Circular No. 51/TC-TCĐN guiding 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.

CIRCULAR OF THE MINISTRY OF FINANCE

Guidelines for implementing tax regulations applicable to foreign-invested enterprises and foreign parties conducting business cooperation 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 issues guidelines for implementing tax regulations applicable to foreign-invested enterprises and foreign parties conducting business cooperation based on contracts under the Law on Foreign Investment in Vietnam as follows:

I. SCOPE OF APPLICATION

1. Foreign-invested enterprises: 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 constructing infrastructure 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 a foreign country. In cases where the Agreement contains provisions regarding taxes for joint ventures that differ from those in Vietnamese tax laws and this Circular, such provisions shall be implemented according to the Agreement.

3. Foreign parties conducting business cooperation based on contracts (referred to as foreign cooperative parties) under the Law on Foreign Investment in Vietnam.

4. This Circular's provisions do not apply to:

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

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

II. GUIDELINES FOR IMPLEMENTING EACH TYPE OF TAX APPLICABLE TO FOREIGN-INVESTED ENTERPRISES AND FOREIGN COOPERATIVE PARTIES

A. INCOME TAX

1. Taxpayers.

Foreign-invested enterprises and foreign cooperative 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.

Where a foreign-invested enterprise has dependent business units (branches, affiliated companies), the income of these units will be consolidated with the enterprise's income, and the enterprise is responsible for paying income tax on the total income of the enterprise, including the income of these dependent units.

Where a foreign cooperative party participates simultaneously in multiple business cooperation contracts, income tax will be calculated separately for each business cooperation contract (each contract being a separate taxpayer).

2. Determination of taxable income.

The taxable income of a foreign-invested enterprise 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), 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 and loans, exchange rate differences, etc.

The taxable income of a foreign cooperative party is the difference between total revenues of the foreign party and total expenses of the foreign party incurred in executing the contract signed with the Vietnamese party.

a. Revenues:

The revenues of a foreign-invested enterprise or a foreign cooperative party include revenues from product sales, service provision, and other revenues from any activity of the enterprise or party during the tax year.

Where a business cooperation contract is structured as profit sharing, 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 a foreign-invested enterprise or a foreign cooperative party include the following:

Expenses for raw materials and energy used in producing primary and secondary products or providing services.

Wages, salaries, and allowances paid to Vietnamese and foreign workers based on labor contracts consistent with the Labor Regulations for Foreign-Invested Enterprises 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. The depreciation rate of fixed assets must comply with Circular No. 31-TC/TCDN dated July 18, 1992 of the Ministry of Finance. If an enterprise or foreign party applies a higher depreciation rate than stipulated in Circular No. 31-TC/TCDN, it must obtain written approval from 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 costs, warehouse and laboratory maintenance costs, labor protection costs, environmental protection costs, invention and patent awards, recruitment and training costs, fire prevention and security costs.

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

Clauses for paying interest on borrowed funds at a reasonable interest rate for the amount of borrowed capital.

Direct costs related to the consumption of products or provision of services such as storage costs, packaging costs, loading and unloading costs, advertising costs.

Amounts paid into the social insurance fund for workers in accordance with the provisions of Article 46 of Decree No. 233-HĐBT dated June 22, 1990, which are the obligations of the enterprise.

Amounts spent on insuring the assets of the enterprise.

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 those losses 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 expenses stated above.

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

The enterprise or the foreign partner in a joint venture shall not include the following items in the deductible expenses for determining taxable income:

Expenses for materials and energy used for purposes unrelated to generating income, such as lending, selling, exchanging, or giving away.

Excess depreciation of fixed assets beyond the limits set by the Ministry of Finance, and basic depreciation of fixed assets that have been fully depreciated.

Losses due to damage to assets, materials, and capital such as losses from theft, natural disasters, fires where the responsible party for compensation cannot be identified.

Production stoppage losses due to any cause.

Losses that have been resolved by the insurance fund.

Penalties that the enterprise is responsible for paying, such as penalties for breach of economic contracts, penalties for violation of laws, and penalties for late payment of accounts payable.

