Decree No. 91/2014/ND-CP Amending and supplementing some articles in decrees on tax

DECREE

Amending and supplementing certain provisions of decrees on tax

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Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Law on Tax Administration dated November 29, 2006; the Law Amending and Supplementing Certain Articles of the Law on Tax Administration dated November 20, 2012;

Pursuant to the Personal Income Tax Law dated November 21, 2007; the Law Amending and Supplementing Certain Provisions of the Personal Income Tax Law dated November 22, 2012;

Pursuant to the Value Added Tax Law dated June 3, 2008; the Law amending and supplementing certain provisions of the Value Added Tax Law dated June 19, 2013;

Pursuant to the Corporate Income Tax Law dated June 3, 2008; the Law Amending and Supplementing Certain Provisions of the Corporate Income Tax Law dated June 19, 2013;

At the proposal of the Minister of Finance,

At the proposal of promulgates this Decree amending and supplementing certain provisions of decrees on tax.

Article 1. Amending and supplementing Decree No. 218/2013/NĐ-CP dated December 26, 2013 of the Government detailing and guiding the implementation of the Law on Corporate Income Tax as follows:

1. Amending and supplementing Point m Clause 2 Article 3 as follows:

"m) The difference arising from revaluation of assets in accordance with the law for capital contribution, transfer when dividing, splitting, merging, consolidating, or converting the business form, except in cases of shareholding reform, restructuring, and modernizing enterprises wholly owned by the State.

The enterprise receiving the asset shall account for it at the revalued price when determining deductible costs as stipulated in Article 9 of this Decree."

2. Amending and supplementing Clause 3 Article 4 as follows:

"3. Income from performing scientific research and technological development contracts in accordance with the law on science and technology shall be exempt from tax during the contract performance period and for a maximum of three years from the date revenue begins to be generated from the performance of scientific research and technological development contracts; income from selling products made from new technology applied in Vietnam for the first time in accordance with the law and guidelines of the Ministry of Science and Technology shall be exempt from tax for a maximum of five years from the date revenue begins to be generated from product sales; income from selling experimental production products during the experimental production period in accordance with the law."

3. Amending and supplementing Clause 9 Article 4 as follows:

“9. Income from performing state-assigned tasks of the Vietnam Development Bank in credit investment development and export credit activities; income from credit activities for the poor and other policy targets of the Social Policy Bank; income of the Limited Liability Company managing the assets of Vietnamese credit institutions; income from profit-making activities performed under state assignments of state financial funds: the Vietnam Social Security Fund, deposit insurance organizations, the Health Insurance Fund, the Vocational Training Support Fund, the Overseas Employment Support Fund under the Ministry of Labor, Invalids and Social Affairs, the Farmer Support Fund, the Legal Aid Fund of Vietnam, the Public Telecommunications Service Fund, the Local Investment and Development Fund, the Environmental Protection Fund, the Guarantee Fund for Small and Medium Enterprises, the Cooperative Development Support Fund, the Poor Women Support Fund, the Overseas Citizens and Legal Entities Protection Fund, the Housing Development Fund, the Small and Medium Enterprise Development Fund, the National Science and Technology Development Fund, the National Technological Innovation Fund, income from performing state-assigned tasks of the Land Development Fund and other state funds operating without profit-making objectives established and operated according to the law as decided by the Government or the Prime Minister.”

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

"a) Actual expenses incurred in connection with the business operations of the enterprise, including the following expenses:

- Expenses for implementing national defense and security education tasks, training, and activities of self-defense forces and other national defense and security tasks as prescribed by law; expenses supporting the activities of party organizations and political-social organizations within the enterprise.

- Actual expenses for preventing and controlling HIV/AIDS in the workplace of the enterprise, including: expenses for training enterprise staff on HIV/AIDS prevention, expenses for organizing communication on HIV/AIDS prevention for enterprise employees, fees for HIV counseling and testing services, expenses for supporting HIV-infected employees.

