Circular No. 96/1999/TT-BTC guides corporate income tax for households and individuals engaged in agricultural production with high commodity output values and high incomes.

CIRCULAR

Guidelines on corporate income tax for households and individuals engaged in agricultural production with large product volumes and high incomes having significant product volumes and high income

Pursuant to the Law on Corporate Income Tax (CIT) and Decree No. 30/1998/NĐ-CP dated May 13, 1998 of the Government detailing the implementation of the Law on Corporate Income Tax, the Ministry of Finance issued Circular No. 99/1998/TT-BTC dated July 14, 1998 guiding the implementation of the Government's decree on corporate income tax;

Pursuant to Circular No. 179/UBTVQH10 dated March 17, 1999 of the Standing Committee of the National Assembly regarding the collection of corporate income tax from individuals with high income who are owners of agricultural farms;

Pursuant to Clause 2c - Article 1 - Decree No. 30/1998/NĐ-CP dated May 13, 1998 of the Government detailing the implementation of the Law on Corporate Income Tax;

The Ministry of Finance supplements guidelines on certain issues concerning corporate income tax for households and individuals engaged in agricultural production with large product volumes and high incomes as follows:

I. ON TAXPAYERS OF CORPORATE INCOME TAX

Households and individuals engaged in agricultural, forestry, and aquaculture production (collectively referred to as agricultural producers) include activities that produce crop products, livestock, aquaculture products, and other agricultural production activities (such as flower cultivation, pet breeding, etc.) with total product value exceeding 90 million VND/year and annual income exceeding 36 million VND/year, which are subject to corporate income tax on the portion of income above 36 million VND/year.

Agricultural producers are determined based on households allocated land, households receiving land leases, households leasing land for agricultural production, and groups or collectives engaging in agricultural production under various forms.

Households and individuals engaged in agricultural, forestry, and aquaculture production who have registered for business and are subject to VAT according to this Circular are not subject to corporate income tax.

II. ON THE BASIS FOR CALCULATING TAX AND TAX RATE

The basis for calculating tax is taxable income and tax rate:

1. Taxable income is determined as follows:

Taxable income = (revenue - expenses) - 36 million VND.

a. Revenue of agricultural producers is determined by multiplying the quantity of agricultural, forestry, and aquaculture products by their selling price at the time of sale or valuation, plus revenue from other agricultural production activities of the agricultural producer during the year of corporate income tax calculation.

- Quantity of products:

+ Crop products: The actual quantity of crops harvested in the year or based on the actual cultivated area (including land allocated, leased from state farms, stations, cooperatives, production groups, and land transferred through land use rights transfer or rented for cultivation) multiplied by the yield of each type of crop (annual and perennial crops).

+ Livestock products: The actual quantity of livestock products (livestock, poultry, aquaculture products calculated by head or weight in kg or tons) sold in the year.

In cases where the actual quantity of crop products or livestock sold cannot be determined, it is calculated based on statistical data or survey yields per unit area of crops, number of heads of livestock, and aquaculture products, which are yields in kg or tons per area of ponds or lakes.

- Selling price of products: Actual selling price at the time of harvest or sale; if the actual selling price cannot be determined, it is calculated based on the average market price of each type of product during the period (month, quarter, or season).

Example: Mr. A in the Mekong Delta planted 2 hectares of rice with two harvests, winter-spring harvest 14 tons at an average selling price of 2,000 VND/kg, summer harvest 10 tons at an average selling price of 2,200 VND/kg; raised fish in a 0.4-hectare pond yielding 5,000 kg at an average selling price of 12,000 VND/kg. Raised livestock: sold 6 calves for 15 million VND. Other income 60 million VND:

Determining the value of products of Mr. A:

- Rice: 14,000 kg x 2,000 VND/kg = 28 million VND.

10,000 kg x 2,200 VND/kg = 22 million VND.

- Fish: 5,000 kg x 12,000 VND/kg = 60 million VND.

- Cattle: 6 heads = 15 million VND.

- Revenue from fruit trees and other livestock farming: 60 million VND.

Total: 185 million VND.

b. Production costs: Production costs are determined based on actual costs including: cost of seedlings; cost of materials; fertilizer, animal feed, pesticides, herbicides, disease prevention drugs; labor costs including self-employed and hired labor; costs of machinery and equipment including basic depreciation and major repair depreciation, regular maintenance of fixed assets; costs of leased machinery and equipment; costs of tools and consumables for production; taxes and other actual costs related to producing agricultural, forestry, and aquaculture products consumed in the year.