Interest payments on borrowed funds made by investors for the portion of borrowed capital used to contribute to the statutory capital or the income derived from the capital contributed by domestic investors to the statutory capital of the enterprise.

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

Losses from the transfer of shares.

3. Determining the amount of corporate income tax payable.

The amount of corporate income tax payable is determined by multiplying the taxable income generated during the tax year by the corporate income tax rate specified for the enterprise or the foreign partner in a joint venture 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 partner in a joint venture is allowed to apply in accounting operations.

4. Procedures for paying corporate income tax.

Corporate 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 according to actual figures.

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

Within no more than five days after the aforementioned tax payment period, the foreign-invested enterprise or the foreign partner in a joint venture must submit a corporate income tax declaration form (attached model) to the local tax authority at the location of its main office. The tax authority will review the tax declaration and issue a notice of the tax payable to the enterprise or the foreign partner in a joint venture. In case the enterprise or the foreign partner in a joint venture fails to submit the tax declaration within the prescribed time limit, the tax authority has the right to determine the provisional tax payable 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 partner in a joint venture must pay the full tax according to the notice into the state 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 partner in a joint venture must submit an audited annual accounting report together with the annual corporate income tax declaration form to the local tax authority at the location of its main office. The tax authority will settle the corporate income tax according to the provisions in Part IV of this Circular.

5. Refund of corporate income tax for reinvestment.

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

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

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

L

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

100% - S

Where:

Th: Is the amount of corporate income tax refunded.

L: Is the amount of distributed profit (after paying corporate income tax) used for reinvestment.

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

c) Procedures for refunding corporate income tax for reinvestment.

To obtain a refund of 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 their main office:

A decision allowing reinvestment issued by the State Committee on Investment Cooperation.

A declaration on reinvested profits (model number 2 attached).

Upon receiving all the above documents, the tax authority will conduct a review, calculate the amount of corporate income tax to be refunded, then submit the application for tax refund to the Ministry of Finance (Budget Department) for the Ministry of Finance to refund the tax to the reinvestor.

B. WITHHOLDING TAX ON PROFIT REMITTANCE OUTSIDE THE COUNTRY

1. Taxpayers and persons liable to pay tax.

The profits obtained by foreign economic organizations or foreign individuals from participating in capital investment in any form prescribed in the Law on Foreign Investment in Vietnam, including the amount of income tax refunded for reinvested profits when transferring out of the territory of Vietnam, are subject to tax on repatriation of profits.

Foreign economic organizations or foreign individuals with profits to be transferred out of the country are the taxpayers for the tax on repatriation of profits.

2. Determining the amount of tax payable.

The amount of tax on repatriation of profits payable shall be determined by multiplying the amount of profits requested to be transferred out of the country with the 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 in the form of products or goods, in addition to paying export duties, they must also pay the tax on repatriation of profits calculated by multiplying the quantity of exported products or goods with their selling price (FOB) according to the contract and the tax rate on repatriation of profits. If there is no contract or the contract does not specify the selling price, it will be based on the average FOB price of that product at the market at the time of export as determined by the tax authority.

3. Procedures for payment of tax:

The tax on repatriation of profits 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 in which they have invested capital (Form No. 3 attached).

Upon receipt of the tax declaration within two working days, the tax authority must check the declaration, 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 tax on repatriation of profits into the National Treasury designated by the tax authority. The National Treasury will issue a certificate confirming the payment of the tax on repatriation of profits to the taxpayer for the purpose of processing the transfer of funds out of the country.

C. EXPORT DUTIES AND IMPORT DUTIES

All goods that foreign-invested enterprises and joint ventures are permitted to export or import through the borders of Vietnam, including goods sold from the domestic market to enterprises in export processing zones and goods of enterprises in export processing zones sold into the domestic market, are subject to export duties and import duties and must be paid according to the provisions of the Law on Export Duties and Import Duties.

