Circular No. 39/1997/TT-BTC of the Ministry of Finance guiding the implementation of Decree No. 05/CP dated January 20, 1997 of the Government detailing the implementation of the Income Tax Ordinance for High-Income Individuals.

CIRCULAR

DIRECTIVE NO. 39-TC/TCT OF THE MINISTRY OF FINANCE ON JUNE 26, 1997 GUIDING THE IMPLEMENTATION OF DECREE NO. 5-CP OF THE GOVERNMENT ON JANUARY 20, 1997 PROVIDING DETAILS FOR THE ENFORCEMENT OF LAWS ON INCOME TAX FOR HIGH-INCOME INDIVIDUALS

Pursuant to the Income Tax Law for High-Income Individuals (Amended) adopted by the Standing Committee of the National Assembly on May 19, 1994;

Pursuant to the Law Amending Certain Articles of the Income Tax Law for High-Income Individuals adopted by the Standing Committee of the National Assembly on February 6, 1997;

Pursuant to Decree No. 5-CP dated January 20, 1995 and Decree No. 30-CP dated April 5, 1997 of the Government providing details for the enforcement of the Income Tax Law for High-Income Individuals;

The Ministry of Finance hereby provides guidance as follows:

I. SCOPE OF APPLICATION

The taxpayers subject to income tax for high-income individuals (hereinafter referred to as personal income tax) include:

The taxpayers subject to income tax as stipulated in Article 1 of Decree No. 5-CP dated January 20, 1995 of the Government providing details for the enforcement of the Income Tax Law for High-Income Individuals (hereinafter referred to as income tax) include:

1.2. Individuals who are not Vietnamese citizens but have settled permanently in Vietnam and have income (hereinafter referred to as other individuals settled in Vietnam);

1.2. Other individuals residing in Vietnam who are not Vietnamese citizens but have settled permanently in Vietnam;

1.3. Foreign nationals working in Vietnam with income including:

- Foreign nationals working in Vietnam in domestic or foreign enterprises, economic, cultural, social organizations..., representative offices, branches of foreign companies; independent practitioners;

- Foreign nationals who are not present in Vietnam but have income generated in Vietnam such as income from technology transfer, royalties.

Taxable income includes regular and irregular income.

The taxable income as stipulated in Clause 1, Article 2 of Decree No. 5-CP dated January 20, 1995 and Clause 1, Article 1 of Decree No. 30-CP dated April 5, 1997 of the Government includes regular and irregular income.

2.1.1. Various forms of income under the form of salaries, wages, remuneration, including overtime pay, night shift pay, 13th month salary (if applicable); allowances; social insurance substitute payments; lunch money, midday meal money (if received in cash);

2.1.1. Various forms of income under salaries, wages, remuneration; including overtime pay, night shift pay, 13th month salary (if applicable), compensation paid from the social insurance fund; lunch money, mid-shift meal money.

2.1.2. Monthly, quarterly, annual bonuses, and unexpected bonuses given during holidays and festivals from all sources in various forms.

2.1.3. Income received from participating in business associations, boards of directors, management councils, enterprise councils.

2.1.4. Stable income of individuals mentioned in Article 1 of Decree No. 5-CP dated January 20, 1995 from participating in production, business, service activities that are not subject to corporate income tax, including income from all fields such as design, architecture, long-term consulting services, vocational training, teaching, tutoring, cultural and artistic performances...

2.1.5. Income from organizations and individuals paying income on behalf of housing, electricity, water expenses. Specifically, housing expenses are calculated based on actual payments made on behalf of the individual but not exceeding 15% of the monthly regular income from salaries, wages, and remuneration. If the individual resides at the workplace, the taxable income is also calculated up to a maximum of 15%. In this case, the determination of taxable income is based on rental fees or depreciation costs calculated according to the ratio between the area used by the individual and the total area of the house.

2.2. Irregular income includes:

2.2.1. Income from gifts and donations in kind sent from abroad to individuals in Vietnam through organizations such as postal services or carried back by others. Recipients are Vietnamese individuals, foreign individuals, owners or representatives of private businesses. Gifts brought into Vietnam by individuals themselves and declared in customs declaration upon entry procedures are not considered taxable income from gifts and donations.

2.2.2. Income from technology transfer under contracts, including:

- Transfer of ownership or usage rights of industrial property objects such as patents, designs, utility models, trademarks, trade marks...

