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FIN307 (Group 5) Financial Taxation, Conditions for excise tax deduction -…

- - - - Timber (including pulpwood and forest products)
      - Minerals (oil, natural gas, coal, lignite, ore, marble, stone, sand, and other deposits)
    - - Promote the economically efficient use of natural resources
      - Support sustainable development within the economy.
    - - Property tax base on the value of the extracted natural resources.
      - A fee for governmental services such as resource mapping and environmental remediation.
      - A sale of property, as the taxpayer effectively purchases the natural resources from the government.
    - - Taxable natural resources: minerals, petroleum, forest products, fisheries, and natural water.
      - Based on: value of the actual production output, the taxable price, and the applicable tax rate.
    - - 1990: Established through the Ordinance on Severance Tax.
      - 2010: The Law on Severance Tax No. 45/2009/QH12 became effective.
      - 2013: Law No. 71/2014/QH13 Amended a part of the 2009 Law
    - - Metallic minerals.
      - Non-metallic minerals.
      - Crude oil.
      - Natural gas, coal gas.
      - Natural forest products, other than animals.
      - Natural aquatic products, including marine animals and plants.
      - Natural water, including surface water and groundwater.
      - Natural swallow's nests.
      - Other resources prescribed by the National Assembly Standing Committee.
    - - Joint Ventures: Joint-venture enterprises pay the tax.
      - Business Cooperation Contracts: Tax liability specified in the contract.
      - Small-Scale Exploiters: Principal purchaser pays if they have a written commitment to declare and pay tax.
    - - Base output for natural resource
        
        General: Actual quantity of resource extracted during the tax period.
        
        Measurable Resources: Actual tonnage or volume extracted.
        
        Minerals with Waste: Based on processed tonnage.
        
        Production Minerals: Output based on derived products and standard usage.
      - Base Price per Unit
        
        Specific Cases:
        
        Transport Costs: Excluded if not sold at extraction site.
        
        Crude Oil, Natural Gas, Coal Gas: Selling price at delivery point.
        
        Exported Resources: FOB price minus export duties.
        
        Hydropower Water: Average market price of electricity.
        
        For multi-element resources, price based on individual elements.
        
        Uncertain Selling Price:Regional market price or base price set by provincial People's Committee.
        
        General: Unit selling price of the resource, excluding VAT
      - Minimum and maximum rates defined by the 2009 Law on Severance Tax.
      - Tax rates vary based on the type of natural resource being extracted.
      - Specific Rates: Established by the National Assembly's Standing Committee based on
        
        Compliance with resource categories and rate ranges.
        
        Support for resource management, protection, and sustainable use.
        
        Assurance of revenue and market stability.
        
        Progressive Rate: Applied to crude oil, natural gas, and coal gas based on average daily extraction volume.
    - - Natural Aquatic Resources: Exempt from severance tax.
      - Personal Use: Exemptions for non-commercial extraction of firewood, bamboo, and tree branches.
      - Hydropower: Exemption for natural water used by households for personal hydropower generation.
      - Agriculture & Forestry: Exemption for natural water used in agriculture, forestry, fisheries, and salt-making, as well as for personal use.
      - Land Use: Exemption for soil used on allocated land or for public infrastructure projects
    - - Tax Reductions:
        Disasters/Accidents: Tax reduction for losses of resources due to natural disasters, fires, or accidents. Paid tax may be refunded or credited against future tax liabilities.
      - Other Cases:
        Additional exemptions or reductions as prescribed by the National Assembly Standing Committee.
  - - - Definition
        
        Agricultural land use tax is levied on those owning or holding rights to agricultural land.
      - Characteristics
        
        Property tax based on real estate value.
        
        Direct tax: the taxpayer cannot pass on the tax burden.
      - Terminology
        
        In public land countries: Agricultural Land Use Tax.
        
        In mixed ownership countries: Agricultural Land Tax.
      - A key source of local government revenue
      - Overview
        
        Established in Vietnam in the late 1980s, with the Ordinance on Agricultural Land Use Tax (Ordinance No. 9-LCT/HĐNN7)
        
        From 1993: The Law on Agricultural Land Use Tax was enacted simultaneously with the issuance of the 1993 Land Law.
      - Government revenue generation:
        
        Agricultural land use tax played a significant role in the 1990s, covered 3.05% of government revenue and 0.67% of GDP.
        
        Revenue from agricultural land use tax substantially dropped as exemptions and reductions were introduced to support farmers.
      - Tax Structure:
        
        Tax calculated by the number of kilograms of paddy per hectare, which depends on the land category.
        
        Classification of land is based on land type, quality, location, region, climate, and irrigation and drainage conditions.
        
        For Timber/perennial crops:
        
        Characterized by a single harvest
        
        Tax rate: 4% of output value + additional tax for excess land.
        
        Currency Conversion: Tax amounts converted using the annually set rice price by provincial committees.
    - - Definition:
        Non-agricultural land use tax is levied on individuals or entities owning or using non-agricultural land.
      - Characteristics and Terminology: similar with Agricultural Land Use Tax
      - Non-agricultural land use tax payable can be perceived as a form of land lease.
        
        Direct property tax based on land value.
        
        In public land systems, it acts both as a property tax and a land lease fee, reflecting government ownership of the land.
      - Taxpayers
        
        Organizations, households, and individuals with land use rights.
        
        Specific cases
        
        Current land users will be taxed if certificates have not yet been issued.
        
        State-leased Land: Lessees are taxpayers.
        
        Land Lease Contracts: Taxpayer determined by contract; otherwise, the land rights holder is taxpayer.
        