1. Exemption and reduction of export duties and import duties.

In addition to the cases exempted or reduced from taxes as stipulated in the Law on Export Duties and Import Duties, 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 aforementioned tax-exempt cases, foreign-invested enterprises or joint ventures must follow the procedures for tax exemption at the Ministry of Finance as follows:

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

Each time a foreign-invested enterprise or joint venture has imported goods eligible for tax exemption under Article 76 of Decree No. 18/CP dated April 16, 1993, no later than 30 days from the date of receiving the tax notification from the Customs Authority or 10 days from the date the Customs Authority has completed inspection of the imported consignment, the foreign-invested enterprise or joint venture must apply for tax exemption with the Ministry of Finance (General Department of Taxation). The application for tax exemption includes the following documents:

A letter from the foreign-invested enterprise or 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 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.

A customs declaration and the goods of the imported consignment already inspected by the Customs Authority.

Within three days from the date of receiving all the tax exemption application documents, the General Department of Taxation will issue a confirmation of tax exemption or notify the reasons for non-exemption to the enterprise or joint venture so that the enterprise or joint venture can settle the import duty of the consignment with the Customs Authority. The place to handle 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 according to the Law on Export Duties and Import Duties and Article 35 of the Law on Investment, the procedures for tax 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 aforementioned cases, 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 resale of the goods, foreign-invested enterprises or joint ventures are responsible for declaring to the provincial or municipal Customs Authority or the tax authority in areas without a Customs Authority, at the headquarters of the enterprise, or declare to the Customs Authority or tax authority where the goods were resold (according to Form No. 4 attached). Failure to declare within this period will result in penalties according to the Law on Export Duties and Import Duties.

The additional import duty to be recovered shall be determined based on the tax calculation bases including the tax rate, exchange rate, and taxable value at the time of sale as stipulated in the current Export Tax Law and Import Tax Law. The taxable value shall be applied according to the minimum taxable value table 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 taxable value for recovering the additional import duty shall be the actual selling price evidenced by valid invoices.

During the process of managing tax collection from foreign-invested enterprises and joint ventures, tax authorities are responsible for supervising the use of goods that are exempt from taxes upon import and export. 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. BUSINESS INCOME TAX AND SPECIAL CONSUMPTION TAX

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

2. The basis for calculating tax, the tax rates for business income tax and special consumption tax, and the implementation of exemptions and reductions shall be carried out in accordance with the provisions of the Business Income Tax Law, the Special Consumption Tax Law, and the Decrees and Circulars guiding the enforcement of these laws.

3. Procedures for payment of tax:

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

In cases where foreign-invested enterprises have auxiliary units, these auxiliary units must declare and pay business income tax to the local tax authority where the auxiliary unit is located.

Production facilities producing goods subject to special consumption tax must declare and pay special consumption tax at the local place 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 tax payable to the foreign-invested enterprise or the foreign party in the joint venture (or dependent business entity).

No later than five days from the date of receiving the tax notice from the tax authority, the foreign-invested enterprise or the foreign party in the 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 parties in joint ventures that exploit 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, transportation of resources, and international practices applicable to each project within the framework of the tax rate table specified in the Decree No. 06/HĐBT dated January 7, 1991.

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

3. Declaration and payment of natural resources tax:

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

By the fifth day of each month, foreign-invested enterprises or foreign parties must submit the natural resources tax declaration form of the previous month to the tax authority (according to 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 party in the joint venture. Within five days from the date of receiving the tax notice, the enterprise or foreign party in the joint venture must pay the full amount of natural resources tax according to the tax authority's notice 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 parties in joint ventures shall be implemented according to the current laws and regulations of the Socialist Republic of Vietnam.

III. CURRENCY FOR PAYING TAXES, ACCOUNTING OF TAXES ACCORDING TO THE CURRENT STATE BUDGET CLASSIFICATION

A. CURRENCY FOR PAYING TAXES

Foreign-invested enterprises and foreign parties in joint ventures that have tax payments as guided in Section II of this Circular may pay taxes in Vietnamese Dong or in foreign currency approved by the Ministry of Finance.

