tax.

Chapter IV

TAX REDUCTION AND EXEMPTION

Article 20

1. In cases where natural disasters, enemy attacks, or accidents affect the living conditions of taxpayers, such taxpayers may be considered for tax reduction or exemption.

2. Taxpayers may be considered for tax reduction or exemption in certain special cases as prescribed by the Government.

The Government shall specify the details of tax reduction and exemption.

Chapter V

SANCTIONS AND REWARDS

Article 21

The handling of violations of the Income Tax Ordinance for high-income earners is regulated as follows:

1. Individuals and organizations failing to comply with the procedures for declaring, recording accounts, and maintaining accounting vouchers on income tax, or failing to deduct income tax as prescribed, shall be subject to administrative penalties for tax violations;

2. Individuals and organizations engaging in false declarations or tax evasion, in addition to paying the full amount of income tax as stipulated by this Ordinance, shall be fined one to three times the amount of evaded tax; if the amount of tax evasion is large or they have been administratively penalized for tax violations and continue to violate or commit serious offenses, they shall be referred for criminal prosecution under the law;

3. Individuals and organizations delaying tax or fine payments beyond the prescribed deadlines shall, in addition to paying the full amount of tax and fines, be subject to a daily penalty of 0.1% of the delayed payment amount;

4. Individuals and organizations failing to pay taxes or fines as notified or decided by the tax authority shall be handled as follows:

a) Seizing funds from the organization or individual's account at the Treasury or financial institution to pay taxes and fines. The Treasury or financial institution shall be responsible for deducting funds from the organization or individual's account to pay taxes and fines into the state budget before recovering debts;

b) Seizing assets in accordance with the law to ensure the payment of taxes and fines.

Article 22

The authority to handle violations as stipulated in Article 21 of this Ordinance is regulated as follows:

1. The head of the tax collection management agency has the right to handle violations by taxpayers as specified in Clauses 1, 2, and 3 of Article 21 of this Ordinance;

2. The Director of the Tax Bureau or Branch directly managing tax collection may apply the measures provided for in Clause 4 of Article 21 of this Ordinance and transfer case files to competent authorities for handling in accordance with the law for violations as specified in Clause 2 of Article 21 of this Ordinance.

Article 23

Any individual obstructing or inciting others to obstruct the enforcement or investigation and handling of violations of this Ordinance shall be subject to administrative penalties or criminal prosecution depending on the nature and severity of the violation as prescribed by law.

"d) Within no more than one working day from the date of receiving the dossier submitted for administrative procedures by the specialized agency assigned by the Provincial People's Committee, the Chairman of the Provincial People's Committee shall issue a notification of the result of the inspection of plant-based food exports or a certificate at the request of the importing country."

1. Tax officials or other individuals misusing their positions or powers to embezzle or misappropriate income tax shall compensate the State for the entire amount embezzled or misappropriated and be subject to disciplinary action, administrative penalties, or criminal prosecution depending on the nature and severity of the violation as prescribed by law;

2. Tax officials or other individuals misusing their positions or powers to shield violators, intentionally acting contrary to the law, or being negligent in enforcing this Ordinance shall be subject to disciplinary action, administrative penalties, or criminal prosecution depending on the nature and severity of the violation as prescribed by law;

3. Tax officials, due to lack of responsibility or intentional misconduct causing damage to taxpayers or those being processed, shall compensate the damaged party.

Article 25

The Government shall establish a reward system for:

1. Tax agencies and tax officials completing assigned tasks well;

2. Individuals contributing to the discovery of violations of the Income Tax Ordinance for high-income earners.

Chapter VI

APPEALS AND STATUTE OF LIMITATIONS

Article 26

Organizations and individuals have the right to appeal against the improper implementation of the Income Tax Ordinance for high-income earners concerning themselves.

Appeals must be submitted to the direct tax authority managing or deciding on the matter within thirty days from the date of receiving the deduction notice, tax notice, collection order, or decision.

While waiting for resolution, the complainant must pay the full amount of tax and fines as notified within the specified time limit.

The authority receiving the appeal must consider and resolve the appeal within fifteen days from the date of receipt; for complex cases, the time limit may be extended but not exceed thirty days from the date of receipt; if the case does not fall within its jurisdiction, it must transfer the file or report to the competent authority for resolution and inform the appellant within ten days from the date of receipt.

Article 27

If the appellant disagrees with the decision of the authority receiving the appeal or if that authority fails to resolve the appeal within the time limit prescribed in Article 26 of this Ordinance, the appellant may appeal to the superior authority of the receiving authority.

Article 28

The tax authority must refund improperly collected taxes or fines and any compensation within fifteen days from the date of receipt of the superior authority's or competent authority's decision as prescribed by law.

Article 29

In cases where false declarations to evade taxes or tax errors are detected and concluded, the tax authority shall be responsible for recovering taxes and fines, or refunding taxes within five years from the date of inspection and detection of false declarations to evade taxes or tax errors. In cases where individuals fail to register, declare, or pay taxes, the recovery period for taxes and fines shall commence from the date of taxable income.

Chapter VII

IMPLEMENTATION

Article 30.

The Government directs the organization and implementation of income tax work nationwide.

In cases where market prices fluctuate by 20% or more, the Government shall submit to the Standing Committee of the National Assembly for adjustment of monetary levels in the income tax rate table to ensure appropriateness.

Article 31

The Minister of Finance shall be responsible for organizing and implementing, inspecting income tax work nationwide; resolving complaints and suggestions regarding income tax within their jurisdiction.

Article 32

The Chairperson of People's Committees at all levels shall direct the implementation and inspection of the enforcement of the Income Tax Ordinance for High-Income Individuals in their locality.

Chapter VIII

IMPLEMENTING PROVISIONS

Article 33

This Ordinance shall take effect from July 1, 2001.

This Ordinance replaces the Income Tax Ordinance for High-Income Individuals dated May 19, 1994, which has been amended according to the Ordinance Amending Certain Provisions of the Income Tax Ordinance for High-Income Individuals dated February 6, 1997, and the Ordinance Amending Certain Provisions of the Income Tax Ordinance for High-Income Individuals dated June 30, 1999.

Previous regulations contrary to this Ordinance are abolished.

Article 34

The Government shall provide detailed regulations and guidance for the implementation of this Ordinance.