        Disputed Land: Current users are taxpayers until the dispute is resolved.
        
        Co-Used Land: The representative of co-users is the taxpayer.
        
        Business Capital Contribution: New legal entity is the taxpayer.
      - Ordinance on Land and Housing Tax (1992).
        
        Taxable Assets: houses, residential and construction land.
        
        Tax Base: Based on land area, grades, and tax rates, with 10 different rates linked to agricultural land tax.
        
        Exemptions:
        
        Applied to land used for public, social, or charitable purposes.
        
        Temporary applied to aouses and buildings as stipulated by the Law.
        
        Taxpayers:
        
        Organizations and individuals with land use rights.
        
        Actual users of disputed or ungranted land were considered taxpayers.
        
        From 2008: the Ordinance is replaced by the Law on Non-Agricultural Land Use Tax.
      - Taxable Land
        
        Residential land (rural and urban).
        
        Non-agricultural production/business land (industrial parks, production sites, mineral extraction, construction materials).
        
        Commercial non-agricultural land (as specified by law).
      - Non-Taxable Land
        
        Public use land (infrastructure, cultural sites,
        
        historic places).
        
        Land used by religious institutions.
        
        Cemeteries and graveyards.
        
        Water bodies (rivers, canals, ditches).
        
        Land with communal or worship structures.
        
        Offices or land for defense/security.
        
        Other non-taxable land per legal provisions.
      - tax exemptions and reductions
        
        Tax Exemptions
        
        land for special investment projects, educational and healthcare facilities, cultural and environmental activities
        
        land for gratitude houses
        
        land within quotas in socio-economically challenged areas
        
        land owned by impoverished households.
        
        Tax Reductions (50%)
        
        land for special projects, investments in disadvantaged areas
        
        land within quotas in disadvantaged areas.
        
        Reductions also apply to taxpayers affected by force majeure.
        
        Tax exemption and reduction principles
        
        Taxpayers eligible for both exemption and reduction will receive an exemption.
        
        For multiple reduction categories, an exemption applies.
        
        Only one property can benefit from these tax breaks.
      - Tax base
        
        Non-Agricultural Land Use Tax utilizes the valuation-based principle.
        
        Taxable value = Land area × Base price per square meter
        
        Multiple Parcels: Aggregate area of all residential parcels is taxed.
        
        Multi-Story Buildings: A specific coefficient applies.
        
        Base Price: Set by the provincial people's committee, fixed for five years.
      - Tax rates
        
        Progressive tariff for residential land (Including commercial use):
        
        0.03% within the quota.
        
        0.07% for land up to 3 times the quota.
        
        0.15% for land exceeding 3 times the quota.
        
        Multi-Story Buildings: 0.03% tax rate.
        
        Non-Agricultural Business Land: 0.03% tax rate.
        
        Commercial Use Land: 0.03% tax rate.
        
        Improperly Used/Unused Land: 0.15% tax rate.
        
        Encroached Land: 0.2% tax rate (no quota). Tax payment does not establish legal land rights.
      - Tax declaration:
        
        Annual tax declarations are required by January 30 each year.
        
        For households and individuals with unchanged taxable land, a one-time declaration is sufficient unless there are changes.
        
        Tax payments: made in two installments:
        
        the first by May 31
        
        the second by October 31
  - - - Quantity of Taxable Goods:
        
        Domestic Goods: Quantity produced, sold, exchanged, consumed, or donated.
        
        Imported Goods: Quantity of goods imported.
      - Tax Rate: Based on the absolute rate specified in the law.
    - - Absolute Tax Rate Setting:
        The Standing Committee of Vietnam’s National Assembly determines specific rates within a prescribed range.
      - Principles:
        
        Align with socio-economic development policies.
        
        Reflect the extent of negative environmental impact of the goods.
    - - Organizations, households, and individuals producing or importing taxable goods.
      - For commissioned imports, the person who entrusted the importation is the taxpayer.
      - For coal procurement hubs lacking tax proof documents, the hub is considered the taxpayer.
    - - Tax Liability Timing:
        
        Domestic Goods: Arises when goods are put into use.
        
        Imported Goods: Arises upon customs declaration registration.
        
        Gasoline & Petroleum: Arises when sold to non-subsidiary entities.
      - Declaration Schedule:
        
        Monthly basis declaration
        
        Due Date: By the 20th of the month following the tax month.
        
        Imported Goods: Declaration coincides with import duty timing.
    - - Transit Goods:
        Exempt if transported through Vietnam without import/export procedures, including under international agreements.
      - Temporary Imports:
        Exempt if re-exported within the legally prescribed period.
      - Direct Exports:
        Exempt when exported directly by producers or through entrusted export businesses.
    - - Introduced by the Law on Environmental Protection Tax No. 57/2010/QH12.
      - Enactment: Passed by Vietnam's National Assembly on November 15, 2010; effective from January 1, 2012.
    - - One-stage consumption tax: Only producers or importers pay this tax; traders are exempt.
      - Indirect Tax: The financial burden ultimately falls on consumers.
      - Targeted Goods: Applies to commodities that cause environmental harm during production and consumption, not on the pollutants themselves (when a pollutant is identified, an environmental fee is applied instead.)
    - - Petroleum
      - Coal
      - Hydrogen-chlorofluorocarbon liquids (HCFCs).
      - Plastic bags that are subject to taxation.
      - Herbicides classified as 'Restricted Use.'
      - Pesticides classified as 'Restricted Use.'
      - Wood preservatives classified as 'Restricted Use.'
      - Warehouse disinfectants classified as 'Restricted Use.
    - - Stored Goods: Imported goods in customs warehouses for re-export.
      - Export/Import Agents: Goods exported/imported through agents or sold to foreign firms’ vehicles.
      - Temporary Imports: Goods temporarily imported for re-export by businesses.
      - Re-exported Goods: Goods imported for re-export to foreign countries.
      - Trade Events: Goods temporarily imported for trade fairs, exhibitions, and product introductions, to be re-exported.
- - - - Not separate taxes, but a combination of existing taxes paid by foreign contractors
      - Mainly CIT, VAT, and PIT
      - VAT & CIT are largest components
  - - - Foreign business organizations (with or without PE in Vietnam)
      - Foreign business individuals (residents or non-residents of Vietnam)
      - Doing business or having income arising in Vietnam via contract/agreement with Vietnamese entity
      - Foreign Sub-contractors also subject to FCT
        
