Circular No. 45/TC-TCT guiding the implementation of the Law on Business Income Tax

CIRCULAR OF THE MINISTRY OF FINANCE

Guidelines for Implementing the Law on Business Income Tax

Pursuant to Clause 1 of Decree No. 351/HĐBT dated October 2, 1990 of the Council of Ministers detailing the implementation of the Law on Business Income Tax, the Ministry of Finance hereby provides guidelines for implementing the Law on Business Income Tax as follows:

 

A. ON THE SCOPE OF APPLICATION OF THE BUSINESS INCOME TAX LAW

I- In accordance with Article 1 of the Law on Business Income Tax, business income tax shall be uniformly applied to all economic sectors within state-owned and non-state-owned enterprises. The Law on Business Income Tax replaces the state revenue collection system, corporate tax, trading tax, certain goods subject to commodity taxes now converted to business income tax, and the salt revenue collection system.

The taxpayers subject to business income tax include organizations and individuals engaged in business activities generating income within the territory of Vietnam;

Covering all industries; production (including processing, manufacturing, extraction), construction (including surveying, design), transportation, commerce (including agency, consignment), catering, various services (including scientific and technical services, postal services, credit, banking, pawnshops, insurance, leasing of assets, educational services, vocational training, cultural, artistic, health, sports, legal advisory services, tourism services, dancing, horse racing, car racing, lottery issuance, brokerage, ship agency services, etc.);

Covering all forms of business: economic organizations (enterprises, State Corporations, Companies or other state-owned units; joint ventures; associations, joint stock companies, public-private partnerships; cultural, health, education, art and other public service units operating under a commercial model, cooperatives, cooperative groups, production conglomerates, collective economic organizations of administrative and public service staff; research institutes, schools, political-social organizations, mass organizations, armed forces, Joint Stock Companies, Private Enterprises; organizations and individuals conducting business activities under the Foreign Investment Law selling goods or providing services in Vietnam, etc.); Private Enterprises, small household businesses, individual businesses, family economy households, etc.;

Having fixed or mobile business locations, engaging in regular or irregular activities, seasonal operations.

II - According to Article 2 of the Law on Business Income Tax, the following activities are not subject to business income tax:

1. Agricultural production subject to agricultural tax;

2. Production of goods subject to special consumption tax (tobacco products, alcohol, beer, fireworks, playing cards, paper money offerings);

3. Production of goods actually exported.

Temporary exemption from business income tax applies to slaughterhouses directly slaughtering pigs, cattle, and buffalo that have already paid the slaughter tax.

 

B - BASIS FOR CALCULATING TAX AND TAX RATES

According to Article 7 of the Law on Business Income Tax, the basis for calculating tax is business income and tax rate.

I- Taxable business income includes the total amount received from sales, processing fees, and service charges during the tax payment period, after completing sales, processing, or service provision, without deducting any remaining fees, when the buyer, processor, or service recipient has acknowledged payment, regardless of whether the payment has been received or not. Taxable business income is defined in accordance with the characteristics of each activity as follows:

1. For the production industry (including industrial, small-scale industrial, handicraft, mineral extraction: mines, soil, sand, stone, gravel; forestry product extraction, aquaculture, fishery product processing, agriculture not subject to agricultural tax: fishing seedlings, poultry farming, livestock breeding, beekeeping, silkworm rearing, flower and ornamental plant cultivation, etc.) it is the proceeds from selling finished products, semi-finished products, waste products, packaging materials, raw materials, components, fuel, power; rental income from fixed assets; processing, assembly, repair fees.

2. For the construction industry, it is the amount payable for completed projects or project sections handed over, repair fees, construction service fees such as surveying, design, etc.

3. For the transportation industry, it is the freight charges for transporting goods and passengers, baggage, and other revenues related to transportation (port fees, inspection fees, wharfage fees, ferry fees, etc.).

4. For the trade and catering industry, it is the proceeds from selling goods (including purchased goods resold and self-manufactured goods).

a) For agency sales and consignment purchase/export activities, it is the commission earned.

Only entities meeting the following conditions will be recognized as agents or consignees and taxed based on commission income:

Possess a business license for agency or consignment activities;

Have a contract between both parties for agency or consignment transactions specifying the type of goods, price, commission rate, and payment terms for purchasing goods (without outright purchase). The contract must be submitted to the direct tax authority managing the entity for monitoring;

Conduct agency sales or consignment purchases strictly according to the prices stipulated in the contract.

Adhere strictly to accounting records, vouchers, and invoices, clearly and accurately recording sales and purchase revenues, commission income from agency and consignment activities, and related expenses.

b) For consignment sale activities, the business entity receiving consigned goods for sale and the person consigning goods for sale must comply with the following regulations:

Regarding accounting records and vouchers:

The entity receiving consigned goods must have a business license and declare and register for tax on consignment sales activities. It must strictly adhere to national accounting record and voucher regulations. Upon receiving consigned goods, they must be recorded immediately in the ledger.

Consignment goods must be accompanied by invoices (for regular business entities) or consignment sale letters from traders or non-commercial sellers (for high-value items like motorcycles, videos, etc., a certificate from the workplace or local authorities is required for the business entity to record the receipt of consigned goods).

Regarding tax regulations for consignment goods:

The business entity selling consigned goods is taxed on the commission earned.

The business entity consigning goods for sale is taxed on the full amount of consignment sales revenue (excluding commission).

Individuals consigning goods for sale without a commercial nature are exempt from business income tax.