- Welfare expenses directly provided to employees that the enterprise has invoices and certificates as required, such as: expenses for funeral and wedding ceremonies of employees and their families; expenses for vacations, medical treatment support; expenses for supplementary knowledge acquisition at educational institutions; expenses for supporting employee families affected by natural disasters, enemies, accidents, illness; expenses for rewarding children of employees who excel in studies; expenses for supporting travel costs during holidays and festivals for employees and other welfare expenses as guided by the Ministry of Finance; the total amount of expenses not exceeding one month's average actual salary paid in the tax year."

5. Amending and supplementing Point d Clause 2 Article 9 as follows:

"d) The portion of depreciation of fixed assets not in accordance with the regulations of the Ministry of Finance, including: Depreciation of passenger cars with up to nine seats (excluding: cars used for passenger transport, tourism, hotels; cars used as samples and test drives for car sales); depreciation of civil aircraft and yachts not used for cargo and passenger transport, tourism, hotels."

6. Amending and supplementing Clause 3 Article 16 as follows:

"3. Exempting two years of tax and reducing fifty percent of the tax payable for four subsequent years on income from newly implemented investment projects as stipulated in Clause 3 Article 15 of this Decree and income of enterprises from newly implemented investment projects in industrial zones (excluding industrial zones located in areas with favorable economic and social conditions)."

The area with favorable economic and social conditions as stipulated in this Clause shall be the inner districts of special-class cities directly under the central government, class-I cities directly under the central government, and class-I cities directly under provinces, excluding the districts of special-class cities, class-I cities directly under the central government, and class-I cities directly under provinces newly established from counties since January 1, 2009. In cases where industrial zones are located on both favorable and unfavorable areas, the determination of tax incentives for such industrial zones shall be based on the actual location of investment projects on-site. The classification of special-class and class-I cities as stipulated in this Clause shall be carried out in accordance with the Government's regulations on city classification.

7. Supplement Clause 5a of Article 19 as follows:

"5a. For investment projects that have been granted investment permits, if the initial investment registration dossier submitted to the investment permit-granting authority includes registered investment capital, phased investment schedules along with implementation progress, and subsequent phases are actually implemented according to the schedule (except for objective difficulties and force majeure), they will enjoy tax incentives at the current level applicable to the initial investment project; for investment projects that were granted investment licenses before January 1, 2014, the remaining tax incentives will be calculated from January 1, 2014."

Investment projects of enterprises enjoying tax incentives whose phase from 2009 to 2013 continuously invest in machinery and equipment during production and business operations shall also enjoy tax incentives on additional income generated from such continuous investment in machinery and equipment at the current level applicable to the remaining time period.

8. Supplement Clause 5b of Article 19 as follows:

"5b. Enterprises still enjoying tax incentives based on export ratio conditions but stopped receiving tax incentives due to commitments made to the World Trade Organization (WTO) for textile and garment activities starting from January 11, 2007, and other activities starting from January 1, 2012, may choose to combine, not simultaneously and synchronously, tax rate incentives and tax exemption/reduction periods to continue enjoying corporate income tax incentives for the remaining time period starting from 2007 for textile and garment activities or from 2012 for other activities, corresponding to the tax incentive conditions that the enterprise actually meets (excluding the tax incentive condition based on meeting the export ratio requirement and using domestic raw materials) as stipulated in the effective legal tax regulations on corporate income tax from the date the enterprise was granted the Business Registration Certificate until the day before the Government's Decree No. 24/2007/NĐ-CP dated February 14, 2007, detailing the implementation of the Law on Corporate Income Tax took effect, or according to the provisions of the effective legal tax regulations on corporate income tax at the time when the tax incentives were adjusted due to the implementation of WTO commitments."

