Circular No. 97/2002/TT-BTC guiding the tax obligations for Vietnamese enterprises investing abroad

CIRCULAR

Guidelines for fulfilling tax obligations

for Vietnamese enterprises investing abroad.

Based on current laws and ordinances on taxes of the Socialist Republic ofVietnam and detailed implementing decrees of the Government regarding these lawsand ordinances;

Based on Decree No. 22/1999/NĐ-CP dated April 14, 1999 of the Governmentregulating Vietnamese enterprises' investment abroad;

Based on Decision No. 116/2001/QĐ-TTg dated August 2, 2001 of the PrimeMinister on certain incentives and encouragement for Vietnamese enterprises toinvest abroad in the oil and gas sector;

Pursuant to Decree No. 178/ dated October 20, 2015 of dated October 28, 1994 of the Government stipulating tasks, authorities, andorganizational structure of the Ministry of Finance;

The Ministry of Finance issues guidelines for Vietnamese enterprises to fulfilltheir tax obligations when investing abroad according to Decree No. 22/1999/NĐ-CPof the Government dated April 14, 1999 (hereinafter referred to as Decree No.22/1999/NĐ-CP) and Decision No. 116/2001/QĐ-TTg of the Prime Minister datedAugust 2, 2001 (hereinafter referred to as Decision No. 116/2001/QĐ-TTg) asfollows:dated April 9, 2018 onI. GENERAL PROVISIONS.

This Circular applies to Vietnamese enterprises mentioned in Point 1, Article 2 ofDecree No. 22/1999/NĐ-CP, investing abroad as prescribed in Decree No. 22/1999/NĐ-CP and Decision No. 116/2001/QĐ-TTg, including:

1.Enterprises established under the Law on State-Owned Enterprises;

Cooperatives established under the Law on Cooperatives;

Enterprises established under the Enterprise Law.

Oil and gas projects invested abroad are projects conducting oil and gasactivities, including exploration, development, and exploitation of oil and gasfields, including all activities directly serving oil and gas operations, as definedin the permit or approval issued by the host country for the Vietnamese enterprise'soil and gas project abroad.

Vietnamese enterprises conducting overseas investments as mentioned aboveare referred to as "Vietnamese enterprises investing abroad."

In cases where international treaties signed or joined by the VietnameseGovernment contain provisions on taxes that differ from the guidelines set forth inthis Circular, tax obligations shall be implemented according to such internationaltreaties.

2II. TYPES OF TAXES APPLICABLE

1. Export duties, import duties, and value-added tax:

1.1. For exported goods:

1.1. Machinery, equipment, spare parts, materials, raw materials, and fuelexported to create fixed assets for investment projects abroad,

are exempt from export duties (if applicable) and subject to value-added tax at a rate of 0%. Documents submitted to customs authorities for exemption from export dutiesinclude:

A letter requesting exemption from export duties from Vietnamese enterprisesinvesting abroad;

Export declaration form;

List of goods for export to implement foreign investment projects exemptfrom export duties issued by the

Ministry of Trade (specifying types, quantities, and values of goods); Investment permit for foreign investment issued by the

Ministry of Planning and Investment - certified copy of the Vietnameseenterprise investing abroad; Permit or approval from the host country regarding the Vietnamese enterprise'sinvestment there - certified copy and translation with confirmation from theVietnamese enterprise investing abroad or relevant authority;

Power of attorney for export (in case of entrusted export) - certified copy ofthe Vietnamese enterprise with an investment project abroad.

In cases of multiple exports, documents listed in points 4, 5, and 6 of the aboveset of documents only need to be submitted once for the first export.

Based on the aforementioned documents and the actual exported goods,customs authorities are responsible for checking and determining the specificamount of export duty exemptions for each shipment and recording it specificallyon the Export Declaration Form: "the amount of export duty exempted according toCircular No. 97/2002/TT-BTC dated October 24, 2002 of the

Ministry of Finance is In cases where exported goods have no export duty rate, based on the List of Goods Exempt from Export Duties issuedby the... ".

Ministry of Trade, customs authorities monitor the export of goods toimplement foreign investment projects of Vietnamese enterprises investing abroadand clearly record on the Export Declaration Form: type, quantity, and value ofexported goods. Documentation proving exported goods when declaring value-added tax shallbe carried out in accordance with the current Value-Added Tax Law for exportedgoods. Specifically, the sales contract signed with foreign countries can bereplaced by the List of Goods Exempt from Export Duties issued by theMinistry of Trade. 1.1.2. Goods exported temporarily and re-imported to implement foreigninvestment projects shall be subject to export duties on temporarily exported goodsand import duties on re-imported goods according to the current Law on ExportDuties and Import Duties, and value-added tax according to the current Value-AddedTax Law.

