Circular No. 86/1997/TT-BTC guides the payment of tax on additional telecommunications charges at hotels.

CIRCULAR

Guidelines on Tax Payment for Additional Telecommunication Charges at Hotels

 Pursuant to current provisions of the Value Added Tax Law and the Ordinance Amending and Supplementing Certain Articles of the Value Added Tax Law; the Income Tax Law and the Ordinance Amending and Supplementing Certain Articles of the Income Tax Law;

Pursuant to Decree No. 57/CP dated August 28, 1993 of the Government detailing the implementation of the Income Tax Law and the Ordinance Amending and Supplementing Certain Articles of the Income Tax Law; Decree No. 96/CP dated December 27, 1995 of the Government detailing the implementation of the Value Added Tax Law and the Ordinance Amending and Supplementing Certain Articles of the Value Added Tax Law;

Pursuant to Circular No. 75A TC/TCT dated August 31, 1993 of the Ministry of Finance guiding the implementation of Decree No. 57/CP dated August 28, 1993 of the Government; Circular No. 97 TC/TCT dated December 30, 1995 of the Ministry of Finance guiding the implementation of Decree No. 96/CP dated December 27, 1995 of the Government;

Pursuant to Decision No. 477/TTg dated July 3, 1997 of the Prime Minister regarding additional telecommunication charges at hotels,

The Ministry of Finance guides the implementation of tax payment obligations for hotels that organize the collection of additional telecommunication charges as follows:

I. SCOPE OF APPLICATION:

a) Hotels rated with stars that have registered their levels of additional telecommunication charges with the Ministry of Finance and the Government Price Board pursuant to Decision No. 477/TTg dated July 3, 1997 of the Prime Minister are subject to value added tax and income tax according to the guidelines set forth in this Circular from the date of registration of their levels of additional telecommunication charges with the Ministry of Finance and the Government Price Board.

b) Hotels not yet rated with stars, guesthouses, inns, restaurants, and other entities not within the scope of regulation of Decision No. 477/TTg dated July 3, 1997 of the Prime Minister are not subject to value added tax and income tax according to the guidelines set forth in this Circular.

In cases where hotels already rated with stars have not registered their levels of additional telecommunication charges with the Ministry of Finance and the Government Price Board, or entities specified in paragraph (b) above, if they arbitrarily organize the collection of additional telecommunication charges, they must remit the entire amount collected into the State Budget and may be subject to administrative penalties for price management violations depending on the severity of the violation.

II. BASIS FOR CALCULATING TAX

a) Taxable Revenue:

The taxable revenue for value added tax and income tax for hotels that have registered their levels of additional telecommunication charges is the total amount of additional telecommunication charges generated during the tax period, regardless of whether the money has been collected or not.

b) Tax Rate:

Additional telecommunication charges are considered hotel revenue, thus the following tax rates apply:

- Value Added Tax rate: 10%;

- Income Tax rate: 45%.

III. ACCOUNTING AND TAX REPORTING

Based on the specific level of additional telecommunication charges generated during the tax period, hotels shall organize accounting and report the amount of additional telecommunication charges, and pay value added tax and income tax as prescribed above.

IV. IMPLEMENTATION

This provision takes effect from August 3, 1997. Any previous regulations contrary to Decision No. 477/TTg dated July 3, 1997 of the Prime Minister and the guidelines provided in this Circular are hereby abolished. Other regulations continue to be implemented according to the provisions of the Value Added Tax Law and the Income Tax Law.

During the implementation process, if there are any issues, units are advised to report them to the Ministry of Finance for consideration and resolution./.