In addition to paying turnover tax on their share of commission received, businesses also have the responsibility to:

Monthly prepare a list of goods from businesses frequently selling within the district, county, or town to be sent to the local tax authority for the basis of collecting turnover tax on goods sold by these businesses (based on business name, address, quantity of goods sold, revenue...).

Deduct 5% from the revenue of traders with goods for sale (if they have not yet paid turnover tax before transporting the goods) to submit to the local tax authority (2% for turnover tax, 3% for income tax).

When collecting taxes, the tax authority will issue a receipt for the business authorized to deduct the above tax amount to hand over to the person selling goods on consignment and charge the consignee a fee of 3% calculated based on the tax deducted and submitted to the tax authority.

5. For the service industry, revenue includes service fees, labor costs, raw materials, spare parts (if any), and other expenses serving the service activities.

a) For credit and banking activities, it is the total interest income received by the institution from borrowers, for example, a Credit Cooperative has a loan capital of 100 million VND, receives interest income of 5 million VND, taxable revenue is 5 million VND, plus other revenues such as payment service fees through banks, check sales, etc. (if any).

b) For insurance activities, it is the total premium income from customers.

c) For leasing activities, it is the total amount received from lessees.

d) For products made by production and service units of schools and other educational institutions that sell products and provide services externally, turnover tax must be paid according to the applicable tax rate for production and service industries. In cases where there is a need to invest in enhancing teaching and learning facilities, a plan must be prepared and recorded in the sector's or local plan, and the financial authority will consider allocating funds from the state budget to the school.

e) For cultural, artistic, sports, dance, horse racing, car racing performances, revenue is calculated based on the total ticket sales and other service activity revenues of the business.

g) For lottery companies, revenue is calculated based on lottery ticket sales and other service activity revenues (if any).

6. For revenue received in foreign currency (from domestic business operations or exports), the amount of foreign currency received must be converted into Vietnamese Dong at the buying exchange rate announced by the bank at the time the business receives the foreign currency.

7. In cases where businesses use goods, materials, machinery, equipment... (self-produced or purchased) or their own services to exchange goods or pay for services, as well as self-supplying goods or services of the business for internal needs or giving gifts to others, they must calculate the value in money based on wholesale prices of those goods or service prices at the time of occurrence to calculate turnover tax.

In all cases of exchanging goods or services mentioned above, each party involved in the exchange must pay tax on the taxable turnover value of the goods or service price of their own part being exchanged.

8. For economic organizations (state-owned, collective...) using the form of contracting individuals within or outside the organization to manage business operations, distribute income, and possibly fund themselves, only a certain amount is collected, turnover tax is calculated based on the actual revenue generated by each individual contractor.

9. For goods produced directly for export by a production unit, no turnover tax is required. If the production unit entrusts another unit to export, turnover tax is only levied on the commissioned business on the commission received.

10. For cases of selling goods on installment payments, revenue is calculated and taxed based on the actual amount received in each period until full payment is completed.

11. Taxable revenue is determined:

a) For medium and large-scale economic organizations and private households, it is the declaration of the business confirmed by the tax officer after inspection.

If declared revenue is found to be inconsistent with actual business operations, the business must pay tax based on the revenue determined by the tax officer according to Article 17 of the Turnover Tax Law. Additionally, they may face penalties for false declarations and tax evasion as stipulated in Article 19 of the Turnover Tax Law.

b) For small traders (with average monthly revenue up to 6 million VND for manufacturing and trading sectors; 3 million VND for catering; 1.5 million VND for processing, construction, transportation, and service sectors) it is the revenue quota set by the tax authority based on the trader's declaration, combined with the investigation data of the tax officer, and public democratic discussion among industry groups, recorded in a proposal for specific revenue quotas for each trader, reviewed by the head of the Tax Branch to establish legal grounds for tax records. This revenue level serves as the basis for calculating tax for a three-month period (for seasonal or highly fluctuating industries) or six months (for less fluctuating industries). If actual revenue increases or decreases by more than 20% compared to the quota during this period, the revenue quota must be adjusted. The process of adjusting the revenue quota must follow proper procedures with valid minutes to establish new tax records.

The standard for small households based on the monetary criteria mentioned above will be adjusted by the Ministry of Finance when the currency depreciates by more than 20% compared to the time the small household standard was defined.

II - Turnover tax rate: Based on Article 9 of the Turnover Tax Law and Article 4 of Decree No. 351-HĐBT issued by the Council of Ministers on October 1, 1990, the Ministry of Finance details the Tax Schedule attached to the Turnover Tax Law into a schedule attached to this Circular for uniform application across regions.

1. In cases where a production facility is subject to both a tax rate based on industry and raw material characteristics, and a tax rate based on usage, the tax rate based on usage shall be applied. For example, if rubber products (tax rate 6%) are also children's toys (tax rate 1%), the tax rate for children's toys (1%) shall be applied; if wooden products (tax rate 5%) are musical instruments (tax rate 2%), the tax rate for musical instruments (2%) shall be applied.

2. Business establishments operating in multiple industries with different turnover tax rates shall pay turnover tax according to the respective tax rate for each industry. If a business cannot separately account for the turnover of each industry, the highest tax rate applicable to any industry in which it operates shall be applied.

3. Decision No. 172-NQ/HĐNN8 dated September 10, 1991 abolished the turnover tax rate for wholesale activities, thus the conditions for applying the wholesale turnover tax rate stipulated herein are no longer in effect.