        Foreign business organizations/individuals doing business/having income in VN via contract with foreign contractor for part of work
      - Other Subject Entities/Individuals:
        
        (i) Foreign contractor selling goods into Vietnam under Incoterms (seller bears risk until delivery in Vietnam territory)
        
        (ii) Foreign contractors carrying out part/all of goods distribution/service provision in Vietnam (owner of goods delivered, responsible for costs, quality, pricing decisions)
        
        (iii) Foreign contractors negotiating/signing contracts with Vietnamese parties via Vietnamese organizations/individuals in foreign contractor's name
        
        (iv) Foreign contractors carrying out right to export/import/distribute goods in VN; purchasing goods for export; selling goods to Vietnamese traders under Commercial Law
      - Cases NOT subject to FCT (No FCT Filing & Payment):
        
        Foreign organizations/individuals doing business under Law on Investment, Petroleum Law, Credit Institutions Law
        
        Foreign Contractor selling goods/providing services in Vietnam under following circumstances:
        
        a) Goods delivered at a foreign border gate (seller responsible until foreign border gate, buyer from there)
        
        b) Goods delivered at Vietnam's border gates (seller responsible until VN border gate, buyer from there)
        
        c) Services provided and consumed outside of Vietnam (income from these not taxed in Vietnam)
        
        d) Provision of services abroad (specific services like repair of transport means/machinery, marketing/advertisement (not internet), investment/trade promotion, offshore brokerage, training (not online), international post/telecom provided abroad)
        
        e) Use of bonded warehouses and inland clearance depots (ICD) for supporting international transportation, transshipment, or goods storage for processing
    - - VAT taxable objects
        
        Taxable services/goods under Law on VAT consumed in Vietnam
        
        Supplied in Vietnam by FC/sub-contractor & consumed in Vietnam
        
        Supplied outside Vietnam by FC/sub-contractor & consumed in Vietnam
      - CIT taxable income
        
        Incomes arising from provision of services (including services associated with goods) by FC/sub-contractor in Vietnam
        
        All income receivable in any form based on contract, irrespective of operation location, including:
        
        Income from transfer of ownership/right to use assets
        
        Income from royalties (any form)
        
        Income from author's rights, industrial rights, technology transfer
        
        Income from assignment/liquidation of assets
        
        Interest from loans/deposits (with exceptions), late payments
        
        Income from investment/securities
        
        Fines/penalties for contractual breach
        
        Other legally stipulated income
  - - - VAT payable: Determined under credit method (like Vietnamese enterprises)
      - CIT payable: Determined based on net income (like Vietnamese enterprises)
      - Conditions for Application (all 3 must be met):
        
        Having permanent establishments (PE) in Vietnam OR being Vietnamese residents
        
        Duration of work in Vietnam >= 183 days from contract effective date
        
        Applying Vietnamese accounting standards; registered & granted Tax Identification Number
    - - VAT amount payable
        
        VAT payable = Base Turnover × Deemed VAT Rate
        
        a) Base turnover:
        
        In principle: Turnover inclusive of VAT and all other taxes payable in Vietnam
        
        If turnover is net of VAT: Convert to VAT-inclusive: Turnover exclusive of VAT / (1 - Percentage of VAT on turnover)
        
        Services associated with goods: Turnover of services for supplies in/outside Vietnam consumed in Vietnam
        
        Incoterms DDP, DAT, DAP: Goods value subject to import VAT only; services subject to FCT. VAT base is actual service turnover. If contract not separated, VAT base is whole contract turnover (goods + services).
        
        Foreign contractor subcontracting: VAT taxable turnover does NOT include value of work/machinery implemented by sub-contractor.
        
        FC purchasing from Vietnamese suppliers: VAT taxable turnover STILL includes value of goods/services purchased.
        
        Costs for internal consumption/out of FC's scope: VAT taxable turnover INCLUDES value of goods/services.
        
        International forwarding & warehousing: Excludes international freight charges payable to carriers.
        
        International forwarding & warehousing from VN to overseas: Total turnover receivable by FC, excluding international freight charges.
        
        b) Deemed VAT rates:
        
        Services; M&E leasing; insurance; construction; assembly & installation without material/M&E supply: 5%
        
        Manufacturing; transportation; services with goods supply; construction, assembly & installation with material/M&E supply: 3%
        
        Other businesses: 2%
        
        If contract has different activities: Apply rate for each activity. If not separated, highest deemed VAT rate applies to total.
        
        M&E supply with installation/training/operation/commissioning: If separable, apply rate to each part. If not separable, 3% applies to total.
    - - CIT payable = CIT Taxable Turnover × Deemed CIT Rate
      - a) CIT taxable turnover:
        
        In principle: Turnover receivable by FC/sub-contractor, exclusive of VAT and any other taxes.
        
