Law Amending and Supplementing Certain Provisions of Laws on Tax Number 71/2014/QH13

LAW

Amending and supplementing certain provisions of tax laws

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On the basis of the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax No. 14/2008/QH12 which has been amended and supplemented by Law No. 32/2013/QH13, the Law on Personal Income Tax No. 04/2007/QH12 which has been amended and supplemented by Law No. 26/2012/QH13, the Law on Value Added Tax No. 13/2008/QH12 which has been amended and supplemented by Law No. 31/2013/QH13, the Law on Special Consumption Tax No. 27/2008/QH12, the Law on Resource Tax No. 45/2009/QH12, the Law on Tax Administration No. 78/2006/QH11 which has been amended and supplemented by Law No. 21/2012/QH13, the Law on Export Duties and Import Duties No. 45/2005/QH11, the Law on Customs No. 54/2013/QH13.

Article 1

Amending and supplementing certain provisions of the Law on Corporate Income Tax No. 14/2008/QH12 which has been amended and supplemented by Law No. 32/2013/QH13.

"2. Guaranteed electricity consumption (hereinafter referred to as guaranteed consumption) includes:

"2. Other income includes: income from transferring capital, transferring rights to contribute capital; income from transferring real estate, transferring investment projects, transferring rights to participate in investment projects, transferring rights to explore, extract, process minerals; income from using assets, owning assets, including income from intellectual property rights as provided for by law; income from transferring, leasing, liquidating assets, including various types of negotiable instruments; income from interest on deposits, lending funds, selling foreign currency; revenue from non-performing debts that have been written off but are now recoverable; revenue from debts payable where the creditors cannot be identified; income from business operations in previous years that were not recorded and other types of income."

For Vietnamese enterprises investing abroad, if they repatriate post-tax corporate income from foreign countries back to Vietnam, then for countries with which Vietnam has signed Double Taxation Avoidance Agreements, such repatriation shall be carried out according to the provisions of the Agreement; for countries without such agreements, if the corporate income tax rate in the country from which the enterprise repatriates is lower than the corporate income tax rate under the Law on Corporate Income Tax of Vietnam, then the difference will be taxed according to the Law on Corporate Income Tax of Vietnam.

2. Amend and supplement Clause 1 of Article 4 as follows:

"1. Income from crop cultivation, animal husbandry, aquaculture, processing agricultural and aquatic products, salt production of cooperatives; income of cooperatives operating in agriculture, forestry, fisheries, salt industry in areas with difficult socio-economic conditions or extremely difficult socio-economic conditions; income of enterprises from crop cultivation, animal husbandry, aquaculture, processing agricultural and aquatic products in areas with extremely difficult socio-economic conditions; income from marine fishing activities."

3. Amending and supplementing Point a Clause 1 Article 9 as follows:

"a) Actual expenses incurred in connection with the production and business activities of enterprises; expenses for vocational education and training; expenses for national defense and security tasks of enterprises as prescribed by law;"

4. Repealing Point m Clause 2 Article 9.

5. Adding Points đ and e to Clause 1 Article 13 as follows:

"đ) Income of enterprises from implementing new investment projects producing products listed in the Priority Support Industry Products Catalogue that meet one of the following criteria:

- Industrial support products for high technology industries as defined by the High Technology Law;

- Industrial support products for the textile-garment, leather-shoe, electronics-information technology, automobile assembly, and mechanical manufacturing industries, where these products had not been produced domestically up to January 1, 2015, or were produced but did not meet EU technical standards or equivalent standards.

The Government shall specify the Priority Support Industry Products Catalogue as provided for herein.

e) Income of enterprises from implementing investment projects in the production sector, excluding projects producing goods subject to special consumption taxes and mineral extraction projects, with a minimum investment capital of twelve trillion VND, using technology that must be appraised according to the High Technology Law and the Science and Technology Law,, to be disbursed within no more than five years from the date of permission to invest as stipulated by the Investment Law."

6. Amending and supplementing Point d Clause 2 Article 13 as follows:

"d) Income of enterprises from: planting, caring for, protecting forests; farming, processing agricultural and aquatic products in areas with difficult socio-economic conditions; farming forest products in areas with difficult socio-economic conditions; producing, breeding, and hybridizing plant and animal seeds; producing, extracting, and refining salt, except for salt production as provided for in Clause 1 Article 4 of this Law; investing in post-harvest agricultural product preservation, preservation of agricultural, aquatic products, and food;"

7. Adding Clause 3a after Clause 3 Article 13 as follows:

"3a. Applying a tax rate of 15% for: income of enterprises from crop cultivation, animal husbandry, and processing in the agricultural and aquatic sectors outside areas with difficult socio-economic conditions or extremely difficult socio-economic conditions."