4. According to Article 15 of the Turnover Tax Law, businesses engaged in trading on a per-trip basis or businesses with fixed locations in the trade sector selling goods outside permitted areas shall pay turnover tax at a rate of 2% on turnover calculated at market prices at the point of departure and 3% on profit.

 

C- REGISTRATION, DECLARATION, PAYMENT OF TURNOVER TAX

Pursuant to Articles 10 and 11 of the Turnover Tax Law, business establishments have the responsibility to declare and register with the tax authority, strictly adhere to accounting bookkeeping systems and invoices; fully declare business turnover; provide documents upon request from the tax authority; and pay taxes in full and on time.

Pursuant to Article 16 of the Turnover Tax Law, the tax authority has the duty and power to guide and assist business establishments in implementing accounting bookkeeping systems, declaration procedures, and tax payment; conduct inspections; monitor business operations; require the provision of complete documents; calculate taxes, establish tax ledgers, approve tax ledgers, and notify the amount of tax due; prepare records and handle violations; examine and resolve complaints.

I- Regarding declaration and registration for tax purposes

1. The Turnover Tax Law is uniformly implemented and applied to all economic sectors, and all business establishments must register with the tax authority, including those that previously registered or did not register.

Provincial, city, and special zone tax authorities need to develop specific plans for approval by the People's Committee to uniformly implement declaration and registration according to the attached model in this Circular. The declaration form must be made in two copies, confirmed by the tax officer directly managing the establishment: one copy retained by the tax authority, and one copy confirmed by the tax authority and returned to the business establishment for proof of having completed the registration procedure.

When there are changes to the declared and registered items, the business establishment must report to the tax authority to adjust the recorded items in the tax authority's tracking ledger.

When there is a merger, division, or dissolution, the business establishment must report to the tax authority at least five days before the merger, division, or dissolution, and must settle all outstanding turnover tax before such changes occur.

2. The organization of declaration and registration must be completed no later than December 31, 1990 for all business establishments in all industries and economic sectors within the locality.

3. After receiving the declaration and registration documents, the tax authority needs to:

Examine and request additional information for unclear or insufficiently detailed points in the declaration form.

Organize verification of the declared and registered documents against the actual business activities of the establishment, focusing on indicators such as capital, labor, turnover, etc.; if discrepancies in declarations are found, they should be handled according to the provisions at Point a, Clause 1, Article 19 of the Turnover Tax Law, depending on the severity of the violation.

Record in the official tracking ledger, known as the business establishment directory, which is established separately for each economic sector (state-owned enterprises, cooperatives, organizations conducting economic activities of agencies, mass organizations, armed forces, private, individual, etc.) divided by industry (production, construction, transportation, trade, catering, services, etc.), with unique codes suitable for computer use.

Conduct classification of business establishments in the area to implement appropriate management and tax collection measures for each type of business.

Coordinate with the main management department, local government, and market management board to arrange stable seating positions for business establishments by industry groups within the area (market, street, ward, commune) to facilitate tax policy dissemination, guidance on accounting books and vouchers, or provision of operational information, ensuring fair tax payment and facilitating anti-tax evasion efforts.

Select individuals within the business group who relatively understand tax policies and have a good attitude towards contributions, introduce them to be elected as group leaders and deputy leaders. Tax officers must regularly exchange and assist group leaders and deputy leaders in understanding tax principles and encourage them to provide information and comments on the business situation of group members to enhance tax collection efficiency.

Organize regular or surprise inspections of business operations, compare with declared and registered documents, promptly identify and handle cases where responsibilities for declaration, registration, and tax payment are not fully fulfilled.

II- Regarding Accounting Books and Vouchers.

1. For economic organizations (state-owned enterprises, cooperatives, etc.) and large and medium-sized private and individual establishments:

The Accounting Regulations were issued by the State Council on May 10, 1988, and the Chairman of the Council of Ministers issued Decision No. 292-CT on the system of issuing purchase and sale invoices and service supply receipts on November 17, 1988, and these have been implemented according to Joint Circular No. 58-TT/LB dated December 23, 1988, by the Ministry of Finance and the General Statistics Office.

One of the important requirements for the implementation of new tax laws is to decisively and urgently bring accounting bookkeeping systems and voucher issuance into a regulated and disciplined framework to provide a basis for examination, inspection, and accurate tax calculation according to the law for each establishment in various economic sectors.

Localities need to promptly implement training, instruction, and detailed guidance on accounting records and invoices to ensure that tax officials and business establishments understand the principles and practices of bookkeeping: issuing vouchers, recording in accounting books, preparing appropriate reports for each type of entity as stipulated in the regulations so that implementation can be strictly adhered to...

It is necessary to resolutely address the tendency of complacency among tax officials who lack determination in implementing accounting record and invoice regulations for private entities, fearing difficulties and complexities, and worrying about reduced revenue. Adequate preparation must be made with specific, synchronized measures to ensure strict implementation of accounting records and invoices, tied to the regular management duties of tax officials, combined with organizing, educating, guiding, and widely mobilizing businesses, along with rigorous inspection and severe handling of violations of the Tax Law to promote strict compliance in all economic units.

Additionally, it is necessary to widely disseminate to all consumers the responsibility to demand receipts and invoices according to actual transactions and service payments; actively assist tax authorities in identifying cases of selling goods without invoices or issuing incorrect invoices to evade sales tax.