The conversion between foreign currency and Vietnamese Dong or vice versa shall be conducted based on the exchange rate published by the Viet Nam Bank for Foreign Trade at the time of tax payment.

B. ACCOUNTING OF TAXES ACCORDING TO THE CURRENT STATE BUDGET CLASSIFICATION

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

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

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

Export Tax: Item 4

Import Tax: Item 5

Business Income Tax: Item 18 - appropriate class, sub-class, category

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

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

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

Personal Income Tax: Item 25.

Land Rent, Water Surface Rent, Sea Surface Rent: Item 21 - appropriate class, sub-class, category.

Other Tax Revenue: Item 30 - appropriate class, sub-class, category.

IV. SETTLEMENT OF TAX OBLIGATION COMPLIANCE

At the end of each fiscal year and when foreign-invested enterprises or foreign joint venture partners terminate their operations or dissolve according to the Law on Foreign Investment in Vietnam, the tax authority will conduct a final settlement of tax obligations (hereinafter referred to as "tax settlement") of such enterprises or foreign joint venture partners as stipulated below:

A. ANNUAL TAX SETTLEMENT

Within three months from the end of the fiscal year, foreign-invested enterprises and foreign joint venture partners must submit audited accounting reports to the tax authority. The tax authority will conduct the annual 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 declarations.

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

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

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

B. TAX SETTLEMENT WHEN FOREIGN-INVESTED ENTERPRISES AND FOREIGN JOINT VENTURE PARTNERS TERMINATE THEIR OPERATIONS OR DISSOLVE.

When joint venture parties terminate their contracts or when foreign-invested enterprises terminate their operations or dissolve 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 business 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 is:

Review 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 receivables and payables, and specific responsibilities of investors for these debts, control and guide the settlement of receivables and payables according to the priority order of payment.

Determine the investment capital of investors currently held in the enterprise's account, including monetary capital, fixed assets, materials, goods, etc., and confirm to foreign investors the amount of their investment capital that can be repatriated.

Determine profit or loss amounts and the rights and responsibilities of investors related to these profits or losses. Confirm the income that foreign investors can enjoy and transfer abroad. Calculate and set the tax on repatriating profits based on the income that can be transferred abroad. This tax on repatriating profits will be collected immediately for the State budget unless foreign investors present documents proving that such income was not repatriated due to one of the following reasons:

Reinvested 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 OF TAX SETTLEMENT

Before conducting annual tax settlement or tax settlement when foreign-invested enterprises or foreign joint venture partners terminate their operations 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 partner 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 partner 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 venture partners 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 partner must still strictly comply with the conclusions issued by the tax authority.

V. RESPONSIBILITIES OF FOREIGN-INVESTED ENTERPRISES AND FOREIGN JOINT VENTURE PARTNERS

1. Not later than five days before starting operations or dissolution, or changing the production and business area, or changing the location of the headquarters, enterprises, dependent business units of enterprises or foreign joint venture partners must complete registration procedures with the provincial or municipal tax authority where the headquarters is located (according to Form No. 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. RESPONSIBILITIES 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 voluntarily declare within the prescribed time limit.

4. Prepare records and handle tax violations within the scope of authority prescribed by law.

5. Be responsible for strictly enforcing tax laws, ensuring honesty, accuracy, and objectivity.

VII. HANDLING VIOLATIONS AND SETTLING COMPLAINTS.

1. Violations of tax laws shall be penalized as follows:

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

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.

Misdeclaration or fraud involving tax amounts shall be subject to a fine of up to five times the amount of misdeclared 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.

2. Authority to handle violations and complaints.

Tax violations shall be handled by the tax collection agency.

Taxpayer complaints shall be reviewed and resolved by the tax collection agency. If the party concerned 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 Departments are responsible for disseminating and guiding foreign-invested enterprises and foreign joint venture parties to strictly implement the provisions of this Circular.

Each Tax Department must allocate a dedicated staff force 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 status and other reports serving the general management requirements for enterprises and foreign joint venture parties operating in 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./.