- Transfer through sale or provision (with or without equipment); technical secrets, project plans, technological processes, design drawings or models, formulas, diagrams, tables, technical specifications or other specialized technical knowledge.

- Provision of support and advisory services after:

+ Research, analysis, evaluation of opportunities, feasibility studies for investment projects and technological innovation;

+ Technical support, selection of technology, installation guidance for equipment, trial operation of technological chains;

+ Advisory services on technology management, organization and operation of technological processes and production;

+ Training, upgrading the professional skills and management level of managers, technicians, and workers (excluding specialized training);

+ Services related to information collection, processing, and provision about markets, technologies, laws, resources, and environments.

- Transfer of usage or usage rights of industrial, commercial, or scientific equipment (excluding purely machine, equipment, material import activities).

- In cases where gifts and donations are technology transfers as specified in point 2.2.2 above, individuals receiving such gifts and donations are exempt from irregular income tax.

2.2.3. Income from copyright royalties for literary and artistic works.

2.2.4. Income from technical design in construction and industry, and other services: consulting services, training services, brokerage services, promotional award income or brokerage commissions...

2.2.5. Income from scientific activities such as seminars, research topics at various levels.

2.2.6. Lottery winnings issued by the State and promotional lotteries.

3. Temporary exemption from income tax on interest income from bank deposits, savings accounts, purchase of treasury bills, bonds, promissory notes, stocks as stipulated in Article 3 of Decree No. 5-CP.

4. Income not subject to income tax as stipulated in Article 4 of Decree No. 5-CP includes:

4.1. The income items below are determined by the Government of Vietnam for income generated in Vietnam; the level of cash expenditure is set according to the regulations of the competent authority and in accordance with the current financial management system. For foreigners, the amount of allowances is based on the basic salary stipulated in the contract and the allowance coefficient prescribed by the Ministry of Labor, War Invalids and Social Affairs for all categories.

- Night shift allowance (excluding night shift wages);

- Hazardous and dangerous work allowance for occupations or jobs in places with hazardous and dangerous conditions such as: mines; offshore drilling platforms; working at heights; direct contact with toxic substances, toxic gases, toxic dust; working in areas with radiation levels exceeding permissible limits;

- Regional allowance, attraction allowance, special allowance for remote, harsh, new economic zones, distant islands, border areas with difficult conditions, excluding the overseas allowance for foreigners;

- Seniority allowance for military forces: People's Army of Vietnam, professional soldiers, security forces, people's police;

- Special allowances for certain professions: forensic science, surgery;

- Allowances for civil servants and other allowances funded from the state budget, preferential allowances for cadres who participated in revolutionary activities before 1945;

- Travel expenses for business trips: payment for transportation, rental of accommodation, lodging fees. In cases where travel expenses are allocated, only the above expenses can be deducted;

- Fixed meal allowance for certain jobs and special professions, meals provided at the workplace (except when paid in cash);

- Social assistance benefits for beneficiaries of social policies such as: war invalids, disabled veterans, families of martyrs, those who contributed to the revolution; emergency hardship assistance, assistance to address social evils;

- Severance pay funded from the social insurance fund;

- Relocation allowance to production units as prescribed by the State, including one-time relocation allowance for foreigners residing in Vietnam;

- Insurance compensation due to participation in human and property insurance;

- Awards for technical improvements, inventions, international awards, national awards organized and recognized by the Vietnamese State (excluding awards funded by other organizations and individuals);

- Prizes accompanying titles conferred by the State such as: Heroic Mother Vietnam, Hero of the People's Armed Forces, Labor Hero, Professor, People's Teacher, Outstanding Teacher, People's Artist, Outstanding Artist...

4.2. The income of individual household business owners that falls within the scope of taxable income under the Income Tax Law (their income is not included in costs when determining taxable income).

4.3. Regular income of foreigners staying in Vietnam for less than 30 days within a continuous 12-month period.

II. BASIS FOR CALCULATING INCOME TAX

THE BASIS FOR CALCULATING INCOME TAX IS TAXABLE INCOME AND TAX RATE

1. For regular income:

1.1. Regular income subject to tax is the total annual income of each individual as specified in Clause 1, Article 2 of Decree No. 5-CP, averaged monthly throughout the year, specifically:

1.1.1. Vietnamese citizens residing in the country or traveling abroad for work, and other individuals permanently residing in Vietnam: the total income earned in the year, including income from abroad, divided by 12 months (according to the Gregorian calendar).