For households and individuals maintaining accounting books in accordance with the State's accounting regulations, reasonable and valid costs are determined in accordance with the guidance provided in Section III Part B of Circular No. 99/1998/TT-BTC dated July 14, 1998 of the Ministry of Finance.

For households and individuals without accounting books, production costs are determined as a percentage (%) corresponding to the revenue of each type of agricultural product produced (based on the income survey data of agricultural producers).

c. Determination of taxable income

For agricultural producers maintaining accounting books recording revenue, expenses, and income, taxable income is determined as (revenue - expenses) - 36 million VND.

For agricultural households that have not established accounting books, income is calculated using the survey method to determine the ratio (%) of income to product sales revenue. The Ministry of Finance shall issue, along with this Circular, a framework table of the ratio (%) of enterprise income based on sales revenue for certain types of crop, livestock, and aquaculture products in different regions (the attached income-to-sales revenue ratio framework). The Tax Department shall base its determination of specific income ratios for each type of crop and livestock in the locality on the framework ratio (%) of enterprise income to sales revenue, local agricultural production conditions, and product selling prices in the locality, to suit the actual circumstances of each season, region, and year. In cases where market prices for agricultural, forestry, and aquatic products fluctuate by more than 20% compared to the price when the Tax Department establishes the income ratio, the Tax Department shall re-determine the percentage ratio of income to sales revenue to reasonably determine taxable income.

Example: Based on the sales revenue data of farmer household A mentioned above, the income ratio is determined as follows: 30% for annual crops, 25% for livestock products, 25% for aquaculture products, and 25% for other agricultural production.

Income from crop cultivation = 50 million VND x 30% = 15 million VND

Income from livestock breeding = 15 million VND x 25% = 3.75 million VND

Income from aquaculture = 60 million VND x 25% = 15 million VND

Income from other agricultural production = 60 million VND x 25% = 15 million VND

Total: 48.75 million VND

+ Taxable income = business income - 36 million VND

= 48.75 million VND - 36 million VND = 12.75 million VND

2. The corporate income tax rate applied uniformly to agricultural production households is 32%.

+ The corporate income tax payable by farmer household A is:

12.75 million VND x 32% = 4.08 million VND

III. REGISTRATION, DECLARATION, PAYMENT, AND SETTLEMENT OF TAXES

Agricultural households with large-scale commercial production and high income as specified in Section I above are required to register, declare, pay, and settle corporate income tax according to Part C of Circular No. 99/1998/TT-BTC dated July 14, 1998, issued by the Ministry of Finance, and the guidance provided in this Circular. Specifically:

1. Declaration of tax: Individual household heads engaged in large-scale agricultural production with significant output value and high income must register, declare, and pay corporate income tax at the District Tax Office where their agricultural activities take place, following the prescribed declaration form and instructions from the tax authority.

If a household has permanent residence registration in one place but engages in agricultural production in multiple places, they should declare the value of their output in terms of goods and income at each location of agricultural production to the village or ward tax team for transfer to the District Tax Office. In cases where a household produces agricultural products in multiple counties, the declaration should be transferred to the District Tax Office where the household has permanent residence registration or where the main production takes place for consolidation of the household's total income.

If individual household heads engaged in large-scale agricultural production with significant output value and high income fail to register and declare, the tax authority directly managing tax collection will cooperate with the tax advisory council to determine the income levels of these individuals and report to the local government for notification to the agricultural production households to fulfill their obligation to pay corporate income tax.

Based on the tax declaration forms submitted by households and individuals, the tax authority directly managing tax collection shall calculate the corporate income tax for each household, issue a tax payment notice for the taxpayer to be aware of and fulfill their tax payment obligations.

2. Payment of corporate income tax. Due to the characteristics of household agricultural production, households subject to corporate income tax shall temporarily pay corporate income tax quarterly or per harvest season as notified by the tax authority.

- The deadline for paying corporate income tax for agricultural households is no later than 25 days from the date of receipt of the notification. However, the total tax payable for the tax year must be paid by December 31st of the same year.

- Households paying corporate income tax shall pay directly into the State Treasury at the district or county level where agricultural production takes place, as instructed by the tax authority. In cases where households pay taxes far from the district or county treasury, tax officers shall collect the tax directly, issuing a tax receipt immediately upon collection and submitting the collected tax to the District Tax Office to deposit into the State Treasury. The deadline for depositing tax into the State Treasury is no later than three days from the date of tax collection, extended to six days in mountainous or difficult-to-reach areas.

In cases where agricultural households have already made temporary payments of corporate income tax quarterly or per harvest season, or have paid the full year's tax as notified by the tax authority, but due to natural disasters or price fluctuations causing reduced revenue and income, with annual revenue reaching only up to 90 million VND or annual income reaching only up to 36 million VND, such households are exempt from paying corporate income tax. Any tax temporarily paid during the year may be carried forward to the next year or refunded at the request of the taxpayer.