1.2. For imported goods: 1.2.1. Machinery, equipment, and spare parts exported abroad to create fixedassets for investment projects, when liquidated or concluded and re-importedinto Vietnam, are exempt from import duties and are not subject to value-addedtax.

Documents submitted to customs authorities for exemption from import dutiesand determination of goods not subject to value-added tax include:

Import declaration form (completed customs procedures);

Export declaration form (confirmed completion of customs procedures andactual exported goods) when exporting goods to create fixed assets for foreigninvestment projects - original or certified copy of the Vietnamese enterpriseinvesting abroad;

Official document confirming the conclusion of the foreign investment projectissued by the competent authority of the host country, or decision to liquidateassets by the Board of Directors or equivalent body as prescribed by the hostcountry - certified copy and translation with confirmation from the Vietnameseenterprise investing abroad or relevant authority.

Export declaration form;

Declaration of imported goods (completed customs procedures);

Declaration of exported goods (confirmed completion of customs procedures and actual export of goods) when exporting goods to create fixed assets for foreign investment projects - original or certified copy by the Vietnamese enterprise investing abroad; Confirmation document of the completion of the foreign investment project issued by the competent authority of the host country, or the liquidation decision of the Board of Directors or equivalent body according to the regulations of the host country - certified copy and translation by the Vietnamese enterprise investing abroad or the competent authority;

Vietnamese enterprise

Powerof Attorney for Import Contract (in case of import agency) - certified copy by theVietnamese enterprise investing abroad.

Inthe case of multiple imports of goods, the documents mentioned in points 4 and 5 ofthe above-mentioned file shall only be submitted at the first import.

Basedon the aforementioned file and the actual imported goods, the customs authorityshall issue a decision to exempt import tax for each consignment of importedgoods.

1.2.2Goods divided upon liquidation or completion of an investment project abroadfunded by capital; goods representing a share of revenue or profit from aninvestment project abroad, when imported into Vietnam, shall be subject toimport duties as prescribed by the Law on Export Tax, Import Tax, and Value AddedTax as currently in force.

1.2.3Samples and technical documents (magnetic tapes, paper tapes, etc.) of oil andgas projects invested abroad, imported for research, analysis, and to serve theimplementation of oil and gas projects abroad, shall be exempted from importtaxes and not subject to Value Added Tax.

Official document confirming the conclusion of the foreign investment projectissued by the competent authority of the host country, or decision to liquidateassets by the Board of Directors or equivalent body as prescribed by the hostcountry - certified copy and translation with confirmation from the Vietnameseenterprise investing abroad or relevant authority.

Export declaration form;

Declaration of imported goods (completed customs procedures);

Listof samples and technical documents imported for oil and gas projects investedabroad for research, analysis, and to serve the implementation of oil and gasprojects abroad, prepared by the Vietnamese enterprise investing abroad (specifytype, quantity, and value of goods). The enterprise shall bear legalresponsibility for the contents of the List.

Ministry of Planning and Investment - certified copy of the Vietnameseenterprise investing abroad; InvestmentPlan Approval - certified copy by the Vietnamese enterprise investing abroad.

Permitor approval from the host country regarding the Vietnamese enterprise'sinvestment in an oil and gas project in that country - certified copy or certifiedtranslation by the Vietnamese enterprise investing abroad or competentauthority.

Powerof Attorney for Import Contract (in case of import agency) - certified copy bythe Vietnamese enterprise investing abroad.

Inthe case of multiple imports of goods, the documents mentioned in points 4, 5, and6 of the above-mentioned file shall only be submitted at the first import.

Basedon the aforementioned file and the actual imported goods, the customs authorityshall issue a decision to exempt import tax for each consignment of importedgoods.

1.2.4Specialized equipment and materials for oil and gas activities imported forprocessing into products under a processing contract signed with the authorizedrepresentative of the oil and gas project invested abroad, shall be exempt fromimport taxes and not subject to Value Added Tax when imported. Whenexporting the processed products, the corresponding amount of Value Added Tax at0% shall apply based on the actual quantity of exported products, if the exporttax is exempted.

TheGeneral Customs Department shall organize guidance on implementing theexemption of import taxes and non-application of Value Added Tax for caseswhere Vietnamese enterprises investing abroad import specialized equipment andmaterials for oil and gas activities for processing and exporting products to oiland gas projects abroad, according to the current laws on Export Tax, ImportTax, and Value Added Tax.