9. Amend Points 2, 3, 4, 5, 32, 37 The list of areas eligible for corporate income tax incentives attached to Decree No. 218/2013/NĐ-CP dated December 26, 2013, of the Government is as follows:

1. Amend and supplement Point a Clause 2 Article 3 as follows:

"a) Credit services include the following forms:

- Lending;

- Discounting, rediscounting transferable instruments and other securities;

- Guarantee;

- Financial leasing;

- Issuing credit cards;

- Domestic factoring; international factoring;

- Sale of collateral assets, including cases where the borrower sells collateral assets on behalf of the lender to repay secured loans;

- Provision of credit information in accordance with the Law on the State Bank;

- Other credit forms as prescribed by law".

2. Amend Point b Clause 2 Article 9 as follows:

"b) Have non-cash payment vouchers for goods and services purchased, except when the total value of goods and services purchased each time is less than VND 20 million.

For goods and services purchased on deferred payment or installment basis with a value of VND 20 million or more, businesses shall declare and deduct input VAT based on purchase contracts, VAT invoices, and non-cash payment vouchers for such goods and services. In cases where there are no non-cash payment vouchers due to the payment period not having arrived according to the contract, businesses may still declare and deduct input VAT.

Goods and services purchased through offsetting between the value of goods and services purchased and the value of goods and services sold are also considered as non-cash payments."

3. Amend Point c Clause 1 Article 9 as follows:

"c) Input VAT on fixed assets, machinery, equipment, including input VAT on activities renting these fixed assets, machinery, and equipment, shall not be deductible but included in the original cost of fixed assets or deductible costs under the Corporate Income Tax Law and its guiding documents in the following cases: Fixed assets specifically used for producing weapons and military equipment for national defense and security; fixed assets, machinery, and equipment of credit institutions, reinsurance enterprises, life insurance enterprises, securities trading enterprises, medical facilities, educational facilities; civil aircrafts, yachts not used for commercial cargo and passenger transport, tourism, and hotel business.

For fixed assets being passenger cars with up to nine seats (excluding: cars used for commercial cargo and passenger transport, tourism, and hotel business; cars used for car model and test driving purposes), if their value exceeds VND 1.6 billion, the corresponding input VAT on the excess value over VND 1.6 billion shall not be deductible."

Article 3. Amend and supplement Decree No. 65/2013/NĐ-CP dated June 27, 2013 of the Government detailing certain provisions of the Personal Income Tax Law and the Law Amending and Supplementing Certain Provisions of the Personal Income Tax Law as follows:

1. Amend and supplement Point đ Clause 2 Article 3 as follows:

"đ) Benefits in cash or non-cash other than wages and salaries paid by employers that taxpayers enjoy in all forms:

- Housing, electricity, water, and accompanying services (if any), excluding housing benefits provided by employers for workers in industrial zones, housing built by employers in economic zones, difficult socio-economic areas, and extremely difficult socio-economic areas for workers.

- Premiums for voluntary life insurance, other non-mandatory insurance, contributions to voluntary pension funds, purchased or contributed by employers for employees. Before paying insurance premiums, pensions to individuals, insurance companies, and voluntary pension fund management companies must withhold tax at a rate of 10% on premiums and contributions corresponding to the portion purchased or contributed by employers for employees from July 1, 2013.

- Membership fees and other service charges serving individual needs, such as: Health care, entertainment, sports, leisure, beauty.

- Other benefits as prescribed by law."

2. Amend Point b Clause 5 Article 30 as follows:

"b) Individuals and households engaged in business who have declared and paid taxes in accordance with Clause 1 Article 10 of this Decree."

3. Add Point e Clause 5 Article 30 as follows:

Article 4. Amend and supplement Decree No. 83/2013/NĐ-CP dated July 22, 2013 of the Government detailing the implementation of certain provisions of the Law on Tax Administration and the Law Amending and Supplementing Certain Provisions of the Law on Tax Administration as follows:

1. Amend Clause 5 of Article 5 as follows:

"5. In cases where taxpayers have submitted a written request to the business registration authority at the place where they registered to temporarily cease business operations, they are not required to submit tax declaration forms during the period of temporary cessation of business operations. If taxpayers resume business operations after the temporary cessation period and have notified the business registration authority at the place where they registered in writing, they shall comply with the regulations for submitting tax declaration forms. The business registration authority at the place where the enterprise or individual business has registered shall be responsible for notifying the tax authority about information regarding enterprises or individual businesses that have temporarily ceased business operations or resumed business operations."