The transition to managing and collecting taxes through declarations must be implemented appropriately, initially applying transitional management measures under current regulations when thorough and tight maintenance of accounting records and invoices has not been organized, while also taking decisive, synchronized, urgent actions without rushing to implement simultaneously but avoiding laxity and delay in implementation, ensuring no loss of revenue and reduction in taxes due to the state budget.

2. For small individual businesses:

After reviewing and adjusting revenues to reflect actual business operations; categorizing establishments, subject to approval by the Tax Branch leadership for small individual businesses, specific provisions may be made based on local conditions, allowing simpler accounting records or exemption from maintaining accounting records for certain trades.

III- Declaration of Revenue and Provision of Documentation to Tax Authorities.

1. For state-owned enterprises, cooperatives..., and medium to large private establishments

Tax authorities should study the characteristics and revenue generation of each establishment to determine the tax payment regime:

On a weekly basis: daily, every five days, ten days, or fifteen days, primarily applicable to state-owned enterprises with high daily revenue;

Every fifteen days or monthly, mainly for collective and large private establishments.

Accordingly, deadlines for submitting revenue declarations should be set for each type of business, not later than the fifth day of the month following the previous month's revenue, ensuring that taxes due from the previous month are paid no later than the fifteenth day of the subsequent month.

Through regular management and declaration verification, tax officers have the authority to request additional documentation from businesses to clarify unclear points in declarations or to substantiate issues related to declared content and taxation.

According to Article 17 of the Business Tax Law, tax authorities have the right to determine taxable revenue in cases where businesses fail to fully and timely declare revenue, maintain accounting records and invoices properly, or refuse to provide necessary documentation related to taxation. Based on investigative materials on business operations, industry, and trade, the tax authority determines revenue and must obtain approval from the direct supervising tax authority leader before announcing tax collection.

If a business disagrees with the determined revenue, they have the right to appeal, but must still pay taxes at the determined rate pending resolution.

2. For small individual businesses:

Small individual businesses are exempt from monthly revenue declarations and can pay taxes based on quota revenue.

To ensure transparency, fairness, and equality among businesses, quota revenue determination must be based on business declarations, classification and ranking within trading groups, typical case investigations, and opinions from business managers and group leaders, with discussions among tax collection management teams in the same area, thoroughly preparing materials and situations for collective review within the trading group.

Meeting conclusions proposing specific revenue quotas for each household, reviewed and approved by the Tax Branch leadership, serve as legal grounds for establishing tax ledgers for small individual businesses.

IV- Regarding taxation, ledger creation, ledger approval, tax announcement, and tax collection monitoring

These tasks must be carried out through the following main steps:

1. Directly managing officers verify and confirm declaration materials or bases for determining taxable revenue (revenue determined by the tax authority or quota revenue determination record for small individual businesses), calculate taxes, submit to unit leadership for comments, and transfer to the ledger creation department.

2. Ledger creation department:

Review tax calculation materials transferred by management officers and create ledgers according to regulations set by the Ministry of Finance:

Submit to unit leadership for ledger approval to establish legal grounds for taxation;

Issue tax payment orders transferred to management officers to deliver to businesses for tax payment into the treasury (with receipt acknowledgment).

3. Accounting department oversees tax collection monitoring: mark off ledgers for businesses that have paid taxes, noting the payment date and tax receipt number, promptly urging and reminding delinquent taxpayers.

These tasks must be handled according to the principle of specialized division of responsibilities among departments: business management, ledger creation, tax collection, tax payment monitoring, and tax collection inspection... while ensuring close coordination to meet overall management and tax collection requirements.

V- Payment of full tax amount within the prescribed time by business establishments

1. For economic organizations (state-owned enterprises, cooperatives...) and private businesses, medium and large-scale individual businesses: pay the full tax amount within the prescribed time according to the regulations of the tax authority on a periodic or monthly basis. The tax payment can be made in cash or transferred into the state treasury according to the guidance of the tax authority and the treasury authority.

2. For small-scale business establishments: pay turnover tax on the last days of each month according to the time specified by the tax authority based on the turnover quota for each business establishment, simultaneously with the payment of profit tax at a fixed rate for each industry (1% or 2%) based on the turnover quota. Generally, the business establishment directly pays the tax into the state treasury. In necessary cases, for business establishments with a small amount of tax to pay, it may be paid to the revenue collection department of the tax authority for centralized payment into the state treasury. The tax authority will specify and guide the specific tax payment schedule for each small-scale business establishment.

3. For business establishments engaged in temporary trading:

According to Article 15 of the Turnover Tax Law, business establishments engaged in temporary trading must pay tax before transporting goods. Turnover is calculated based on wholesale prices in the market where the goods originate.

According to Articles 11 and 16 of the Profit Tax Law, business establishments engaged in temporary trading must pay profit tax at a quota rate of 3% based on taxable turnover and must pay profit tax simultaneously with turnover tax before transporting goods. If it is discovered that a business establishment engaged in temporary trading transports goods on the road or arrives at the selling location without having paid tax or has not paid the full tax amount corresponding to the quantity of goods, the business establishment must pay tax based on market prices at the location where untaxed goods were discovered. Additionally, depending on the specific circumstances, penalties for false declaration or tax evasion may be imposed according to Article 19 of the Turnover Tax Law.

Business establishments engaged in fixed trading that purchase raw materials or goods must be directly managed and taxed by the tax authority, receiving a "purchase record book" which records the quantities and prices of goods before transportation, and presenting this record to tax control stations for confirmation to distinguish them from temporary trading business establishments and thus avoid paying turnover tax for temporary trading activities.