1.2.5Specialized equipment and materials for oil and gas activities, which are notyet produced domestically, imported for production and processing into productsfor export to oil and gas projects invested abroad, shall be subject to importduties as prescribed by the current laws on Export Tax and Import Tax, andValue Added Tax as prescribed by the current law on Value Added Tax.

Determiningwhether specialized equipment and materials belong to types not yet produceddomestically shall be based on the list of materials and equipment for oil andgas activities already produced in the country issued by the Ministry ofPlanning and Investment.TheMinistry of Planning and Investment has issued this list.

2.CorporateIncome Tax: Vietnamese enterprises investing abroad earning income fromproduction and business activities overseas shall declare and pay corporateincome tax according to the current Corporate Income Tax Law of Vietnam,including cases where the enterprise is enjoying tax exemptions or reductionsaccording to the regulations of the host country. The tax rate for declaring andpaying corporate income tax on foreign-source income shall be the basic taxprescribed by the Corporate Income Tax Law, without applying any preferentialrates (if any) enjoyed by Vietnamese enterprises investing abroad under the lawfor domestic enterprises. Taxauthorities have the right to determine taxable income from production andbusiness activities abroad of Vietnamese enterprises investing abroad in casesof violations of tax declaration and payment regulations stipulated in Article16 of the Corporate Income Tax Law of Vietnam.

Ifsuch income has already been taxed as corporate income tax (or a similar tax)abroad, when calculating the corporate income tax payable in Vietnam, theVietnamese enterprise investing abroad may deduct the tax paid abroad or paid onbehalf by the host country's counterpart (including tax on dividends), but thededuction amount shall not exceed the tax calculated according to theprovisions of the Corporate Income Tax Law of Vietnam. The

corporateincome tax exempted or reduced by the host country's laws for the portion ofprofit earned from the investment project abroad by Vietnamese enterprisesinvesting abroad can also be deducted when determining the corporate incometax payable in Vietnam.Example1: A Vietnamese enterprise earns 800 million VND from an investment projectabroad. This income is post-tax income according to the law of the hostcountry. The corporateincome tax paid is 200 million VND.

Theportion of income of the Vietnamese enterprise A that needs to be declared and paid ascorporate income tax according to the Corporate Income Tax Law of Vietnam isas follows: [(800million VND

200 million VND) x 32%] = 320 million VND. A Thecorporate income tax payable after deducting the tax paid in the host country:320 million VND - 200 million VND = 120 million VND.

Example2 + A Vietnamese enterprise

earns 780 million VND from an investmentproject abroad. This income is post-tax income. The

corporateincome tax paid according to the host country's regulations is 520 millionVND.: has income of 780 million VND from the foreign investment project. This income is after income tax payment. The amount of income tax paid according to the regulations of the host country is 520 million VND. A 4.Other taxes, fees, and charges. In addition to fulfilling tax obligations for production and business activities of foreign investment projects as guided in this Circular, Vietnamese enterprises investing abroad shall fulfill tax, fee, and charge obligations

200 million VND) x 32%] = 320 million VND. A shall declare and pay corporate income tax according to the provisions of the Law on Corporate Income Tax of Vietnam as follows:

[(780 million VND + 520 million VND) x 32%] = 416 million VND.

Vietnamese enterprises Aare only allowed to deduct the amount of tax paid in the host country equivalentto the amount of tax calculated under the Law on Corporate Income Tax of Vietnam,which is 416 million VND. The amount of tax paid in the host country exceeding the amount of tax calculated underthe Law on Corporate Income Tax of Vietnam, which is 104 million VND (520 - 416 =104), shall not be deducted from the tax payable when declaring and payingcorporate income tax in Vietnam. The attached documents when declaring and paying tax by Vietnamese enterprisesinvesting abroad for income from foreign investment projects include:

The resolution of the Board of Directors of the enterprise regarding thedistribution of profits from foreign investment projects.

The audited financial report of the enterprise confirmed by an independentauditor.

The corporate income tax declaration form of the enterprise belonging to theforeign investment project (a certified copy by the authorized representative ofthe foreign investment project).

The settlement statement of corporate income tax for the enterprise (if any); Confirmation of the tax payable, tax paid in the host country, or tax refunds,tax exemptions, and reductions issued by the tax authority in the host country.