1.1.2. Foreigners residing in Vietnam for 183 days or more: the total income generated in the year, including income generated in Vietnam and income generated outside Vietnam, divided by 12 months. If the declared average monthly income abroad is lower than the average monthly income in Vietnam without proof, then the average monthly income during the time in Vietnam will be used as the basis for calculating tax for the time abroad.

1.1.3. Foreigners residing in Vietnam from 30 to 182 days: the taxable income is the total income generated in Vietnam during that period.

1.2. The tax rate for regular income is applied according to the provisions of Clause 2, Article 10 of the Income Tax Ordinance and Clause 3, Article 1 of the Ordinance amending some Articles of the Income Tax Ordinance for high-income earners, Clause 2, 3, 4, Article 7 of Decree No. 5-CP and Clause 2, Article 1 of Decree No. 30-CP.

2. For non-regular income:

2.1. Non-regular income subject to tax is the income of each individual in each occurrence of income as specified in Clause 1, Article 1 of Decree No. 30-CP dated April 5, 1997, specifically:

Gifts and donations from abroad are calculated based on the value of each gift or donation.

Income from technology transfer, engineering design for construction, industrial engineering design is calculated based on the settlement value of each contract, regardless of the number of payments.

2.2. The tax rate for non-regular income is applied according to the provisions of Article 12 of the Income Tax Ordinance and Article 9 of Decree No. 5-CP.

III. ORGANIZATION OF TAX DECLARATION AND PAYMENT

1.1. In cases where the payer of income can be identified, the declaration and payment of personal income tax shall be carried out according to the principle of withholding at source.

Article 11 of Decree No. 5-CP stipulates: Income tax shall be implemented according to the principle of withholding at source. Organizations or individuals paying income or labor management agencies (referred to as withholding organizations) have the obligation to withhold income tax at source before disbursing income to individuals.

Other cases shall be directly organized for collection by the tax authority.

Withholding organizations include:

- Domestic agencies managing, selecting, brokering, or providing labor;

- Agencies managing, selecting, sending people to work abroad: Ministries, sectors, enterprises, etc.;

- Agencies managing and selecting people to work abroad: Ministries, sectors, enterprises...

- Organizations and individuals receiving technology transfers or purchasing copyrights;

- Organizations inspecting goods, paying gifts, and donations from abroad such as customs gates, post offices, organizations and individuals providing services to transfer gifts and donations in kind;

- Individuals bringing gifts back to Vietnam;

- Organizations and individuals paying money for technology transfer or purchasing copyrights;

- Organizations paying lottery winnings;

- Organizations and individuals paying for service provision and consultancy;

- Contractors.

In cases where the management agency does not directly pay income but performs management, inspection, and supervision functions over organizations with individuals subject to taxation, if it ensures timely centralized tax collection and is accepted by the tax authority, it may also be considered a withholding organization.

Withholding organizations are entitled to a fee calculated based on the amount of income tax collected, to be used for covering costs related to tax collection and rewarding individuals who have achieved success in organizing tax payment. The rate of the fee is as follows:

- 0.5% (five thousandths) for the amount of tax collected from regular income.

- 1% (one percent) for the amount of tax collected from non-regular income and income tax collected through foreign contractors.

2. Registration - Declaration on Tax:

2.1. Individuals with taxable income (including regular and non-regular income) have the responsibility to proactively register and declare their income to the withholding organization or local tax authority where they work.

2.2. Withholding organizations must proactively register with the local tax authority where they file for business registration fees (if the withholding organization does not need to pay business registration fees, then it registers with the local tax authority where its headquarters is located) regarding the collection of income tax at their own units.

2.3. Individuals with taxable income that has not been withheld at source have the responsibility to register with the local tax authority where they work to receive tax declaration forms and individual income tax declaration forms.

3. Payment - Settlement of Tax:

3.1. For regular income:

3.1.1. Payment.

Income tax is calculated for the entire year and temporarily paid monthly based on actual income.

Based on the actual monthly income payments, the withholding organization implements the withholding of tax and prepares a summary declaration form listing the number of people, actual income, and the amount of tax payable for each person, the total amount of tax payable to be submitted to the state budget after retaining the fee earned according to Point 1, Section III of this Circular. The deadline for monthly submission is no later than the 15th day of the following month.