To ensure uniform tax calculation in each locality and prevent revenue loss due to price fluctuations, the district-level tax authority or equivalent must organize inspections and monitor changes in market prices of key goods involved in temporary trading activities in the locality, informing tax stations so they have a basis for referencing market prices when calculating taxes for temporary trading activities.

4. Tax Receipts:

In all tax collection situations, the tax collection authority must issue a tax receipt or a certificate confirming the tax payment to the taxpayer using a stamp uniformly issued by the Ministry of Finance.

 

D - TAX REDUCTION AND EXEMPTION

I- Given its nature as an indirect tax borne by consumers through product prices, generally, turnover tax reduction or exemption is not applicable to business establishments.

However, to consider the specific difficulties faced by some business establishments, Article 18 of the Turnover Tax Law and Articles 12 and 13 of Decree No. 351-HĐBT dated October 2, 1990 stipulate tax reduction and exemption for the following cases:

1. Elderly, disabled individuals, or those engaged in petty trade with monthly income below the minimum salary and allowance level of state employees shall be exempted from turnover tax.

2. Business establishments experiencing significant difficulties due to natural disasters, enemy actions, or unexpected accidents affecting their business operations.

3. Business establishments operating in mountainous areas or in certain important industries facing difficulties requiring government subsidies to maintain operations.

Implementation of these provisions includes:

Regarding point 1: Business establishments with current monthly income of approximately 50,000 VND are exempted from turnover tax. Tax officials need to manage, investigate, understand the situation, exchange information with local authorities, and submit applications for tax exemption to the head of the district-level tax authority or equivalent for approval. Business establishments eligible for tax exemption will be issued a turnover tax exemption certificate valid during the exemption period. If the business continues to face difficulties beyond this period, a new exemption certificate or extension of the existing certificate will be issued, signed by a tax authority leader and stamped by the tax authority.

For collective economic organizations of staff and workers newly established to address surplus labor, independently accounting for salaries and allowances below the minimum level of state employees (approximately under 50,000 VND/month/person), turnover tax exemption also applies.

Regarding point 2: For business establishments facing difficulties due to natural disasters, enemy actions, or unexpected accidents, if the value of losses ranges from 20% to 50% of taxable turnover, the district-level tax authority or equivalent will propose a tax reduction corresponding to the loss ratio, to be decided by the provincial-level tax authority or equivalent. If the value of losses exceeds 50% of taxable turnover, the provincial-level tax authority or equivalent will propose a tax reduction or exemption based on the proposal of the district-level tax authority or equivalent, to be decided by the State Tax总局或其相应机构决定减税或免税。这种减免税仅适用于一年期限。

Regarding point 3: According to Article 18 of the Turnover Tax Law and Article 13 of Decree No. 351-HĐBT, the temporary non-collection of turnover tax applies to the printing of People's Army Newspaper, People's Army Daily, specialized newspapers and magazines, traditional folk art troupes such as puppet shows, opera, and folk music under the Ministry of Culture, Sports and Tourism, broadcasting and television transmission activities according to the national plan, and daily catering services within enterprises, schools, and military forces. For collective canteens, if they engage in catering services for external customers, they still need to pay turnover tax on these activities.

For mountainous areas, the People's Committee of provinces or equivalent administrative levels shall examine and decide on reducing or exempting business income tax for certain activities in important industries managed by localities that face difficulties and require state subsidies to maintain operations. The provincial tax authority or its equivalent shall coordinate with the finance sector and relevant sectors to examine and propose the People's Committee to decide on tax exemption for a period of one year; if there are still difficulties, it may be considered for another year of tax exemption.

II - For small businesses, the fixation of business income has an average nature, so in general, the issue of monthly tax exemption or reduction is not raised. However, in cases of sudden difficulties (illness, childbirth, legitimate personal matters) requiring cessation of business operations, they may still be eligible for tax reduction or exemption based on the principle that if business operations are suspended for three days or less in a month, the entire month's tax will be exempted; up to fourteen days, half of the month's tax will be reduced. All temporary cessation of business operations seeking tax reduction or exemption must submit a leave application to the district-level tax authority or its equivalent at least five days before the cessation; in cases of sudden illness, an immediate report must be made to the tax authority. The leave application must be confirmed by the directly managing staff and approved by the head of the district-level tax branch or its equivalent. Tax authorities at all levels need to strengthen inspections, detection, and handling of cases where businesses seek tax reduction or exemption but continue operating. Directly managing staff responsible for collecting taxes must bear joint responsibility for cases of tax evasion or underpayment.

All cases eligible for tax reduction or exemption (except those specified in point 3) must submit an application for tax reduction or exemption, which must be decided upon in writing by the head of the tax authority, recorded in the tax ledger with the date of the decision on tax reduction or exemption, and provided to the business entity as proof of tax reduction or exemption.

E - VIOLATION HANDLING

I- Article 19 of the Business Income Tax Law stipulates the level of violation handling for business entities regarding:

1. Not complying with regulations on declaration procedures, accounting books, invoices as stipulated in Articles 10 and 11; fraudulent declarations, tax evasion; late payment of taxes or fines; delaying tax payments or fines.

In each case of violation, different penalties are prescribed depending on the severity. Therefore, tax authorities must carefully analyze each case of violation to make appropriate decisions; ensuring that the handling serves both educational purposes and economic considerations. Each violation case file must include a detailed record of the incident, sufficient evidence to determine the nature and degree of the violation, actions, procedures for tax evasion, whether it is a first-time offense or a repeat offense, mitigating or aggravating circumstances... Based on this, the correct form and level of penalty should be decided.