In cases where foreign investment projects have not yet generated taxableincome (or are currently generating losses), when declaring annual corporate incometax settlements, Vietnamese enterprises investing abroad only need to submit thefinancial report confirmed by an independent auditor or the competent authority inthe host country and the

corporate income tax declaration form of the foreign investment project (acertified copy by the authorized representative of the foreign investmentproject). Losses arising from foreign investment projects are handled or carriedforward according to the regulations of the host country and cannot be deductedfrom the income generated by the domestic enterprise when calculating corporateincome tax. When the foreign investment project ceases operations and generatesunrecovered losses that the Vietnamese enterprise must bear, the Vietnameseenterprise may declare and offset these losses against the income of the Vietnameseeenterprise in subsequent periods in accordance with the provisions of the Law onCorporate Income Tax.

For oil and gas projects invested in foreign countries, if Vietnameseenterprises investing abroad borrow funds for investment and can prove that theinterest expense has not been deducted when determining taxable income accordingto the regulations of the host country, this interest expense will be deductiblefrom the income from oil and gas projects invested in foreign countries whendetermining taxable income according to the Law on Corporate Income Tax ofVietnam. The rate of deductible interest is implemented in accordance with thecurrent Law on Corporate Income Tax.Foreign income is declared in the corporate income tax settlement of thesubsequent fiscal year according to the regulations of the host country. Enterprisescan declare in the corporate income tax settlement of the same fiscal year asthe fiscal year of the foreign investment project if the enterprise has sufficientbases and supporting documents to determine the income and corporate incometax paid by the foreign investment project. Example 3

has income from a foreign investment project in the 2001 fiscal year. TheVietnamese enterprise shall declare the aforementioned income in the corporate income taxsettlement declaration of the 2002 fiscal year, according to the provisions of theLaw on Corporate Income Tax of Vietnam.

As for income from production and business activities of foreign investmentprojects that have signed Double Taxation Avoidance Agreements with Vietnam,Vietnamese enterprises investing abroad shall declare and pay taxes in accordancewith the provisions of the Agreement.

3. Corporate Income Tax for High-Income Individuals:: has income of 780 million VND from the foreign investment project. This income is after income tax payment. The amount of income tax paid according to the regulations of the host country is 520 million VND. A Individuals working for foreign investment projects shall pay personal incometax according to the current Personal Income Tax Ordinance for High-IncomeIndividuals. A4. Other Taxes, Fees, and Charges.In addition to fulfilling tax obligations for production and businessactivities of foreign investment projects as guided in this Circular, Vietnameseenterprises investing abroad shall fulfill tax, fee, and charge obligations

in accordance with current laws on taxes, fees, and charges applicable toproduction and business activities in Vietnam through the provision of goods, services, and other economic transactions with foreign investment projects.

1. Quarterly, the General Department of Customs compiles and reports to theMinister of Finance the types and quantities of exported and imported goods;export and import turnover; export tax exemptions and import tax exemptions offoreign investment projects.

2. This Circular takes effect 15 days from the date of signature. Duringimplementation, if any issues arise, organizations and individuals are requestedto report to the Ministry of Finance for timely research and supplementaryguidance./.

in accordance with the current laws on taxes, fees, and charges applicable to production and business activities in Vietnam through the provision of goods, services, and other economic transactions with foreign investment projects.

1.Quarterly, the General Department of Customs compiles and reports to the Minister of Finance the types and quantities of exported and imported goods; export and import turnover; export tax amounts and exempted import tax amounts of foreign investment projects. This Circular takes effect 15 days after the date of signature. During implementation, if any difficulties arise, organizations and individuals are requested to report to the Ministry of Finance for timely research and supplementary guidance./. shall be conducted for activities of production and business in Vietnam throughthe provision of goods, services, and other economic transactions with foreigninvestment projects.

III. IMPLEMENTATION

1.Quarterly, the General Department of Customs shall compile and report to theMinister of Finance the types, quantities of exported and imported goods;export and import turnover; export tax amounts and amounts of import taxpardoned for foreign investment projects. 2.This Circular shall take effect fifteen days from the date of signature. Duringimplementation, if any difficulties arise, organizations and individuals arerequested to reflect them to the Ministry of Finance for timely research andsupplementary guidance./.

2.Thông tư này có hiệu lực sau 15 ngày, kể từ ngày ký. Trong quá trình thực hiệnnếu có phát sinh vướng mắc, đề nghị các tổ chức, cá nhân phản ánh về Bộ Tài chính để nghiên cứu và hướngdẫn bổ sung kịp thời./.