8. Amending and supplementing Clause 5 Article 13 as follows:

"5. The extension of the application period for preferential tax rates is regulated as follows:

a) For investment projects requiring special attraction with large scale and high technology, the application period for preferential tax rates can be extended, but the additional extension period shall not exceed fifteen years;

b) For projects specified in Point e Clause 1 of this Article meeting one of the following criteria:

- Producing globally competitive products with annual revenue exceeding 20,000 billion VND at the latest five years after generating revenue from the investment project;

- Regularly employing over 6,000 workers;

- Investment projects in economic infrastructure, including: developing water treatment plants, power plants, water supply and drainage systems, roads, railways, airports, seaports, river ports, airfields, new energy, clean energy, energy-saving industries, oil refining projects.

The Prime Minister decides to extend the application period for the preferential tax rate specified in this point, but the extended period shall not exceed fifteen years.”

9. Amend and supplement Clause 3 of Article 2 of Law No. 32/2013/QH13 as follows:

“3. Enterprises with investment projects shall enjoy preferential corporate income tax rates as prescribed by the Corporate Income Tax Law at the time of issuance of the investment permit or investment certificate in accordance with the Investment Law. In cases where the Corporate Income Tax Law is amended and supplemented, and the enterprise meets the conditions for preferential tax treatment under the new law, the enterprise has the right to choose to enjoy preferential tax rates and exemption or reduction periods as prescribed by the law at the time of issuance of the permit or according to the newly amended and supplemented law for the remaining period.”

As of the end of the 2015 tax year, enterprises with investment projects currently applying the preferential tax rate of 20% as stipulated in Clause 3 of Article 13 of the Corporate Income Tax Law No. 14/2008/QH12, amended and supplemented by Law No. 32/2013/QH13, shall be subject to a tax rate of 17% from January 1, 2016 for the remaining period.”

Article 2

Amend and supplement some provisions of the Personal Income Tax Law No. 04/2007/QH11 which has been amended and supplemented by Law No. 26/2012/QH13.

2. Amending and supplementing Article 7 as follows:

“1. Business income, including:

a) Income from production and business operations of goods and services;

b) Income from independent professional activities of individuals holding a license or certificate in accordance with the provisions of the law.

Business income as provided for in this clause does not include income of individuals engaged in business with annual turnover of up to 100 million VND.”

2. Amend Point c of Clause 6 of Article 3 as follows:

“c) Winnings from gambling activities;”

3. Add Clause 15 and Clause 16 to Article 4 as follows:

“15. Income from salaries and wages of Vietnamese seafarers working for foreign shipping companies or Vietnamese shipping companies operating international transportation.

16. Income of individuals who are ship owners, individuals with rights to use ships, and individuals working on ships from activities directly serving the exploitation and distant sea fishing operations.”

4. Amend Article 10 as follows:

“Article 10. Taxation of Individual Businesses

1. Individual businesses pay personal income tax at a percentage of revenue for each field and production and business sector.

2. Revenue includes all proceeds from sales, processing fees, commissions, service supply charges arising during the tax period from production and business activities involving goods and services.

In cases where individual businesses cannot determine their revenue, the competent tax authority shall fix the revenue in accordance with the law on tax administration.

3. Tax rates:

5. Amend Article 13 as follows:

“Article 13. Taxable Income from Capital Transfer

1. Taxable income from capital transfer is determined by subtracting the purchase price and reasonable related expenses from the selling price.

For securities trading activities, taxable income is determined based on the transaction price each time.

2. The time of determining taxable income from capital transfer is the completion time of the capital transfer transaction as prescribed by law.

The Government shall provide detailed regulations and guidance on implementing this provision.”

6. Amending Article 14 as follows:

“Article 14. Taxable income from the transfer of real estate

1. Taxable income from the transfer of real estate is determined as the transfer price each time.

2. The Government shall prescribe principles and methods for determining the transfer price of real estate.

3. The time for determining taxable income from the transfer of real estate is the time when the transfer contract becomes effective according to the provisions of the law.

7. Amending and supplementing Clause 2 of Article 23 as follows:

"2. The full tax rate is prescribed as follows:"

Article 3

Amend and supplement some articles of the Value Added Tax Law No. 13/2008/QH12 which has been amended and supplemented by some articles according to Law No. 31/2013/QH13.