According to Article 7 and 8 of the Administrative Violation Penalty Decree issued by the State Council on November 30, 1989:

Mitigating circumstances include cases where the violator has taken measures to reduce the harm caused by the violation; violations committed under mental provocation caused by illegal acts of others; violations due to limited cognitive ability; violations due to particularly difficult objective circumstances...

Aggravating circumstances include cases of organized violations; repeated or recidivist violations; violations causing significant damage; inciting or enticing minors to commit violations; taking advantage of positions, powers, or natural disasters, epidemics, enemy threats to violate; after the violation, attempting to evade or conceal administrative violations.

a) Handling of non-compliance with regulations on declaration procedures, registration, accounting bookkeeping, and submission of invoices: Depending on the severity, warnings or fines up to 1,000,000 dong may be imposed.

Regarding warnings:

Direct staff members have the authority to warn business entities in cases of first-time violations due to insufficient understanding of principles and systems.

Regarding fines: Article 20 of the Business Income Tax Law stipulates the following authority to impose fines:

The Head of the Tax Station can impose fines up to 100,000 dong. This applies to cases where the business entity commits a first-time violation without clear signs of intent to evade or underpay taxes.

The Head of the District-level Tax Authority or its equivalent can impose fines up to 400,000 dong. The Head of the Provincial-level Tax Authority or its equivalent can impose fines up to 1,000,000 dong. This applies to cases of more severe violations than those mentioned above.

b) Handling of fraudulent declarations and tax evasion: In addition to paying the full amount of business income tax as stipulated by the Law, violators will also be fined from one to three times the amount of evaded tax according to the general principle that the first violation is fined once the tax, the second violation is fined twice, and third or subsequent violations are fined three times. In cases of serious violations (organized, large-scale fraud, sophisticated tax evasion), even the first violation may result in a fine of two to three times the amount of evaded tax according to Article 20 of the Business Income Tax Law. The Head of the District-level Tax Authority or its equivalent can impose a fine of one time the tax, while the Provincial-level Tax Authority or its equivalent can impose a fine of up to three times the tax. The District-level Tax Authority must report detailed cases of aggravating circumstances along with the record to the higher-level Tax Authority for appropriate consideration and decision on the fine.

c) Handling of late payment of taxes or fines: In addition to paying the full amount of taxes and fines as stipulated by the Law, a daily fine of 0.5% (five thousandths) of the amount of late-paid tax will be imposed. In principle, all cases of late payment of taxes or fines will be subject to this penalty without consideration of mitigation or aggravation. However, when handling cases of late payment, the reasons for intentional delay or genuine difficulty (due to excessive capital occupation, large amounts of tax or fines) should also be considered to adjust the time frame and assist the entity in settling debts to ensure conditions for tax and fine payment.

d) Cases involving overdue tax and fine payments: shall be categorized as overdue tax and fine cases where the payment of taxes and fines is delayed beyond the deadline set by the tax authority for more than 30 days.

Regarding the form of processing to deduct funds from organizations held at banks for tax and fine payments: the tax authority needs to establish close relationships with commercial banks and the State Bank to obtain information on the balance in the accounts and deposits of the business entity at the bank; issue a letter accompanying the tax payment notice requesting the bank to deduct the amount held by the business entity to pay taxes and fines. According to Article 19 of the Value Added Tax Law, banking institutions have the responsibility to implement preferential deduction procedures for tax and fine payments into the state budget account at the treasury.

Regarding the form of temporarily seizing goods and evidence to ensure full collection of taxes and fines: the temporary seizure of goods and evidence often causes many complexities in determining the quality of seized goods and evidence and their preservation. Therefore, this method is only applied in certain special cases where failure to seize the goods and evidence would result in non-payment of outstanding debts.

According to Clause 3, Article 20 of the Value Added Tax Law, the head of the tax authority directly managing the business entity may apply the above measures, therefore, all cases of temporarily seizing goods and evidence must be decided in writing by the head of the tax authority directly managing the business entity and one copy must be handed over to the business entity. When implementing the decision to temporarily seize goods and evidence, there must be a record detailing the actual quantity and quality of the seized goods and evidence (including the detailed condition of the evidence). If sealing is necessary, it must be carried out immediately in the presence of the owner or representative of the business entity. Goods and evidence temporarily seized must be handed over between tax officials, requiring careful inspection, and the custodian must bear responsibility if there is any substitution, damage, or loss.

Regarding the form of "seizing assets" according to the provisions of the law to ensure outstanding tax and fine payments: Clause 3, Article 31 of the Administrative Violation Handling Ordinance stipulates: Within five days from the date the handling decision becomes effective, if the party does not voluntarily comply, compulsory enforcement will be carried out.

In Article 32 of the Administrative Violation Handling Ordinance, "seizing assets for auction" is one of the measures of compulsory enforcement of administrative penalty decisions, and "the competent state agency responsible for imposing penalties has the duty to organize administrative enforcement against individuals and organizations penalized for administrative violations if they do not voluntarily comply with the penalty decision, the People's Police force has the responsibility to enforce the administrative enforcement decision of the same-level People's Committee and cooperate with other agencies that issued the penalty decision and organized administrative enforcement when requested." Therefore, in cases where asset seizure is necessary, the tax authority must report and seek opinions from the same-level People's Committee and higher-level tax authorities, closely coordinating with the police, the Prosecutor's Office... under the guidance of the local People's Committee to ensure strict and lawful enforcement.

