Circular No. 51/TC-TCÐN guides the implementation of tax regulations applicable to foreign-invested enterprises and foreign partners conducting business cooperation based on contracts under the Law on Foreign Investment in Vietnam.

MINISTRY OF FINANCE ********	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ********
Number: 51-TC/TCĐN	Hanoi, July 3, 1993

 

CIRCULAR

NUMBER 51-TC/TCĐN OF JULY 3, 1993 ISSUED BY THE MINISTRY OF FINANCE GUIDING THE IMPLEMENTATION OF TAX REGULATIONS APPLICABLE TO ENTERPRISES WITH FOREIGN INVESTMENT CAPITAL AND FOREIGN PARTIES ENGAGED IN JOINT BUSINESS OPERATIONS BASED ON CONTRACTS UNDER THE LAW ON FOREIGN INVESTMENT IN VIETNAM

Pursuant to the Law on Foreign Investment in Vietnam dated December 29, 1987, the Law Amending and Supplementing the Law on Foreign Investment in Vietnam dated June 30, 1990, and the Law Amending and Supplementing the Law on Foreign Investment in Vietnam dated December 23, 1992 (hereinafter referred to as the Law on Foreign Investment in Vietnam);
Pursuant to Decree No. 18-CP dated April 16, 1993 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;
Pursuant to current tax laws and ordinances of the Socialist Republic of Vietnam;
The Ministry of Finance guides the implementation of regulations on taxes applicable to enterprises with foreign investment capital and foreign parties engaged in joint business operations based on contracts under the Law on Foreign Investment in Vietnam as follows:

I. SCOPE OF APPLICATION

1. Enterprises with foreign investment capital: These are joint ventures and wholly foreign-owned enterprises established under the Law on Foreign Investment in Vietnam, operating in various fields, including joint venture enterprises for infrastructure construction in export processing zones and export processing zone enterprises as stipulated in Decree No. 322-HĐBT dated October 18, 1991 of the Council of Ministers (now the Government).

2. Joint ventures established on the basis of Agreements signed between the Government of the Socialist Republic of Vietnam and the Government of foreign countries. In cases where the Agreement contains provisions regarding taxation for joint ventures that differ from the provisions of Vietnamese tax laws and guidance provided in this Circular, such provisions shall be implemented according to the Agreement.

3. Foreign parties engaged in joint business operations based on contracts (referred to as foreign joint venture parties) under the Law on Foreign Investment in Vietnam.

4. The provisions of this Circular do not apply to:

- Joint ventures, wholly foreign-owned enterprises, and foreign parties operating under build-operate-transfer (BOT) contracts as stipulated in Article 55 of Decree No. 18-CP dated April 16, 1993 of the Government, which fulfill their tax obligations to the State of Vietnam according to separate guidelines.

- Foreign subcontractors, economic organizations, and individuals from abroad conducting business activities in Vietnam but not falling under the forms of investment as defined by the Law on Foreign Investment in Vietnam.

II. GUIDANCE FOR THE IMPLEMENTATION OF EACH TYPE OF TAX APPLICABLE TO ENTERPRISES WITH FOREIGN INVESTMENT CAPITAL AND FOREIGN JOINT VENTURE PARTIES

A. INCOME TAX

1. Taxable Object.

Enterprises with foreign investment capital and foreign joint venture parties must pay income tax on all income derived from any economic activity permitted under the Business License issued by the State Committee for Cooperation and Investment.

In cases where an enterprise with foreign investment capital has dependent business units (branches, affiliated companies), the income of these dependent units is aggregated into the enterprise's total income, and the enterprise is responsible for paying income tax on the entire income of the enterprise, including the income of the dependent units.

In cases where a foreign joint venture party participates simultaneously in multiple joint business contracts, income tax is calculated separately for each joint business contract (each contract being a separate taxable object).

2. Determination of Taxable Income.

- The taxable income of an enterprise with foreign investment capital is the difference between total revenues and total expenses, plus other incidental income of the enterprise (including both main and dependent units if any) earned during the tax year.

Other incidental income includes: income from leasing fixed assets (not part of the main business operation), income from selling liquidated assets, transferring assets, or transferring shares, income from joint ventures or joint operations with other economic organizations, and other financial income such as interest rate differences from deposits received and bank loans paid, price and exchange rate differences...