        If turnover is net of CIT: Convert to CIT-inclusive: Turnover exclusive of CIT / (1 - CIT rate as percentage of taxable turnover)
        
        Foreign contractor subcontracting: CIT-taxable turnover does NOT include value of work/M&E implemented by sub-contractor.
        
        FC purchasing from Vietnamese suppliers: CIT-taxable turnover STILL includes value of goods/services purchased.
        
        Costs for internal consumption/out of FC's scope: CIT-taxable turnover INCLUDES value of goods/services.
        
        Lease of M&E/transport means: Total rent. If includes lessor-paid costs (insurance, freight), excludes such costs if documented.
        
        International forwarding & warehousing: Excludes international freight charges payable to carriers.
        
        International forwarding & warehousing from VN to overseas: Total turnover receivable by FC, excluding international freight charges.
      - b) Deemed CIT rate:
        
        Supply of goods in VN or associated with services in VN (including in-country import-export, distribution, Incoterms seller risk in VN): 1%
        
        Services (except restaurant, hotel, casino management, financial derivatives): 5%
        
        Leasing of machinery, equipment, drilling rigs: 5%
        
        Restaurant, hotel, casino management services: 10%
        
        Financial derivatives: 2%
        
        Construction, assembly, installation (with or without material/M&E supply): 2%
        
        Leasing of aircraft and vessels: 2%
        
        Transportation: 2%
        
        Other business: 2%
        
        Interest: 5%
        
        Re-insurance, commission for re-insurance; transfer of securities: 0.1%
        
        Income from royalties: 10%
        
        If contract has different activities: Apply rate for each activity. If not separated, highest deemed CIT rate applies to total.
        
        M&E supply with installation/training/operation/commissioning: If separable, apply rate to each part. If not separable, 2% applies to total.
    - - Combination of Declaration & Direct Methods
      - VAT payable: Determined based on credit method
      - CIT payable: Determined based on direct method
      - Conditions for Application (both must be met):
        
        Having permanent establishments (PE) in Vietnam OR being Vietnamese residents
        
        Duration of work in Vietnam >= 183 days from contract effective date
  - - - Vietnamese parties deduct & pay FCT on behalf of foreign contractors.
      - Filing & Payment Deadline: No later than 10 days from date of payment to foreign contractor.
      - Multiple payments in a month: May register to file/pay once a month (due date: 20th of following month).
      - Official declaration for each contract upon completion.
    - - VAT filing & payment: Same as other Vietnamese enterprises (Chapter 4)
      - CIT filing & payment: Same as Direct method above
  - - - Generally, foreign contractor may avoid CIT portion of FCT if from DTA country AND does NOT have a Permanent Establishment (PE) in Vietnam.
      - Reason: DTA rule typically states non-resident company taxed only in home country, unless it has a PE in the source country (Vietnam).
    - - Definition Varies: Specific list may differ per DTA, but often follows OECD/UN Model.
      - OECD/UN Model: Fixed place of business through which enterprise's business is wholly/partially carried out. "Fixed" means more than temporary.
      - Vietnam's DTAs:
        
        Some extend PE definition to "furnishing a service" (e.g., Seychelles, Sweden)
        
        Even without a fixed place, service supplied can create PE if other conditions met (e.g., service performed over 6 months by employee/personnel).
        
        Some do NOT enlarge PE definition (e.g., Malaysia, France)
        
        Less likely for foreign contractor from these countries to have PE in Vietnam for services, thus not taxed in Vietnam.
    - - Most DTAs allow foreign contractor to claim tax credit in home country for FCT (income tax portion) paid in Vietnam.
      - Principle: Elimination of double taxation.
      - Conditions: Must prove coverage by DTA & comply with DTA conditions/procedures and home country tax regulations.
- - - - Overal
        
        Taxes
        
        Personal income tax (or individual income tax) is.
        
        a direct tax levied on an individual’s income
        
        Characteristics of personal income tax: Direct tax and highly progressive.
        
        Four central concepts of personal income tax:
        
        Taxpayer: Any individual who has taxable income.
        
        Tax period: The year or period during which one’s taxable income is considered.
        
        Taxable income (gross income – thu nhập tính thuế): The total amount derived by
        
        the taxpayer during the tax period.
        
        Assessable income (Thu nhập chịu thuế): The taxable income of an individual for
        
        the period, less the total deductions allowed in that period.
      - 2.2. Scope of personal income tax
        
        Taxpayers:
        
        Being present in Vietnam for 183 days or more in a calendar year or within 12
        consecutive months counting from the first date of their presence in Vietnam
        
        Having a place of habitual residence in Vietnam, which is either a registered permanent residence or a rented house in Vietnam under a long-term lease
        
        Individuals not meeting the conditions for being tax residents but receiving income from Vietnam are considered tax non-residents in Vietnam.
        
        Types of taxpayers
        
        Individuals earning income from business
        
        Businesses with a Certificate of Business Registration: The taxpayer(s) is/are the
        
        person(s) whose name(s) is/are registered in the Certificate of Business
        
        Businesses without a Certificate of Business Registration: The taxpayer is the person conducting the business
        
        Businesses without a Certificate of Business Registration: The taxpayer is the person conducting the business
        
        Individuals earning income from asset transfers
        
        The taxpayers are the co-owners or
        co-authors who earn income from such transfers.
        
        2.3. Incomes subject to personal income tax
        
        Annual declaration (tờ khai hằng năm)
        
        Incomes from business activities
        
        a/ Incomes from goods production or trading or service provision;
        
        b/ Incomes from independent professional activities of individuals possessing practice licenses or certificates in accordance with law.
        