Foreigners entering Vietnam, if their stay period in Vietnam has been determined beforehand, those staying less than 30 days are exempt from payment; those staying from 30 days up to less than 183 days pay taxes on total income; those staying 183 days or more, pay monthly based on actual income and progressive rates as specified in Clause 2, Article 10 of the Income Tax Ordinance. If the duration of stay cannot be determined beforehand, they temporarily pay at a rate of 10%, and at the end of the year, they settle the final amount due.

Individuals who pay tax directly to the tax authority without going through withholding organizations must submit tax declarations monthly at the tax authority where they have registered, receive tax notifications, and directly pay taxes at the tax authority.

3.1.2. Settlement of Tax:

3.1.2.1. Principles of Tax Settlement

Income tax on regular income is settled annually according to the Gregorian calendar year-end or upon expiration of the contract within the year. Individuals must declare and settle income tax according to the following regulations:

- Aggregate all sources of income throughout the year, calculate the tax payable on the annual tax settlement form, and submit the form to the withholding organization or the tax authority (in cases where individuals directly pay taxes to the tax authority). The deadline for submitting the form is no later than January 30 of the following year or 20 days after the contract ends. The withholding organization or the tax authority will review, calculate the tax payable on the individual's declaration, compare it with the amount already paid to determine additional tax owed or refundable tax, and prepare a summary of the tax settlement. The withholding organization or the individual directly paying taxes must complete the tax settlement with the tax authority no later than February 28 of the following year or 30 days after the contract expires.

- In cases where an individual works at different places during different periods of the year, monthly income tax withheld at source must be declared and settled at the last place of employment at the end of the year.

- In cases where an individual simultaneously works and earns income from multiple places during the same period of the year, they must aggregate and declare the income tax settlement at the place with the highest income or most convenient location.

- In cases where an individual earns income from participating in business associations, Board of Directors, or other regular income outside their main workplace during the year, they must aggregate and declare their income together with the income from their main workplace to pay taxes and settle the income tax according to the regulations.

3.1.2.2. Tax Settlement for Vietnamese Citizens and Other Individuals Residing in Vietnam.

- In the case where work is only performed within the country during the tax year: individuals consolidate and declare their entire annual regular income for the Gregorian calendar year divided by twelve months to calculate the average monthly taxable income, even if there are some months without income, they must still declare to calculate the average. Based on the average monthly taxable income and the Tax Table prescribed in Clause 3, Article 1 of the Ordinance Amending Certain Articles of the Income Tax Ordinance, the total tax payable for the year is calculated, compared with the amount already paid monthly, to determine the additional tax due (or the excess payment to be refunded).

- In the case where part of the time during the year is spent studying or working abroad for a short term and only reimbursed for travel expenses or provided with accommodation, food, and transportation costs during the work period, these amounts are not declared for calculating taxable income.

- In the case where work is performed both within and outside the country during the year, generating income in Vietnam and abroad: the taxable income is also calculated based on the average monthly income from the total annual income divided by twelve months, and the tax payable is determined according to the corresponding tax table, specifically:

+ During the time in Vietnam, the average monthly taxable income is calculated according to the Tax Table prescribed in Clause 3, Article 1 of the Ordinance Amending Certain Articles of the Income Tax Ordinance for high-income earners. + During the time abroad, the average monthly taxable income is calculated according to the Tax Table prescribed in Clause 2, Article 10 of the Income Tax Ordinance.

- In the case where work is only performed abroad during the tax year: individuals consolidate and declare their total annual income divided by twelve months to calculate the average monthly taxable income and determine the tax payable according to the Tax Table prescribed in Clause 2, Article 10 of the Income Tax Ordinance. If tax has been paid abroad and proof of payment is available, the amount paid can be deducted but not exceeding the tax payable according to Vietnam's tax table, if the countries have signed Double Taxation Avoidance Agreements with Vietnam, then the provisions of the Agreement shall apply.

The authorized withholding organization or tax authority checks the declaration, calculates the tax payable according to the above regulations, compares it with the foreign tax payment receipts, and collects the difference (if any).

3.1.2.3. Finalization of tax for foreigners.

Regular income tax for foreigners is declared and finalized based on residency status. Individuals are responsible for accurately declaring the number of days present in Vietnam, taxable income to calculate the residency period and the tax payable in Vietnam. For the first tax year, the residency period is determined by adding up all the days present in Vietnam within a continuous twelve-month period starting from the date of arrival; thereafter, the residency period is determined annually from January 1st to December 31st, each day counted as one day. If the previous year was determined as a resident, then the subsequent year will also be considered a resident.