2. Add Clause 3a of Article 7 as follows:

Meeting with voters in the constituency "For enterprises with large investment scales, national key projects, or priority investment projects approved by the Prime Minister before granting investment permits, the Ministry of Finance shall consider and recognize such enterprises as priority enterprises even if they have not yet met the two-year operational requirement for assessing compliance with laws and the reliability of customs authorities. The Ministry of Finance shall implement the recognition of priority enterprises and apply preferential measures as stipulated in Clause 2 of this Article when the enterprise has completed the construction of project facilities."

3. Amend Point b of Clause 1 of Article 11 as follows:

"b) Quarterly declarations apply to taxpayers whose total revenue from goods and services in the previous year does not exceed VND 50 billion."

4. Amend Clause 1 of Article 12 as follows:

"1. Corporate income tax declarations are annual finalization declarations or declarations up to the point of corporate division, merger, consolidation, conversion of business form (excluding cases of conversion where the successor entity assumes all tax obligations of the predecessor entity), dissolution, or cessation of operations, except for declarations made on a transaction-by-transaction basis for corporate income tax arising from real estate transfers or other business activities as prescribed by the Corporate Income Tax Law.

The tax authority shall inspect the finalization of corporate income tax within fifteen working days from the date it receives relevant documents and files related to the finalization of tax obligations from taxpayers in cases of division, merger, consolidation, conversion of business form, dissolution, or cessation of operations. For cases of dissolution or cessation of operations, the Ministry of Finance shall guide the mechanism for the tax authority to commission independent auditing companies or organizations providing tax service procedures to quickly and conveniently inspect and finalize corporate income tax."

5. Amend Clause 2 of Article 12 as follows:

"2. Documents for corporate income tax declarations include:

a) Finalization declaration documents for corporate income tax include:

- Corporate income tax finalization declaration form;

- Annual financial statements or financial statements up to the point of corporate division, merger, consolidation, conversion of business form, dissolution, or cessation of operations;

b) Declaration documents for corporate income tax from real estate transfers include the corporate income tax declaration form for real estate transfers;

c) Declaration documents for corporate income tax on a transaction-by-transaction basis include the corporate income tax declaration form."

6. Add Clause 1a of Article 26 as follows:

"1a. Based on production and business results, taxpayers must make provisional payments of corporate income tax for the quarter no later than the thirtieth day of the following quarter in which the tax liability arises.

For enterprises required to prepare quarterly financial statements under the law, the provisional quarterly tax payment shall be based on the quarterly financial statements and the tax regulations.

For enterprises not required to prepare quarterly financial statements, the provisional quarterly tax payment shall be based on the corporate income tax of the previous year and the projected business results for the current year.

If the total of four provisional payments is less than twenty percent more than the corporate income tax payable according to the finalization, the enterprise must pay interest on late payment for the difference exceeding twenty percent between the provisional payment and the finalization amount from the day following the last day of the fourth quarter's tax payment deadline until the day the outstanding tax is paid."

7. AmendClause 3 of Article 31 as follows:

"3. Time limit for tax payment extension:

a) The maximum time limit for tax payment extension is two years from the due date of tax payment as specified in Points a and c of Clause 1 of this Article.

The amount of tax extended for payment as specified in Point c of Clause 1 of this Article shall not exceed the amount of state budget arrears.

b) The maximum time limit for tax payment extension is one year from the due date of tax payment as specified in Points b and d of Clause 1 of this Article."

Article 5. Effectiveness and Responsibility for Implementation

1. This Decree takes effect from November 15, 2014. However, the provisions of Article 1 of this Decree shall apply to the corporate income tax period starting from 2014.

2. The Ministry of Finance shall provide guidance on the implementation of this Decree.

3. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial People's Committees directly under the Central Government, and related organizations and individuals are responsible for implementing this Decree./.