- The taxable income of a foreign joint venture party is the difference between total revenues of the foreign party and total expenses of the foreign party incurred in implementing the contract signed with the Vietnamese party.

a. Revenues:

The revenues of an enterprise with foreign investment capital or a foreign joint venture party include revenues from product sales, service provision, and other revenues from any activity of the enterprise or the foreign party during the tax year.

In cases where joint business contracts are structured on a profit-sharing basis, revenue from product sales is calculated based on the quantity of products allocated to each party multiplied by (x) the average market price of the product at the time of allocation, as determined by the tax authority.

b. Expenses:

Regardless of the accounting system applied, the expenses of an enterprise with foreign investment capital or a foreign joint venture party are determined to include the following items:

- Expenses for raw materials and energy used in the production of main and secondary products or for service provision.

- Wages, salaries, and allowances paid to Vietnamese and foreign workers based on labor contracts consistent with the labor regulations for enterprises with foreign investment capital issued together with Decree No. 233-HĐBT dated June 22, 1990 of the Council of Ministers (now the Government).

- Depreciation of fixed assets used in production and business operations. The depreciation rate of fixed assets must comply with the provisions of Circular No. 31-TC/TCDN dated July 18, 1992 of the Ministry of Finance. In cases where an enterprise or a foreign party applies a higher depreciation rate for fixed assets than the rate specified in Circular No. 31-TC/TCDN, such higher rate must be approved in writing by the Ministry of Finance.

- Expenses for purchasing or paying for the use of technical documents, patents, technology, and technical services.

- Enterprise management costs include administrative expenses, warehouse, house, and laboratory preservation costs; labor protection, environmental protection, invention and patent award costs; recruitment and training costs; fire prevention and firefighting, security costs.

- Taxes, fees, and charges with a tax nature that have been paid (excluding income tax).

- Interest payments on borrowed capital at reasonable interest rates.

- Direct costs related to product consumption or service provision such as storage, packaging costs, loading and unloading costs, advertising costs.

- Payments to social insurance funds for employees according to the provisions of Article 46 of Decree No. 233-HĐBT dated June 22, 1990.

- Insurance premiums for enterprise assets.

- Losses from previous years (joint ventures and wholly foreign-owned enterprises are permitted to carry forward losses from any fiscal year to the next year and offset them with profits from subsequent years but not exceeding five years, starting from the year immediately following the year in which the loss occurred).

- Other expenses not mentioned above but not exceeding 5% of the total costs mentioned above.

All identified expenses must be supported by valid documentation; regardless of the expense, if it lacks valid documentation, it shall not be included in the deductible expenses when determining taxable income.

Joint venture enterprises or foreign parties shall not include the following expenses in the determination of taxable income:

- Material and energy costs used for purposes unrelated to income generation such as loans, sales, exchanges, gifts.

- Excessive depreciation of fixed assets beyond the limits set by the Ministry of Finance, and basic depreciation of fully depreciated fixed assets.

- Losses of assets, materials, and capital due to theft, natural disasters, fires, and other undetermined responsible parties.

- Production stoppage losses due to any cause.

- Losses covered by insurance funds.

- Penalties payable by the enterprise for breach of economic contracts, violation of laws, and late payment penalties for accounts receivable.

- Interest payments on borrowed capital made by investors for the portion of borrowed capital used to contribute to the statutory capital or returns on capital contributions by domestic investors for the portion of capital received from the State to contribute to the statutory capital of the enterprise.

- Interest payments on borrowed capital by foreign-invested enterprises for borrowed capital exceeding 234% of the statutory capital, except where the State Committee on Cooperation and Investment approves a statutory capital less than 30% of the total investment.

- Losses from share transfers.

3. Determination of the amount of income tax payable.

The amount of income tax payable is determined by multiplying the taxable income generated during the tax year by the income tax rate specified for the enterprise or the foreign joint venture party as recorded in the License issued by the State Committee on Cooperation and Investment.

The tax year is the financial year that the foreign-invested enterprise or the foreign joint venture party is allowed to apply in accounting operations.