- Foreigners residing in Vietnam for between 30 to 182 days in the tax year: declare the total income generated in Vietnam and finalize the tax payable at a unified rate of 10%. In cases where work nature requires frequent entry and exit for work in Vietnam over a period of two years or more, with a total presence of less than 183 days in the tax year, the tax table is calculated as that of a resident and the tax payable is determined based on the number of months in Vietnam. A month is calculated as thirty days.

- Foreigners residing in Vietnam for 183 days or more in the tax year: declare the total income generated in Vietnam and the income generated outside Vietnam during the tax year divided by twelve months to calculate the average monthly income and finalize the tax payable according to the provisions of Clause 2, Article 10 of the Income Tax Ordinance. If the average monthly income declared abroad is lower than the average monthly income in Vietnam without proof, then the average monthly income in Vietnam is used as the basis for calculating the tax payable for the time abroad. If the departure from Vietnam is definitively determined during the tax year, the tax finalization is calculated up to the month of departure.

In the case of finalizing tax for the second tax year (after the first year), if part of the time was included in the first year's tax calculation period at a unified rate of 10%, then in the second tax year, the tax for this period is still calculated at a rate of 10%, but the residency period is added to the total number of days present to calculate the residency period for the second Gregorian year (from January 1st to December 31st).

3.1.2.4. Settlement and finalization of tax.

- The authorized withholding organization settles with the tax authority the tax to be collected and collected from each individual; the tax to be paid and paid to the state budget of the unit according to point 3.1.2.1. Section III above is responsible for settling with the state budget and taxpayers within fifteen days from the date of tax finalization. If the individual's tax payable is greater than the monthly tax paid, the authorized withholding organization must deduct and collect the remaining amount from the individual and pay it into the state budget no later than fifteen days from the date of tax finalization. If the monthly tax paid exceeds the annual tax payable, the excess is refunded by offsetting against the tax payable for the next period, subject to verification and confirmation by the tax authority.

- For individuals who directly pay taxes at the Tax Bureau when settling and finalizing tax, they must pay the outstanding tax within fifteen days from receiving the notification from the tax authority. If the tax paid exceeds the tax payable, it is refunded by offsetting against the tax payable for the next period; if there is no tax payable for the next period, the tax authority refunds from the income tax already collected.

3.2. For non-regular income.

Income tax on occasional income shall be paid for each occurrence of income. The authorized withholding organization shall provide a declaration form to the person receiving income to declare taxable income, calculate tax, deduct tax before payment of income, and settle tax directly on the declaration form. In cases where individuals with occasional income have not had tax deducted at source, they shall submit the declaration form to declare and pay tax to the local tax authority where their main workplace is located. Tax settlement between taxpayers and tax authorities shall be conducted directly on the individual declaration form.

- Monthly, the authorized withholding organization must prepare a list detailing the number of people, amount of income, amount of tax deducted, amount of remuneration received, amount of tax to be transferred to the state budget, and overpayment or underpayment of tax. The authorized withholding organization must pay any outstanding tax to the state budget within 15 days from the date of settlement; in cases of overpayment, it can be refunded by offsetting against the tax due for the next period.

- For income in kind, the authorized withholding organization must collect the full amount of income tax before paying out the income.

- For income that the recipient does not personally receive, such as technology transfer fees, copyright fees, etc., the authorized withholding organization must declare on behalf of the income recipient, deduct tax, and pay it to the state budget before disbursing the income, and notify the taxpayer.

- Individuals transferring gifts or presents in kind from abroad must declare and pay tax on behalf of the recipients.

- For income from technical design services for industry, construction, etc., tax shall be withheld according to the amount received each time and declared and settled based on the value of the final contract settlement.

IV. RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUALS IN THE COLLECTION AND PAYMENT OF PERSONAL INCOME TAX

1. Responsibilities of individuals subject to personal income tax:

Individuals subject to income tax must voluntarily register, declare taxable income, and pay income tax through authorized withholding organizations or directly declare and pay tax to the tax authority as stipulated in Section III.2 and Section III.3 of this Circular. Individuals who file tax declarations bear legal responsibility for the accuracy and honesty of the data declared.