1. Supplement Clause 3a following Clause 3 as follows:

"3a. Fertilizers; machinery and equipment specifically used for agricultural production; distant sea fishing vessels; livestock and poultry feed and other animal feed;"

2. Amend Point b Clause 2 Article 8 as follows:

"b) Ores for fertilizer production; pesticides and growth stimulants for livestock and crops;"

3. Repeal Point c and Point k Clause 2 Article 8.

Article 4. Amend and supplement some articles of the Mineral Resources Tax Law No. 45/2009/QH12

1. Amending and supplementing Clause 7 of Article 2 as follows:

"7. Natural water, including surface water and groundwater, except natural water used for agriculture, forestry, fisheries, salt industry."

2. Amend Clause 5 Article 9 as follows:

"5. Exempt tax on natural water extracted by households and individuals for household purposes."

Article 5

Amend and supplement some articles of the Tax Administration Law No. 78/2006/QH11 which has been amended and supplemented by some articles according to Law No. 21/2012/QH13.

1. Amend and supplement Clauses 1, Clause 1a and Clause 6 Article 31 as follows:

"1. The tax declaration form for taxes declared and paid monthly is the Monthly Tax Declaration Form;

1a. The tax declaration form for quarterly taxes is the Quarterly Tax Declaration Form;"

"6. The Government shall specify types of taxes declared monthly, quarterly, annually, provisional quarterly declarations, declarations made each time a tax liability arises, final tax declarations; criteria for identifying taxpayers to declare quarterly taxes and tax declaration forms for specific cases."

2. Amend and supplement Article 43 as follows:

“Article 43. Currency for Determining Revenue, Expenses, Taxable Price, and Taxes Paid to the State Budget

Taxpayers shall determine revenue, expenses, taxable price, and taxes paid to the state budget in Vietnamese Dong, except where taxes are paid in foreign currency as prescribed by the Government. In cases where revenue, expenses, or taxable prices arise in foreign currency or where taxpayers have an obligation to pay in foreign currency but are permitted by competent state authorities to pay in Vietnamese Dong, they must convert foreign currency to Vietnamese Dong based on the actual transaction exchange rate at the time of occurrence.

The Government shall provide detailed regulations and guidance on implementing this provision.

3. Supplement Clause 11 to Article 7 as follows:

"11. Based on actual conditions and technological information equipment capabilities, the Government shall specify in detail the circumstances under which taxpayers are not required to submit documents in tax declaration, payment, refund, and other tax file submissions that the state management agencies already possess."

4. Amend and supplement Clause 1 Article 106 as follows:

"1. If a taxpayer fails to pay taxes within the prescribed deadline, the extended payment deadline, the deadline stated in the tax administration agency's notification, or the deadline specified in the tax administration agency's decision, the taxpayer must pay the full amount of tax and late payment interest at a rate of 0.05% per day on the overdue tax amount..

In cases where a taxpayer provides goods or services for payment from state budget funds but has not yet received payment, leading to delayed tax payments resulting in tax arrears, the taxpayer is not required to pay late payment interest on the outstanding tax amount, provided it does not exceed the amount of unpaid state budget funds during the period of non-payment."

Article 6. Implementation Provisions

1. This Law takes effect from January 1, 2015.

2. Abolish the provisions regarding exchange rates when determining revenue, expenses, taxable price, taxable income, taxable income subject to tax, and taxes paid to the state budget at:

a) Article 8 and Clause 3 Article 9 of the Corporate Income Tax Law No. 14/2008/QH12 which has been amended and supplemented by some articles according to Law No. 32/2013/QH13;

b) Clause 1 Article 6 of the Personal Income Tax Law No. 04/2007/QH11 which has been amended and supplemented by some articles according to Law No. 26/2012/QH13;

c) Clause 3 Article 7 of the Value Added Tax Law No. 13/2008/QH12 which has been amended and supplemented by some articles according to Law No. 31/2013/QH13;

d) Article 6 of the Special Consumption Tax Law No. 27/2008/QH12;

đ) Clause 3 Article 9 and Article 14 of the Export Tax, Import Tax Law No. 45/2005/QH11;

e) Clause 4 Article 86 of the Customs Law No. 54/2013/QH13.

3. Abolish Point c Clause 1 Article 49 of the Tax Administration Law No. 78/2006/QH11 which has been amended and supplemented by some articles according to Law No. 21/2012/QH13.

4. Abolish the provisions related to the determination of tax for individual businesses at Clause 1 Article 19, Clause 1 Article 20, and Clause 1 Article 21 of the Personal Income Tax Law No. 04/2007/QH12 which has been amended and supplemented by some articles according to Law No. 26/2012/QH13.

5. The Government shall provide detailed regulations on the articles and clauses assigned in this Law.

This Law was passed by the Thirteenth National Assembly of the Socialist Republic of Vietnam at its eighth session on November 26, 2014.