4. Procedures for paying income tax.

Income tax is temporarily collected quarterly based on declarations, at the end of the tax year or upon termination of the contract, it will be settled based on actual figures.

For joint venture contracts with a term of less than one year, income tax is paid in two installments, the first installment is temporarily paid halfway through the contract period, and the final settlement is made based on actual figures upon expiration of the contract.

- Within no more than five days after the aforementioned tax payment period, the foreign-invested enterprise or the foreign joint venture party must prepare and submit the income tax declaration form (model number... attached) to the local tax authority at the location of the main office. The tax authority will review the tax declaration and issue a notice of the tax payable to the enterprise or the foreign joint venture party. If the enterprise or the foreign joint venture party fails to submit the tax declaration within the prescribed time limit, the tax authority has the right to determine the provisional tax payment and issue a tax notice and impose penalties for late filing.

- Within no more than five days from the date of receipt of the tax notice from the tax authority, the foreign-invested enterprise or the foreign joint venture party must pay the full tax according to the notice into the National Treasury designated by the tax authority.

- Within no more than three months from the end of the financial year, the foreign-invested enterprise or the foreign joint venture party must submit the audited accounting report together with the annual income tax declaration form to the local tax authority at the location of the main office. The tax authority will settle the income tax according to the provisions in Part IV of this Circular.

5. Refund of income tax for reinvestment.

a) Foreign economic organizations or individuals who use distributed profits for reinvestment for three years or longer will be refunded the income tax paid on the reinvested profits by the Ministry of Finance.

In cases where foreign parties in foreign-invested enterprises have not contributed sufficient statutory capital as recorded in the License issued by the State Committee on Cooperation and Investment, they will not be eligible for a refund of income tax on reinvestment.

b) The amount of income tax refunded for reinvested profits is calculated as follows:

L

Th = ------------------- x S

100% - S

Where:

Th: Is the amount of income tax refunded.

L: Is the distributed profit (after income tax payment) used for reinvestment.

S: Is the income tax rate recorded in the license.

c) Procedures for refunding income tax on reinvestment.

To recover the tax paid on reinvested profits, foreign economic organizations or individuals must present the following documents to the local tax authority at the location of the main office:

- Decision allowing reinvestment issued by the State Committee on Cooperation and Investment.

- Declaration on reinvested profits (according to model number 2 attached).

Upon receiving all the aforementioned documents, the tax authority shall proceed to examine, calculate the amount of income tax refundable, and then send the application for income tax refund to the Ministry of Finance (Budget Department) so that the Ministry of Finance can refund the tax to the reinvestor.

B. WITHHOLDING TAX ON PROFIT TRANSFER OUT OF THE COUNTRY

1. Taxpayers and Tax Subjects.

Profits obtained by foreign economic organizations or foreign individuals from participating in capital investment under any form prescribed in the Law on Foreign Investment in Vietnam, including the amount of income tax refunded due to reinvestment when transferring out of the country's territory, are subject to withholding tax on profit transfer out of the country.

Foreign economic organizations or foreign individuals who transfer profits out of the country are the taxpayers for withholding tax on profit transfer out of the country.

2. Determination of Tax Liability.

The amount of withholding tax on profit transfer out of the country payable is determined by multiplying the amount of profit requested to be transferred out of the country with the withholding tax rate specified in the License issued by the State Committee for Cooperation and Investment.

In cases where foreign economic organizations or foreign individuals transfer profits out of the country through products or goods, in addition to paying export duties, they must also pay withholding tax on profit transfer out of the country calculated by multiplying the quantity of exported products or goods with their selling price (FOB) according to the contract and the withholding tax rate. If there is no contract or the contract does not specify the selling price, it will be based on the average FOB price of the product or goods at the market at the time of export as determined by the tax authority.

3. Tax Payment Procedures.

- Withholding tax on profit transfer out of the country is collected each time profits are transferred out of the country.

- Each time transferring profits out of the country, foreign economic organizations or foreign individuals must submit a tax declaration form to the tax authority directly managing the collection of income tax from the business establishment where they have invested capital (Form No. 3 attached).

- Within two working days upon receipt of the tax declaration form, the tax authority must check the declaration form, calculate the tax, and issue a notice of the tax payable to the taxpayer.