        Incomes from salaries and wages
        
        a/ Salaries, wages and amounts of similar nature;
        
        b/ Allowances (e.g.: defense or security allowances; hazard or danger allowances;
        
        allowances paid by the Social Insurance, etc.)
        
        c/ Remuneration of all kinds;
        
        d/ Sums of money earned for participation in business associations, boards of directors,
        
        control boards, management boards and other organizations;
        
        e/ Other monetary or non-monetary benefits received by taxpayers;
        
        f/ Bonuses, rewards, except for rewards accompanying honorary titles conferred by the State or international or national prizes; rewards for technical renovations, creations or inventions recognized by competent state agencies; rewards for detection and reporting of illegal acts to competent state agencies
        
        Special treatment income of benefit-in-kinds
        
        (1) Housing allowance
        
        2 more items...
        
        (2) Mid-shift meals allowance
        
        2 more items...
        
        (3) Overnight/ Night-shift allowance
        
        1 more item...
        
        4) Expenditure on shuttling employees.
        
        1 more item...
        
        (5) Membership fees and other expenditure.
        
        1 more item...
        
        Declaring tax when an income is earned
        
        Incomes from capital investment
        
        a/ Interests;
        
        b/ Dividends;
        
        c/ Incomes from capital investment in other forms, except for government bond interests.
        
        Incomes from capital transfer
        
        a/ Incomes from transfer of capital holdings in economic organizations;
        
        b/ Incomes from transfer of securities;
        
        c/ Incomes from transfer of capital in other forms
        
        Incomes from transfer of real estate
        
        a/ Incomes from transfer of rights to use land and assets attached to land;
        
        b/ Incomes from transfer of right to own or use residential houses;
        
        c/ Incomes from transfer of right to lease land or water surface;
        
        d/ Other incomes earned from transfer of real estate.
        
        Incomes from won prizes
        
        a/ Lottery winnings;
        
        b/ Sales promotion winnings;
        
        c/ Betting or casino winnings;
        
        d/ Winnings in prized games and contests and other forms of winning.
        
        Incomes from copyright
        
        a/ Incomes from assignment or licensing of intellectual property objects;
        
        b/ Incomes from technology transfer.
        
        Incomes from commercial franchising
        
        Incomes from inheritances
        
        inheritances that are securities, capital holdings in economic organizations or business establishments, real estate and other assets subject to ownership or use registration.
        
        Incomes from gifts
        
        Incomes from gifts that are securities, capital holdings in economic organizations or
        
        business establishments, real estate and other assets subject to ownership or use
        
        registration
        
        2.4. The computation of personal income tax liabilities
        
        TAX BASES FOR RESIDENTS
        
        Family deduction
        
        Tax deductions
        
        ▪ Compulsory insurance: Social insurance, health care insurance, unemployment insurance and insurance of occupational responsibility under the Law on Social
        
        ▪ Deductible voluntary insurance: restricted to VND 1,000,000 per month
        
        TAX BASES FOR NON-RESIDENTS
      - 2.5. Tax reduction and tax exemption
        
        natural disasters, fires, accidents or severe diseases and affecting their tax payment ability may be considered for tax reduction corresponding to the extent of damage they suffer from but not exceeding payable tax amounts.
        
        Tax payable = Total PIT liabilities – Tax reduction of the tax year
        
        2.6. Tax declaration and payment
        
        Tax collection regime:
        
        Deduction at source:
        
        the entities paying incomes to taxpayers are responsible to deduct PIT before paying salaries, wages
        
        Income paying entities must submit provisional PIT declaration forms monthly (by 20th of the month following the tax month) or quarterly (by the end of the first month of the next quarter.
        
        The deadline submit of final annual PIT return is the last day of the third month since the end of the calendar year or fiscal year.
        
        Self-payment by taxpayer:
        
        Individual must declare tax finalization if:
        
        (i) The amount of tax payable > deducted or provisionally paid amount.
        
        (ii) Taxpayer requests a tax refund or an offset of tax.
        
        (iii) Foreigner must conduct tax finalization on termination of his/her contract to work in Vietnam and before leaving Vietnam.
        
        Deadline of submission: the last day of the fourth month since the end of calendar year
        
        2.7. Tax planning
        
        Subtopic 8Main goal of tax planning: maximizing taxpayer’s total health
        
        → optimizing your tax liabilities
        
        TAX SAVING STRATEGIES
        
        Creation: take advantages of tax subsidies (e.g., moving an operation to a lower taxes jurisdiction)
        
        Conversion: change operation to a more
        
        tax-favored industry
        
        Timing: move taxable income (or tax base) to more favorable tax-accounting periods (e.g., deferring the payment until later)
        
        Splitting: spread the tax base among two or more taxpayers to take advantages of differing tax rates
        
        DEFERRING AND MINIMIZING TECHNIQUES
        
        Income splitting: divert the income to someone else, usually a family member or associate.
        
        Maximizing reliefs: make use of tax deductions (family deduction, dependent deduction...) and tax exemption
        
        Salary sacrifices: a deal between employee and employer to swap some cash salary for another type of non-cash benefit
        
        Tax-timing: choose the time for receiving salary or bonus to differ the tax liabilities
- - - - Corporate Dividends: Taxation on dividend income without relief for taxes paid by the distributing corporation, known as the "classical" system.
      - Cross-Border Income: Taxation by two or more countries on income earned by a resident of one country in another country.
    - - Tax paid in the country of residence with exemption in the country of origin.
      - Withholding tax at the source with a foreign tax credit for taxes already paid.
  - - - Eliminating Double Taxation: Ensures taxpayers are not subjected to double tax obligations.
      - Preventing Tax Avoidance and Evasion: Facilitates cooperation between countries, particularly concerning multinational corporations.
    - - Deduction of deemed tax method
        
        Principle of tax deduction:
        The hypothetical tax amount, known as the "deemed tax," is deducted from the tax owed in Vietnam. This deemed tax represents what would have been paid in the other country if not for special exemptions or reductions.
        