Failure to register, declare, or declare inaccurately, failure to pay or delay in paying taxes will be handled according to Article 21 of the Income Tax Ordinance. If an individual evades a large amount of tax or continues to evade tax after administrative penalties or evades a large amount of tax again, they will be criminally prosecuted according to the law. Foreigners may have their exit visa issuance postponed or exit temporarily delayed if they have not fulfilled their obligation to pay income tax in Vietnam as prescribed in Clause 2, Article 7 of the Ordinance on Exit, Entry, Residence, and Travel of Foreigners in Vietnam.

2. Responsibilities of authorized withholding organizations; organizations welcoming and managing foreigners:

Organizations and individuals paying income to individuals (authorized withholding organizations for income tax) have the responsibility and obligations:

- To proactively declare and register with the local tax authority regarding the collection of income tax from individuals through withholding at their own unit; guide individuals subject to income tax to complete declaration procedures and fill out income tax declaration forms.

- Monthly, based on the list of individuals subject to income tax and the actual amount of income paid to individuals, carry out tax withholding and pay the tax to the state budget.

- Receive declarations, compare the declared personal income with the income payable and actually paid to individuals to calculate tax, confirm the taxpayer's declaration, compile a summary declaration of income tax paid, and submit it to the tax authority.

- Maintain books and records related to the organization's collection of income tax: taxable income, tax calculation, tax deduction, tax declaration, income tax filing, preservation of tax receipts, calculation of remuneration received, and payment of tax to the state budget.

- Issue tax receipts to taxpayers.

- Implement reporting systems; settle tax payments and remuneration received with the tax authority and present all relevant tax documents when requested by the tax authority.

Organizations welcoming and managing foreigners working in Vietnam have the responsibility to guide foreigners to complete income tax payment procedures before exiting the country.

3. Responsibilities of the tax authority:

- Coordinate with state management agencies and relevant agencies to inspect and require organizations and individuals paying income (authorized withholding organizations) operating in the area to register and declare income tax through withholding.

- Guide and inspect authorized withholding organizations in implementing registration, consolidation, declaration, tax calculation, tax deduction, and payment of tax to the state budget.

- Implement tax notification, settlement, and payment of remuneration with authorized withholding organizations.

- Organize the collection of income tax from individuals who directly register and pay tax at the tax authority, issue tax receipts and stamps to taxpayers and authorized withholding organizations.

- Implement coercive measures, recovery of taxes, and fines for violations of the Income Tax Ordinance, decide on rewards for those who discover violations and assist the tax authority in recovering taxes.

- Implement periodic reporting systems to higher-level tax authorities.

V. TAX REDUCTION AND EXEMPTION

1. Regarding the reduction or exemption of tax as prescribed in Clause 1, Article 20 of the Income Tax Ordinance.

Individuals who encounter difficulties due to natural disasters, enemy attacks, accidents causing damage to property and income, affecting their livelihood, may be considered for tax reduction or exemption for the year depending on the extent of the damage. The amount of tax exempted or reduced shall be proportional to the ratio of the loss amount to the taxable income for the year but shall not exceed the total tax payable for the year.

Procedures and authority for tax exemption and reduction:

- An individual taxpayer who requests tax exemption or reduction must submit an application form confirmed by the local authority (People's Committee of the commune or ward) or the income payer to the local tax authority where the income payer is registered for tax payment; the application for tax exemption or reduction must clearly state the reasons, the amount of loss (accompanied by relevant supporting documents), the amount of tax due, and the amount requested for exemption or reduction.

- The tax authority shall examine and issue a decision on tax exemption or reduction, or recommend that the higher-level tax authority handle it according to the following分级任务，确保准确无误地翻译每个段落。接下来是第3段的翻译：

+ The Director of the Tax Department may decide cases where the amount of tax exempted or reduced is less than five million dong per year;

+ The General Director of the General Tax Department may decide cases where the amount of tax exempted or reduced ranges from five million dong to one hundred million dong per year;

+ The Minister of Finance decides cases of tax exemption or reduction over one hundred million dong per year.

- During the period when the competent tax authority is reviewing and deciding on tax exemption or reduction, the taxpayer must pay the full amount of tax as stipulated by the Income Tax Ordinance; once there is a decision on tax exemption or reduction, the taxpayer will be refunded the exempted or reduced tax by deducting it from the tax payable in the next period or by having the authorized tax collector return the deducted tax according to the tax authority's decision. In the case where an individual directly pays the tax at the tax office, the amount will be deducted from the tax payable in the next period or refunded by the state budget according to the tax authority's decision.