- Upon receipt of the tax notice from the tax authority, foreign economic organizations or foreign individuals must pay the withholding tax on profit transfer out of the country into the State Treasury designated by the tax authority. The State Treasury will issue a certificate confirming the payment of the withholding tax on profit transfer out of the country to the taxpayer for the purpose of processing the money transfer out of the country.

C. EXPORT DUTY AND IMPORT DUTY

All goods that foreign-invested enterprises and joint ventures are permitted to export or import across the Vietnamese border, including goods sold from the domestic market to enterprises in export processing zones and goods from enterprises in export processing zones sold into the domestic market, are subject to export duty and import duty and must be paid according to the provisions of the Law on Export Duty and Import Duty.

1. Exemption and Reduction of Export Duty and Import Duty.

In addition to the exemptions and reductions provided for in the Law on Export Duty and Import Duty, foreign-invested enterprises and joint ventures are also exempted or reduced from taxes according to Article 35 of the Law on Foreign Investment in Vietnam and Article 76 of Decree No. 18/CP dated April 16, 1993 of the Government. When importing goods in the cases mentioned above, foreign-invested enterprises or joint ventures must follow the procedures for exemption from tax as stipulated below:

a. For cases exempted from tax according to Article 76 of Decree No. 18-CP dated April 16, 1993 of the Government:

- Each time a foreign-invested enterprise or a joint venture has imported goods eligible for tax exemption under Article 76 of Decree No. 18/CP dated April 16, 1993, within thirty days from the date of receiving the tax notification from the Customs Authority or ten days from the date the Customs Authority has completed inspection of the imported consignment, the foreign-invested enterprise or the joint venture must apply for tax exemption with the Ministry of Finance (General Department of Taxation). The application for exemption includes the following documents:

+ A letter from the foreign-invested enterprise or the joint venture requesting the Ministry of Finance to process the tax exemption for the consignment.

+ A letter from the Ministry of Trade allowing the foreign-invested enterprise or the joint venture to import materials and goods eligible for tax exemption under Article 76 of Decree No. 18-CP dated April 16, 1993, specifying the items, quantities, types, and value of the imported goods eligible for tax exemption.

+ An export (import) permit issued by the Ministry of Trade.

+ The customs declaration and the list of imported/exported goods of the consignment already inspected by the Customs Authority.

- Within three days from the date of receiving the complete application for tax exemption, the General Department of Taxation shall issue a confirmation of tax exemption or notify the reasons for non-exemption to the enterprise or the joint venture so that the enterprise or the joint venture can settle the import duty of the consignment with the Customs Authority. The place to handle the tax exemption procedures is at the General Department of Taxation, No. 10 Phan Huy Chu Street, Hanoi, or at the Representative Office of the General Department of Taxation, No. 138 Nguyen Thi Minh Khai Street, Ho Chi Minh City.

b. For cases exempted from export and import duties under the Law on Export and Import Duties and Article 35 of the Law on Investment, the procedures for exemption shall be carried out according to the regulations and guidelines set forth in Circular No. 08-TC/TCT dated March 31, 1992 of the Ministry of Finance.

2. Declaration and Recovery of Export and Import Duties.

Goods exported or imported by foreign-invested enterprises or joint ventures that have been exempted from export and import duties in the cases mentioned above, if resold in the domestic market, must be approved by the Ministry of Trade and must recover the previously exempted import duties.

- Within two days from the date of selling goods, foreign-invested enterprises or joint ventures shall report to the customs authority of the province or city where the enterprise's headquarters is located, or to the customs authority or tax authority where the goods were sold (in accordance with Form No. 4 attached), if there is no customs authority at that location. Failure to report within the above period will result in penalties under the Law on Export Duties and Import Duties.

- The back-imported import duty is determined based on the tax calculation bases including the tariff rate, exchange rate, and taxable value at the time of sale according to the current Law on Export Duties and Import Duties. The taxable value is applied according to the minimum taxable price list prescribed by the Ministry of Finance at the time of sale.

For fixed assets that have been fully depreciated during their usage period and are allowed to be sold for liquidation, the back-imported import duty taxable value is the actual selling price evidenced by valid invoices.