        Income Reporting:
        Vietnamese residents earning income in a country with tax exemptions or reductions must report that income in their Vietnamese tax filings.
        
        Limitation:
        The deducted deemed tax cannot exceed the amount of tax payable in Vietnam on that income under Vietnamese tax laws.
      - Indirect deduction method
        
        Principle of tax deduction:
        The corporate income tax paid in the other country is deducted from the tax owed in Vietnam. This applies when the Vietnamese resident controls at least 10% of the voting rights in the foreign company.
        
        Income Reporting:
        Vietnamese residents receiving income from a country where corporate income tax has already been paid must include this income in their taxable income in Vietnam.
        
        Limitation:
        The deductible amount cannot exceed the tax payable in Vietnam on that income, based on Vietnamese tax laws.
        
        Application:
        Vietnam applies the indirect tax deduction method only when required by international agreements. However, if Vietnamese law permits the deduction for income earned abroad by residents, this provision is enforced.
      - Deduction method
        
        Principle of tax deduction:
        Taxes paid in the other country are deducted from the amount payable in Vietnam.
        
        Limitation:
        The deduction cannot exceed the tax amount that would be due in Vietnam on the same income under Vietnamese tax laws.
    - - In cases where international agreements exempt foreign-sourced income from taxation in Vietnam, this income is not taxed, and previously paid foreign taxes are not deducted.
      - Single Taxation: The exemption leads to single taxation, making additional double taxation elimination methods unnecessary, as seen in scenarios like scholarships for foreign students in Vietnam.
- - - - Characteristics of taxes:
        
        Compulsory payment
        
        Indirect compensation payment
    - - Generate government revenue.
      - Adjust macroeconomic activities:
        
        Regulate the economic cycle.
        
        − Balance the labor market and control inflation.
        
        − Stimulate economic development in line with government policies.
        
        − Protect domestic industries by imposing import/export duties.
        
        − Address market failures by taxing businesses that produce negative
        
        externalities, such as pollution.
      - Reduce overall income inequality.
    - - According to tax levy:
        
        Direct tax
        
        Taxpayers pay directly to the government. Examples: Income tax, capital gains tax, land tax, etc
        
        Indirect tax
        
        Suppliers collect taxes from consumers and remit them to the government.
      - According to tax base:
        
        Income tax
        
        A tax imposed on the earnings or gains of taxpayers
        
        Property tax
        
        A tax imposed on the value of taxpayers’ property.
        
        Consumption tax
        
        A tax imposed on the value of spending on goods and services
      - According to proportion to income:
        
        Progressive tax
        
        takes a larger percentage from the
        high-income earners
        
        Regressive ta
        
        takes a larger percentage from
        low-income individuals.
        
        Proportional tax
        
        same percentage of income from
        all taxpayers.
    - - Name of the Tax: Examples include Value-added tax (VAT), personal income tax, etc.
      - Taxpayer: The individual or entity subject to the tax.
      - Tax Base: The assessed value upon which the tax is calculated.
      - Tax Rate: The percentage or amount applied to the tax base to determine the tax
      - Incentives (Additional Element): Tax reductions, exemptions, or credits.
      - Procedures: The processes for tax declaration, payment, and compliance.
      - Penalties: Sanctions for non-compliance, such as fines or legal actions.
  - - - Horizontal Equity: Taxpayers in similar financial situations should pay similar amounts
      - ■ Vertical Equity: Taxpayers with a greater ability to pay should contribute more in
      - Two key questions for tax authorities
        
        How much more should better-off taxpayers contribute?
        
        (ii) How should the ability to pay be measured?
    - - Minimization of Costs:
        
        Compliance costs for businesses and administrative costs for the government should be kept as low as possible
      - Tax Administration Efficiency:
        
        Effective management of administrative costs for tax authorities, including
        
        those related to enacting and enforcing tax laws, as well as assessing, collecting,
        
        and auditing taxes.
        
        (ii) Proficiency in preventing tax evasion and the use of tax shelters.
      - Socio-economic efficiency:
        
        The tax system should have a positive impact on the economy, minimizing distortions and deadweight losses.
        
        (ii) Efforts should be made to reduce taxpayer activities aimed at minimizing tax liabilities
        
        (iii) The tax system should be transparent and simple, enhancing understanding and compliance.
    - - The stability of a tax system is crucial for fostering long-term investments.
      - ■ A tax system that undergoes frequent and unexpected changes exposes investors to significant risk.
      - → The government must provide advance notice of any changes in tax policy
    - - Tax systems should be flexible and dynamic, allowing them to automatically adjust to changes in the socio-economic environment.
    - - (i) Tax rules should be clear and easy to understand, ensuring that taxpayers are fully aware of their obligations.
      - (ii) All tax rules and any changes must be made public.
      - (iii) Tax rules should be applied uniformly, with no exceptions.
  - - - ■ The legal exploitation of ambiguities or loopholes in tax law to reduce or defer the amount of tax payable.
    - - ■ An illegal attempt to minimize or evade paying the full tax liability.
      - ■ Tax evasion is an offense, punishable by both civil and criminal penalties.
  - - - General Departments of Taxation
        
        Provincial Tax
        Department
      - General Department of Customs
  - - - • Businesses, households, and service providers
      - • Individuals liable for Personal Income Tax (PIT)
      - • Organizations withholding or collecting taxes
      - • Foreign entities earning income in Vietnam
      - • Others with tax-related obligations or refunds
    - - For Enterprises and Cooperatives: Notify business registration authorities of changes as per legal requirements.
      - For Other Taxpayers: Notify tax offices within 10 days of any changes in declared information.
      - Required Documents for Updates:
        
        • Supplementary documents depending on the nature of the change.
        