2. Individuals who evade taxes in large amounts or who have been administratively punished but continue to violate or evade taxes in very large amounts or commit crimes in other serious cases shall be criminally prosecuted according to the provisions of Article 169 of the Criminal Code.

According to Article 30 of the Administrative Violation Handling Ordinance, when examining violations that indicate criminal offenses, the tax authority transfers the violation files to the competent authority to handle criminal prosecution responsibilities.

II - Article 21 of the Value Added Tax Law provides that individuals obstructing or inciting others to obstruct the enforcement of the Value Added Tax Law or hindering the investigation and handling of violations of this Law shall be subject to administrative penalties or criminal prosecution, depending on the severity of the offense, as prescribed by law.

1. According to Article 11 of the Administrative Offense Sanction Decree, forms of administrative sanctions include warnings, fines, revocation of licenses (driver's licenses, business permits, or other types of licenses); confiscation of contraband items and means of transportation.

a) Article 13 of the Administrative Offense Sanction Decree stipulates that warnings shall be applied to individuals committing minor administrative offenses for the first time with mitigating circumstances.

b) Article 14 of the Administrative Offense Sanction Decree specifies the form of fines:

A fine ranging from VND 1,000 to VND 20,000 shall be imposed on individuals or organizations committing simple, clear administrative offenses without causing significant damage or loss, if the violation occurs repeatedly or is a recidivist offense, then a fine ranging from VND 20,000 to VND 50,000 shall be imposed.

A fine ranging from VND 20,000 to VND 500,000 shall be imposed for administrative offenses not falling under the aforementioned cases.

In cases of tax-related violations with aggravating circumstances, a fine exceeding VND 500,000 may be imposed.

2. According to Article 17 of the Administrative Offense Sanction Decree, the authority to impose sanctions on tax officials is as follows:

a) Tax officials performing their duties may be warned or fined up to VND 20,000. Imposing a fine from VND 20,000 to VND 50,000 must be decided by the immediate superior of the tax official.

b) The Head of the Planning Department may apply all forms of sanctions and coercive measures and impose a fine up to VND 200,000.

According to Article 20 of the Administrative Offense Sanction Decree, when imposing a simple administrative sanction in the form of a warning or a fine up to VND 20,000, the authorized official shall decide the penalty on the spot. The person fined must pay the fine and receive a receipt.

According to Article 21 of the Administrative Offense Sanction Decree, when there is an administrative offense, the competent state agency must promptly establish a record with complete content, except in cases of simple administrative sanctions.

If criminal responsibility needs to be pursued, it shall be carried out according to point 2, section I above.

III- Article 22 of the Value Added Tax Law provides that tax officials and other individuals who abuse their positions or powers to embezzle, misappropriate value-added tax funds, cover up for violators of the Value Added Tax Law; intentionally violate the provisions of the Law; or fail to fulfill their responsibilities while enforcing the Value Added Tax Law shall compensate the State for the full amount of taxes embezzled or misappropriated and, depending on the severity of the violation, shall be subject to disciplinary action, administrative penalties, or criminal prosecution.

Administrative penalties or criminal prosecution shall be applied according to the guidance provided in points 1 and 2, section II above.

In the case where tax officials, due to lack of responsibility or intentional misconduct, cause losses to taxpayers or those being processed, they must compensate the victims and further investigate the reasons for the misconduct, whether for personal gain or due to lack of understanding of principles and regulations, so that the resolution is appropriate.

IV- Article 19 and Article 20 of the Business Income Tax Law have stipulated the maximum penalties and the authority to impose penalties at each level. Therefore, before handling cases, it is necessary to determine which provision of the Law the violation will be processed under and the authority to handle each case at each level to avoid imposing penalties beyond the limit and exceeding the authority of each level.

 

G - APPEAL AND TIME LIMITS

I- Article 24 of the Business Income Tax Law provides the right to appeal against organizations or individuals who believe that the implementation of the Business Income Tax Law is incorrect.

The appeal must be submitted to the tax authority issuing the collection order or decision within thirty days from the date of receipt of the collection order or decision. While waiting for resolution, the appellant must pay the full amount of tax and penalty as notified on time. The authority receiving the appeal must examine and resolve the appeal within fifteen days from the date of receipt of the appeal. For complex cases requiring more time for investigation and verification, the parties concerned must be informed, and the resolution period shall not exceed thirty days from the date of receipt of the appeal.

After examining the appeal, the authority resolving the appeal must issue a decision with one of the following contents:

Not changing the previous decision.

Changing the form, degree, or measures of the decision.

Revoking the previous decision and suspending the previous enforcement.

In cases where the decision is changed or revoked, compensation or restitution for direct losses may be decided if applicable. If the aggrieved party disagrees with the compensation or restitution decision, they may request the court to resolve the matter through civil litigation procedures.

II - According to Article 25 of the Business Income Tax Law, if the appellant disagrees with the decision of the authority receiving the appeal regarding the tax rate or penalty or if the appeal has not been resolved within thirty days, the appellant has the right to appeal to the higher-level tax authority directly above the receiving authority. The jurisdiction to examine and resolve appeals is as follows:

The head of the county tax authority or equivalent examines and resolves appeals regarding the tax rate or penalty decisions made by the station chief.

The head of the provincial tax authority or equivalent examines and resolves appeals regarding the tax rate or penalty decisions made by the head of the county tax authority or equivalent.

If there is still an appeal, the Minister of Finance shall examine and decide.