- During the process of managing tax collection in foreign-invested enterprises and joint ventures, tax authorities are responsible for supervising the use of imported and exported goods that are exempt from taxes. Upon discovering cases of selling goods that were exempt from taxes, they must cooperate with customs authorities to recover taxes and handle violations according to the law.

D. ENTERPRISE INCOME TAX AND SPECIAL CONSUMPTION TAX

1. Foreign-invested enterprises and foreign joint ventures that sell products or goods in the Vietnamese market or provide services must pay enterprise income tax or special consumption tax according to the Law on Enterprise Income Tax or the Law on Special Consumption Tax.

2. The basis for calculating tax, the tax rates for enterprise income tax and special consumption tax, and the implementation of tax exemptions and reductions are carried out according to the provisions of the Law on Enterprise Income Tax, the Law on Special Consumption Tax, and the Decrees and Circulars guiding the implementation of these laws.

3. Tax Payment Procedures.

- By the fifth day of each month following the month of sale, foreign-invested enterprises or foreign joint ventures must submit the declaration form for enterprise income tax and special consumption tax of the previous month to the tax authority (in accordance with Form No. 5 attached).

- In cases where enterprises have branch offices, these branches must declare and pay enterprise income tax to the local tax authority where the branch is located.

Production units producing goods subject to special consumption tax must declare and pay special consumption tax at the local authority where the production headquarters is located.

- Within five days from the date of receiving the tax declaration, the tax authority must check the declaration, calculate the tax, and issue a notice of the amount of tax due to the foreign-invested enterprise or foreign joint venture (or dependent business unit).

- No later than five days from the date of receiving the tax notice from the tax authority, the foreign-invested enterprise or foreign joint venture must pay the tax according to the notice into the State Treasury designated by the tax authority.

E. NATURAL RESOURCES TAX

1. Foreign-invested enterprises and foreign joint ventures exploiting natural resources of Vietnam must pay natural resources tax according to the Natural Resources Tax Ordinance dated March 30, 1990.

2. Specific tax rates for natural resources tax for each case will be examined and decided by the Ministry of Finance and the State Committee for Investment Cooperation based on the conditions of exploitation, quality of resources, costs of exploitation and transportation of resources, taking into account international practices applicable to each project within the framework of the tax rate table specified in the Tariff Table of Decision No. 06/HĐBT dated January 7, 1991.

The determination of the quantity of natural resources exploited and the price for calculating natural resources tax is carried out according to the provisions of the Natural Resources Tax Ordinance and Decision No. 06/HĐBT dated January 7, 1991.

3. Declaration and payment of natural resources tax:

- Foreign-invested enterprises or foreign joint ventures must complete registration procedures for resource exploitation activities within five days before commencing operations, merging, or dissolving with the direct tax authority (in accordance with Form No. 6 attached).

- By the fifth day of each month following the month of sale, foreign-invested enterprises or foreign joint ventures must submit the declaration form for natural resources tax of the previous month to the tax authority (in accordance with Form No. 7 attached). Upon receipt of the tax declaration, the tax authority will check, calculate the tax, and issue a tax notice to the enterprise or foreign joint venture. Within five days from the date of receiving the tax notice, the enterprise or foreign joint venture must pay the full amount of natural resources tax according to the notice issued by the tax authority into the State Treasury designated by the tax authority.

F. OTHER FINANCIAL OBLIGATIONS

Types of taxes and other financial obligations applicable to foreign-invested enterprises and foreign joint ventures are implemented according to the current laws and regulations of the Socialist Republic of Vietnam.

III. CURRENCY FOR PAYING TAXES AND ACCOUNTING OF TAX REVENUE UNDER THE BUDGET CLASSIFICATION

A. CURRENCY FOR PAYING TAXES

Foreign-invested enterprises and foreign joint ventures may pay taxes in Vietnamese dong or in foreign currency accepted by the Ministry of Finance, as guided in Section II of this Circular.

The conversion between foreign currency and Vietnamese dong is conducted based on the exchange rate published by the Vietnam Bank for Foreign Trade at the time of tax payment.