        • Original tax registration certificate.
        
        • Tax registration adjustment form.
    - - All taxpayers are required to register for tax purposes under the Law on Tax
      - Registration Deadline: Within 10 working days from:
      - • Receipt of business certificates/licenses.
      - • Commencement of operations or arising tax liabilities.
      - • Responsibility to withhold/pay taxes or collect fees.
      - • Arising of PIT, VAT refunds, or non-agricultural land use tax liabilities.
    - - Principles:
        
        Taxpayers must:
        
        Tax declarations are submitted to the local tax authority of the taxpayer's headquarters.
        
        Overseas entities without permanent
        establishments in Vietnam engaging ine-commerce or digital services must register, declare, and pay taxes either directly or through authorized representatives as per regulations.
      - Tax Declaration Deadlines:
        
        Monthly Tax Return: 20th day of the following month.
        
        o Quarterly Tax Return: Last day of the first month of the following quarter.
        
        o Annual Tax Declaration: Last day of the first month of the calendar or fiscal year.
        
        o One-Time Tax Obligation: Within 10 days of obligation arising.
        
        o Annual Tax Finalization:
    - - Deadlines for Tax Payment:
        
        Self-Assessment Taxpayers:
        
        Corporate Income Tax (Quarterly): Payment due by the 30th day of the first month of the following quarter.
        
        Tax Calculated by Tax Authorities: Payment deadline specified in the tax notice.
      - Deadlines for Tax Payment:
        
        State Treasuries.
        
        o Tax authorities receiving the declaration dossiers.
        
        o Authorized collection organizations.
        
        o Commercial banks, credit institutions, or service providers as prescribed by law.
  - - - Taxpayers and other entities may file complaints against administrative decisions or actions by tax authorities or officials that infringe upon their lawful rights and interests.
    - - Individuals can appeal violations of tax laws by taxpayers, tax officials, or other entities. Complaints and denunciations are resolved according to relevant legal provisions.
    - - Taxpayers may challenge tax authorities' decisions and actions through legal proceedings as per administrative procedure regulations.
  - - - Comparable Uncontrolled Price Method (CUP)
      - Resale price method (RPM)
      - Cost plus method (CPM)
      - Transactional net margin method (TNM)
      - Profit split method (PSM)
  - - - The Cost-Plus Profit Method calculates the arm's length selling price or net sales
      - of a commodity, service, or asset sold to a related party by adding a gross profit
      - margin to the taxpayer's cost.
- - - - Protects Domestic Industries
      - Revenue generation
      - Anti-Dumping & Investment
    - - Associate with foreign trade activities
      - Influenced by international relations
      - Indirect Tax and regressive tax:
    - - customs duty is a tax levied on the import and export of commodities, typically collected by customs offices at ports, airports, and land frontiers.
  - - - Goods exported from the domestic market into free trade zones; goods imported from free trade zones into the domestic market.
      - Goods indirectly exported-imported
      - Goods exported and imported through Vietnam’s border and border checkpoints.
    - - Goods that are humanitarian aid or grant aid
      - Goods exported from a free trade zone to abroad; goods imported from abroad to a free trade zone and used within such free trade zone; goods transported from one free trade zone to another
      - Goods in transit
      - Exported petroleum that constitutes part of the State's severance tax.
    - - Guarantors and entities authorized to remit taxes, like customs brokers, postal services, international express mail services, and credit institutions.
      - Owners of initially tax-exempt goods later taxed due to a change in use.
      - Individuals entering or leaving Vietnam with goods, or sending/receiving goods through borders.
      - Persons buying or transporting tax-free goods sold domestically, or foreign traders allowed to export/import at border markets.
      - Entrusted exporters and importers.
      - Other cases
      - Owners of exported and imported goods.
    - - Fixed duty method
        
        Formula
        
        Fixed duty = Quantity x Fixed duty per unit x Exchange rate
      - Hybrid method
        
        Mixed duty = Proportional duty + Fixed duty
        
        Combination of both Proportional and Fixed duty method
      - Proportional duty method
        
        Formula
        
        Proportional duty = Quantity x Taxable value per unit x Custom duty rate
        
        Quantity of Goods: The actual quantity of goods imported or exported as declared in the
        customs documents.
        
        Taxable per unit
        
        Exports: The selling price at the export border (FOB), excluding international insurance and freight.
        
        Imports: The purchase price at the first border gate of entry, determined using a hierarchical sequence of six methods, stopping at the method that establishes the taxable price.
        
        Method 1 - Transaction value
        
        represents the total payment made or to be made by the buyer to or for the benefit of the seller.
        
        primary method for determining the taxable price of imported goods.
        
        Subtraction (-)
        
        Domestic freight costs
        
        Domestic taxes and fees
        
        Addition (+)
        
        Commissions and brokerage (excluding buying commissions)
        
        Packing and container charges
        
        Other payments or benefits to the seller
        
        Condition to apply
        
        no seller-imposed restrictions,
        
        no undeterminable conditions affecting the sale
        
        no proceeds from resale accruing to the seller
        
        no influence of related-party transactions on the price
        
        Method 2 - Transaction Value of Identical Goods
        
        Used if the transaction value can't be determined, based on the value of identical goods sold under similar conditions.
        