3. Settlement of corporate income tax.

- At the end of the year, the District Tax Office shall base its settlement of corporate income tax for households on the results of agricultural production in the year, the amount of tax payable, and the amount of tax paid, comparing it with the tax paid to the State Treasury to determine any overpayment or underpayment for tracking purposes.

- The District Tax Office is responsible for annually settling corporate income tax for households engaged in agricultural production that are subject to corporate income tax, in accordance with regulations on tax settlement, and issuing a tax settlement notice to taxpayers and locations where corporate income tax is levied.

IV. REGARDING EXEMPTIONS AND REDUCTIONS IN CORPORATE INCOME TAX

1. Exemption and reduction of corporate income tax for agricultural households producing crops, livestock, and aquaculture products for the first time: They are exempt from corporate income tax for the first two years from the initial harvest and enjoy a 50% reduction in corporate income tax for the subsequent two years. In cases of agricultural households located in mountainous areas or ethnic minority households, the tax reduction period is extended by an additional two years.

2. In cases where agricultural households engage in both crop cultivation, animal husbandry, and aquaculture activities, and each type of product has its first harvest during the tax year for calculating corporate income tax, if the household's total income reaches the taxable level, they shall be exempted from or have their tax reduced according to the proportion of taxable income of that type of product for the period specified in point 1 above.

3. Procedures for tax exemption.

- Agricultural households subject to corporate income tax must submit a request for tax exemption or reduction to the Tax Office where the agricultural production takes place.

- Confirmation from the local authority of the commune or ward where the household engages in agricultural production regarding the criteria:

+ Cultivated area or number of livestock, poultry, and aquatic products raised.

+ Value of production volume of each type of product for the tax year.

+ Year of planting, breeding, and the year of first harvest.

+ Income level of each type of product.

4. Authority to consider tax exemptions and reductions.

- The Tax Office where the exempted or reduced tax area is located shall compile the file and submit it to the Tax Department where the household is registered as a resident or where the main agricultural production takes place, requesting exemption or reduction.

- The Director of the Tax Department shall examine and decide on the tax exemption or reduction for the household and notify the Tax Office where the agricultural production is located.

5. Organizing the refund of taxes paid by agricultural households in cases where taxes were temporarily paid according to seasonal announcements by the tax authority but later determined not to be payable due to natural disasters or losses, upon request by the taxpayer.

- The taxpayer must submit a request to the tax authority that issued the tax payment announcement, clearly stating the reasons for requesting a tax refund.

- The Tax Department shall base its decision on the request and the written determination of the actual tax figures provided by the Tax Offices where the agricultural production takes place, to determine the refund amount based on the actual tax paid and the recalculation of revenue and income not subject to taxation.

V. IMPLEMENTATION

1. The People's Committee of provinces and centrally-administered cities shall direct relevant sectors; Finance, Planning and Statistics, Agriculture and Rural Development shall cooperate with the Tax Authority in organizing the collection of corporate income tax from agricultural households within their jurisdiction.

2. The Tax Authority.

a. Based on the tax declaration form submitted by the taxpayer or through surveys, the Tax Authority shall identify households and individuals engaged in agricultural production reaching the threshold for annual corporate income tax, serving as the basis for establishing and managing taxpayers.

In cases where agricultural households operate in multiple locations (different districts, different provinces), the Tax Office where the household is registered as a resident shall be responsible for compiling the tax declarations and investigation materials to report to the Tax Department for guidance and tax collection in accordance with regulations.

b. The Tax Department shall rely on the materials from the Tax Office, and if the household operates in different provinces, it shall coordinate with the Tax Departments of those provinces to determine the taxable income and allocate the corporate income tax according to the income ratio in each district or county.

c. The Tax Authority shall publicly announce information about the households, sales volume, income, and the corporate income tax payable for each household at the commune where the agricultural production takes place.

d. Annually, the Tax Authority shall be responsible for inspecting and supervising to identify agricultural households subject to corporate income tax. If households are found to underreport or misreport their income intentionally, they shall be required to pay the full amount of tax owed and be subject to administrative penalties for tax violations as stipulated by law.

e. The General Department of Taxation shall direct the Tax Departments to coordinate with relevant functional sectors to implement the collection of corporate income tax in accordance with the law and this Circular.

This Circular shall take effect from January 1, 1999. During implementation, if there are difficulties or obstacles, organizations and individuals are requested to promptly report them to the Ministry of Finance (General Department of Taxation) for research and resolution.