B. ACCOUNTING OF TAX REVENUE UNDER THE CURRENT BUDGET CLASSIFICATION

Revenue collected for the State Budget from foreign-invested enterprises and foreign joint ventures is recorded in Chapter 16 of the current Budget Classification. Depending on the type of tax actually collected, it is recorded in the following items:

Corporate Income Tax: Item 19 - appropriate class, sub-class, and category.

Dividend Repatriation Tax: Item 02 - appropriate class, sub-class, and category.

Export Duty: Item 4

Import Duty: Item 5

Enterprise Income Tax: Item 18 - appropriate class, sub-class, and category.

Special Consumption Tax: Item 17 - appropriate class, sub-class, and category.

Natural Resources Tax: Item 20 - appropriate class, sub-class, and category.

Business License Tax: Item 16 - appropriate class, sub-class, and category.

Personal income tax: Section 25.

Land, water surface, sea surface rental fees: Section 21 - appropriate type, clause, category.

Other tax revenues: Section 30 - appropriate type, clause, category.

IV. SETTLEMENT OF TAX OBLIGATIONS

At the end of each fiscal year and when foreign-invested enterprises or foreign joint ventures have completed their operating period or been dissolved according to the Law on Foreign Investment in Vietnam, the tax authority will conduct the settlement of tax obligations (hereinafter referred to as tax settlement) of such enterprises or foreign joint ventures as stipulated below:

A. ANNUAL TAX SETTLEMENT

Within three months from the end of the fiscal year, foreign-invested enterprises and foreign joint ventures must submit audited accounting reports to the tax authority. The tax authority will conduct tax settlement based on the following contents:

1. Determining the amount of tax generated in the year: based on the audited accounting report and related accounting documents, the tax authority will check to accurately determine the total amount of tax payable for each type of tax throughout the fiscal year, while comparing with periodic tax declarations during the year to verify the authenticity of those tax declarations.

2. Determining the amount of tax paid in the year: based on tax declarations and proof of tax payments, the tax authority will determine the amount of tax paid by the enterprise or foreign joint venture for each type of tax in that year.

3. Determining overpaid or underpaid tax and handling violations: based on the results of determining the contents in points 1 and 2 above, the tax authority will determine the overpaid or underpaid tax for each type of tax in the fiscal year. Overpaid tax will be refunded to the enterprise or deducted from the tax payable in the following year; for underpaid tax, the tax authority needs to identify the cause, issue a notice to collect the underpaid tax, and impose penalties if the underpayment is due to the subjective fault of the enterprise or foreign joint venture.

It is not allowed to offset underpaid tax of one type against underpaid tax of another type when conducting annual tax settlement.

B. SETTLEMENT OF TAX WHEN FOREIGN-INVESTED ENTERPRISES AND FOREIGN JOINT VENTURES COMPLETE THEIR OPERATING PERIOD OR ARE DISSOLVED.

When joint venture parties terminate their contracts or when foreign-invested enterprises complete their operating period or are dissolved according to the Law on Foreign Investment in Vietnam, the tax authority must immediately carry out the following tasks:

1. Conduct tax settlement similar to the annual tax settlement described in section A above.

2. Determine the rights and responsibilities of each party in joint ventures and cooperative joint ventures or foreign economic organizations or foreign individuals in wholly foreign-owned enterprises vis-à-vis third parties. The main content of this work includes:

- Reviewing the liquidation committee's report on the entire situation of receivables and payables in the enterprise's settlement at the time of cessation of operations, sources for settling debts, and specific responsibilities of investors for these debts, controlling and guiding debt settlement in accordance with the priority order of payment.

- Determining the investment capital of investors currently held in the enterprise's account, including monetary capital, fixed assets, materials, goods, etc., confirming to foreign investors the amount of investment capital they can repatriate.

- Determining profits or losses and the rights and responsibilities of investors related to these profits or losses. Confirming the profit share that foreign investors can enjoy and transferring it abroad. Calculating and setting the tax on repatriation of profits based on the profit that can be transferred abroad. This tax on repatriation of profits will be collected immediately for the State budget unless foreign investors present documents proving that the profit was not transferred abroad for one of the following reasons:

+ Used for reinvestment in Vietnam according to the Decision of the State Committee on Cooperation and Investment.

+ Used for personal expenses in Vietnam outside other declared incomes.

+ Used for other purposes in Vietnam.