During the process of examining and resolving appeals, the higher-level tax authority needs to carefully review and analyze the documents and opinions of the lower-level tax authority to ensure fair, impartial, and lawful resolution.

Article 26 of the Business Income Tax Law stipulates that the tax authority must refund improperly collected taxes and penalties and pay compensation (if any) within fifteen days from the date of receipt of the superior's decision.

III- According to Article 27 of the Business Income Tax Law, if fraud, tax evasion, or errors in calculating taxes or penalties are discovered and concluded, the tax authority is responsible for recovering or refunding the incorrectly calculated tax or penalty amounts within three years from the date of fraud, tax evasion, or error in calculating taxes or penalties.

 

H - IMPLEMENTATION ORGANIZATION

To ensure that business income tax management is appropriate to the current level of staff and tax organization, the Ministry guides the management of business establishments as follows:

The provincial tax authority or equivalent manages central enterprises located in the locality and enterprises under provincial or city management.

The county tax authority or equivalent manages other business establishments (local state-owned enterprises, cooperatives, individual private businesses, etc.).

I- Implementation Provisions

According to Resolution No. 270B-NQ/HĐNN8 dated August 8, 1990, and Resolution No. 278/HĐNN8 dated August 28, 1990 of the State Council, and Decree No. 351/HĐBT dated October 2, 1990 of the Council of Ministers, the Business Income Tax Law took effect from October 1, 1990, for non-state economic entities and state-owned enterprises that had completed capital and asset transfers. The tax authority needs to coordinate with central industry management departments, local financial authorities to identify state-owned enterprises that have completed capital and asset transfers, guide business establishments to apply the new Business Income Tax Law from October 1, 1990, while implementing the tax system based on capital and paying basic depreciation according to current regulations. It is necessary to guide the completion of accounting records of business operations up to September 30, 1990, verified by tax officials regarding business income under the enterprise tax, goods tax, or state revenue system, determining the amount due but unpaid, transferred to the fourth quarter of 1990 before applying the new Business Income Tax Law.

For state-owned enterprises that have not yet completed capital and asset transfers, they continue to apply the state revenue system and remit profits until the capital and asset transfer is completed, but no later than December 31, 1990. The tax authority needs to actively coordinate with financial authorities and local asset verification committees to quickly complete capital and asset transfers to promptly implement the tax system based on capital and the unified Business Income Tax Law for all business establishments.

Attached to this circular are the tax registration forms and business income tax declaration forms.

 

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

Tax Registration Number

BUSINESS TAX REGISTRATION FORM (1)

To: (2)

1. Name of business establishment (3)

2. Name of the business owner (4)

3. Start Date of Business Operations (5): From / /19...

4. Business License Number Issued on / /19... by…

5. Form of Business Operation (6)

6. Main Industry:

Secondary:

7. Main Product Line:

Secondary:

8. Business Method (7):

9. Main Business Location (8):

Secondary:

Place with raw material warehouse, product warehouse:

10. Total Business Capital: …VND

Divided into: Fixed Capital: …VND; Working Capital: …VND

Source of Capital: - State Allocation: …VND; - Self-owned: …VND

- Shares: …VND; - Loan (9): …VND

11. Total Number of Employees: …people

Divided into: Own Employees (10): …people; Outsourced (11): …people

12. Average Monthly Revenue (12)

13. Accounting System Applied (13)

14. Bank Account Number …

15. Tax Payment Location Registered (2)

I hereby take responsibility for the accuracy of the information provided above and commit to strictly comply with the responsibilities and obligations of the business establishment as prescribed in the Tax Laws.

Confirmation of tax registration, entered into the book

day... month... year 19...

...tax (2)...

PART GUIDANCE ON CONTENTS OF BUSINESS TAX REGISTRATION

1. Business tax registration in accordance with Clause 1, Article 10 of the Law on Business Tax and Special Consumption Tax.

2. Tax分局或税务局直接负责征收该企业税收。

3. Business enterprise name: factory name, cooperative society name... or store name, shop name

4. Name of business enterprise owner: director, head, team leader... (if it is an economic organization) or individual business household owner (if it is an individual or sole proprietorship)

5. Start date of business operation

6. Form of business: State-owned enterprise, joint general corporation, cooperative society. Cooperative buying and selling society, private enterprise, individual household business, etc.

7. Method of business: production, processing, manufacturing, assembly; exploitation; breeding; construction with full contract or without full contract; short-distance, long-distance, inter-provincial, north-south transportation; wholesale, retail, agency, consignment; fixed or regular mobile or seasonal...

8. Place of business; production, sales, service, headquarters...

9. Bank loans, credit cooperative loans for cadres, workers, employees of enterprises, units...

10. Labor force of the enterprise: within or outside the establishment quota of the enterprise, unit; cooperative society members, family members of the individual business household owner.

11. Outsourced labor: regular, non-regular

12. Average monthly revenue declared for operating units or estimated revenue for new businesses entering the market.

13. Accounting method applied: state-owned, collective, or private.

14. For economic organizations (state-owned enterprises, collectives), the business enterprise owner signs and stamps the seal of the economic organization.

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

...day... month...year 19...

BUSINESS TAX CALCULATION FORM

Tax payment time

Business enterprise name (or individual business household owner):

Business sectors and activities:

Business location:

Account number.

At Bank

Amount of tax due (written in full characters)

I solemnly declare that the information and figures declared above are true to reality; if not, the business enterprise will accept the handling according to point a, b Article 19 of the Value Added Tax Law.