2. For cases of tax exemption or reduction prescribed in Clause 2, Article 20 of the Income Tax Ordinance; Clause 2, Article 18 of Decree No. 5-CP.

Organizations and individuals requesting tax exemption or reduction must send their applications to the Ministry of Finance, which should clearly analyze the reasons and economic, political, and social benefits to the country related to the tax exemption or reduction for taxpayers. The Ministry of Finance will review the files and submit a report to the Prime Minister for consideration and decision on each specific case.

VI. VIOLATION HANDLING AND REWARD

1. Violations of the Income Tax Ordinance concerning high-income earners are handled according to the provisions of Articles 21, 22, 23, and 24 of the Income Tax Ordinance. Administrative violations of the Income Tax Ordinance are penalized according to the specific regulations in Government Decree No. 22-CP dated April 17, 1996, on administrative penalties in the field of taxation and Circular No. 45-TC/TCT dated August 1, 1996, issued by the Ministry of Finance to guide the implementation of Government Decree No. 22-CP.

In the case of organizations and individuals paying income, if they bring gifts or donations from abroad without declaring, registering, or withholding income tax before payment, resulting in the loss of personal income tax revenue, they must bear responsibility for compensating the state budget for the lost tax and be punished according to Articles 21 and 22 of the Income Tax Ordinance. The compensation amount and penalty money cannot be included in the deductible expenses when determining taxable income.

2. Individuals who discover violations of the Income Tax Ordinance and assist tax authorities in recovering taxes are entitled to rewards according to the following specific provisions:

- Individuals who discover tax evasion violations must notify the tax authority through direct reporting, letters, documents, or applications, clearly stating the name and address of the individual or organization evading tax.

- After receiving the notification, the tax authority immediately organizes inspections and calculates taxes at organizations and individuals paying income, prepares records to determine hidden taxes, and issues notices to pay taxes along with decisions to compel organizations and individuals evading taxes to deposit the amounts into the tax authority's temporary account.

- Based on the recovered tax and fines deposited in the temporary account, the tax authority issues a decision to reward organizations and individuals who have contributed to discovering and cooperating with the tax authority. The reward amount does not exceed five percent (5%) of the recovered tax paid into the state budget, with a maximum reward of three hundred thousand dong per case and nine hundred thousand dong per month for individuals.

- The remaining amount after rewarding is paid into the state budget.

VII. IMPLEMENTATION ORGANIZATION

1. This circular takes effect from February 18, 1997. For regular income, the new tax rate table applies to Vietnamese citizens and other individuals residing in Vietnam starting from February 1997. For income from gifts or donations in cash from abroad received after February 18, 1997, individuals do not need to pay non-resident income tax; if already paid, the tax authority (where the tax was collected) will refund the tax by deducting it from the income tax payable by the organization or individual paying the income.

This circular replaces Circular No. 27-TC/TCT dated March 30, 1995, issued by the Ministry of Finance to guide the implementation of Government Decree No. 5-CP dated January 20, 1995, detailing the implementation of the Income Tax Ordinance for high-income earners.

2. Authorities responsible for managing, training, and selecting workers are permitted to deduct up to eight percent of workers' income for management, training, and selection activities. This fund is managed and used according to annual plans, and final settlements must be made according to current financial regulations; any unspent funds must be fully remitted to the state budget, and the deduction rate for the following year must be adjusted accordingly. Beyond this controlled percentage, all ministries, sectors, and organizations managing and using labor are strictly prohibited from redistributing workers' income in any form.

Special cases involving the referral or recruitment of workers under agency agreements can only collect fees once as stipulated in Point 2d, Section II of Circular No. 19-LDTBXH/TT dated December 31, 1990, issued by the Ministry of Labor, Invalids, and Social Affairs to guide the implementation of Government Decree No. 233-HĐBT dated June 22, 1990, establishing labor regulations for foreign-invested enterprises.

3. Income that has been separately agreed upon regarding taxation and tax exemptions shall be implemented according to international treaties and agreements to which Vietnam is a party.

4. The tax authorities at all levels shall have the duty to disseminate and guide individuals subject to income tax and organizations and individuals paying income (withholding agents) to strictly comply with the provisions set forth in the Ordinance, Decree, and Circulars guiding income tax.

During the implementation process, if any issues arise, organizations, individuals, sectors, and localities shall promptly reflect them to the Ministry of Finance (General Department of Taxation) for research and resolution.