C. METHODS FOR TAX SETTLEMENT

Before conducting annual tax settlement or tax settlement when foreign-invested enterprises or foreign joint ventures complete their operating period or are dissolved, the tax authority must issue a decision to inspect and settle taxes. The inspection and tax settlement decision must be documented and sent to the enterprise director or representative of the foreign joint venture or the liquidation committee three days before the start of the inspection.

The results of the inspection and tax settlement must be recorded in a protocol signed by the authorized representatives of the enterprise or foreign joint venture and the tax authority inspector. The tax authority is responsible for sending this inspection protocol to the Ministry of Finance (General Department of Taxation) along with the enterprise's tax settlement report.

If foreign-invested enterprises or foreign joint ventures disagree with the conclusions of the tax authority in the tax settlement protocol, they have the right to appeal to the General Department of Taxation and the Ministry of Finance. During the appeal process, the enterprise or foreign joint venture must still strictly comply with the conclusions issued by the tax authority.

V. RESPONSIBILITIES OF FOREIGN-INVESTED ENTERPRISES AND FOREIGN JOINT VENTURES

1. At least five days before starting operations or dissolution, or changing the production and business area, or changing the location of the headquarters, foreign-invested enterprises, or dependent business units of foreign joint ventures must register with the provincial or municipal tax authority where the headquarters is located (according to form number 8 attached).

2. During the course of production and business activities, they must strictly comply with regulations on tax declaration.

3. Present all accounting books, vouchers, and necessary documents related to tax calculation and settlement when requested by the tax authority.

4. Pay taxes fully and on time as prescribed.

VI. DUTIES AND LIMITS OF THE TAX AUTHORITY

1. Guide taxpayers to register and declare taxes in accordance with established regulations.

2. Inspect tax declarations, check accounting books, accounting vouchers, and necessary documents to calculate and settle taxes, have the authority to request taxpayers to clarify issues that are unclear related to tax calculation and settlement.

3. Calculate taxes and notify the amount of tax due to the taxpayer. Have the authority to determine the amount of tax due in cases where the taxpayer fails to declare voluntarily within the prescribed time limit.

4. Prepare records and handle tax violations within the jurisdiction prescribed by law.

5. Bear responsibility for strictly enforcing tax laws, ensuring honesty, accuracy, and objectivity.

VII. HANDLING VIOLATIONS AND SETTLING COMPLAINTS.

1. Tax law violations will be penalized as follows:

- Failure to comply with tax registration regulations as stipulated in Point 1, Part V of this Circular shall be subject to penalties under the Ordinance on Administrative Offense Penalties.

- Failure to comply with tax declaration and payment regulations shall be subject to a fine of 0.5% (five thousandths) of the tax due for the period in which the violation occurred.

- False declaration or fraud involving tax amounts shall be subject to a fine of up to five times the amount of false declared or fraudulent tax.

- Late payment of tax beyond the prescribed deadline shall incur a daily penalty of 0.2% (two thousandths) of the overdue tax amount.

2. Authority to handle violations and complaints.

- Tax violations are handled directly by the tax collection agency.

- Taxpayer complaints are reviewed and resolved by the direct tax collection agency. If the party disagrees with the resolution, they may appeal to a higher-level tax agency or to the Ministry of Finance. The decision of the Minister of Finance is final. Pending the resolution of the complaint, the complainant must strictly comply with the opinion of the tax agency.

VIII. IMPLEMENTATION

Provincial Tax Bureaus are responsible for disseminating and guiding foreign-invested enterprises and foreign joint venture parties to strictly implement the provisions of this Circular.

At each Tax Bureau, a dedicated staff force must be assigned to manage the collection of various types of taxes from enterprises and foreign joint venture parties. This specialized management unit is responsible for reporting monthly, quarterly, and annually to the Ministry of Finance (General Department of Taxation) on tax collection situations and other reports serving the general management requirements for enterprises and foreign joint venture parties operating within their jurisdiction.

This Circular replaces Circular No. 55-TC/TCT-TT dated October 1, 1991, issued by the Ministry of Finance. All previous regulations of the Ministry of Finance that conflict with this Circular are hereby abolished.

This Circular takes effect from August 1, 1993.

 

Phan Van Dinh (Signed)