        Method 3 - Transaction Value of Similar Goods
        
        Applies if identical goods aren’t available, using the value of goods that closely resemble the imported items.
        
        Method 4 - Deductive Value
        
        Based on the domestic selling price of imported goods, deducting reasonable expenses and profits.
        
        Method 5 - Computed Value
        
        Calculates value based on production costs, profit, and general expenses from the country of export.
        
        Method 6 - Fall-Back Method
        
        Used when no other methods apply, relying on reasonable means consistent with legal principles and available data.
        
        Tax rate
        
        Export Duty Rates
        
        Defined by the Export Tax Tariffs set by Vietnam's Ministry of Finance, within limits established by the National Assembly.
        
        Import duty tax rate
        
        Preferential Tax Rates: For goods from countries with Most Favored Nation (MFN) status with Vietnam.
        
        Special Preferential Tax Rates: For goods from countries with specific trade agreements with Vietnam
        
        Ordinary Tax Rates: For goods from countries without MFN or special trade agreements, calculated at 150% of the preferential rate, or as set by the Government if the preferential rate is zero.
    - - Tax declarations
        
        Taxpayers must declare import or export taxes using customs declaration forms.
        
        Effective date for tax calculation is the date the declaration is submitted.
        
        Taxes are based on ad valorem rates, specific rates, base price, and exchange rates at assessment time.
        
        For electronic declarations, timing follows e-customs regulations set by the Ministry of Finance.
      - Tax Payment Deadline
        
        Duties must be paid before customs clearance or release, unless guaranteed by a credit institution (guarantee valid for up to 30 days).
        
        Overdue interest applies if payment is delayed past the customs clearance date.
        
        Priority-status taxpayers must pay taxes within one month by the 10th of the next month.
        
        Late payments incur overdue interest as per the Law on Tax Administration.
    - - Tax exemption
        
        Manufacturing Exemptions: Materials and components for export products or free trade zones, not incorporating imported parts.
        
        Export Processing: Raw materials and components used in export processing or products for outward processing.
        
        Low Value/Tax: Goods with customs value under VND500,000 or duties under VND50,000.
        
        International Treaties: Goods exempt under international agreements.
        
        Border Trade: Goods traded by border residents within regulatory allowances.
        
        Personal Belongings: items and gifts within tax-free allowances.
        
        Diplomatic and Duty-Free:
        
        Goods from foreign entities with diplomatic immunity.
        
        Tax-free luggage, and imports for duty-free shops
        
        Temporary Imports/Exports: Goods temporarily imported for re-export or vice versa.
        
        Non-commercial Items: Samples, promotional materials, and non-commercial goods.
        
        Investment Incentives: Fixed assets for eligible investment projects, plant varieties, and materials for incentive projects or disadvantaged areas.
        
        Medical and Environmental:Components for prioritized medical equipment, and goods for environmental protection, research, education, social security, and other specified projects.
      - Tax reduction
        
        Eligibility: Goods damaged or lost during customs supervision.
        
        Process: Reduction proportional to the damage or loss, verified by a competent authority.
        
        Responsibility: Local Customs Departments assess and decide on reductions based on the actual damage or loss.
      - Tax Refund
        
        Conditions for Refund
        
        Paid duties with no or reduced exports/imports.
        
        Export duties on goods that need to be re-imported (no import duty required).
        
        Import duties on goods that need to be re-exported (no export duty required).
        
        Duties paid on goods used for manufacturing exports.
        
        Duties on machinery/equipment temporarily imported for re-export.
        
        Refund Calculation: Based on the remaining value of the goods or their use duration. No refund if goods are unusable.
- - - - (1) Unfully deducted monthly/quarterly input VAT (credit method): Carried forward to subsequent period.
      - (2) VAT on annual goods/services for investment activities (newly incorporated businesses under investment project, oil exploration/development, registered credit method): Refundable if accumulated VAT is VND300 million or higher.
      - (3) Refund of VAT for investment projects (active businesses, credit method):
        
        (a) Same province as head office (separate declaration): Max deductible VAT = VAT payable on business activities. If remaining deductible VAT >= VND300 million, refundable. If < VND300 million, carried forward.
        
        (b) Different province from head office (new projects, separate documentation): Max deductible VAT = VAT payable on business activities. If remaining deductible input VAT >= VND300 million, refundable. If < VND300 million, carried forward. Project management boards/branches can file own claims if they meet conditions.
        
        (c) NOT eligible for refund (carry forward only):
        
        Charter capital not fully contributed.
        
        Conditional trades without satisfying business conditions/licenses/certifications.
        
        Conditional trades failing to sustain business conditions during operations.
        
        Natural resources/minerals/energy cost >= 51% of prime cost (licensed after July 1, 2016).
      - (4) Refund of tax on exported goods and services:
        
        Remaining deductible input VAT >= VND300 million (monthly/quarterly): Refundable.
        
        Remaining deductible input VAT < VND300 million: Carried forward.
      - (5) Overpaid VAT/remaining deductible input VAT upon business transfer, conversion, merger, consolidation, division, dissolution, bankruptcy, or shutdown.
      - (6) Projects/programs financed by grant ODA, grant aids, humanitarian aids.
      - (7) Entities granted diplomatic immunities and privileges.
      - (8) Foreigners and Vietnamese expatriates purchasing goods in Vietnam and carrying upon departure.
      - (9) Tax refund at discretion of competent authorities as per laws/international treaties.
    - - Responsibilities of VAT refund beneficiary
        
        Make/send accurate/truthful dossiers.
        
        Supply supplementary documents/explanations if requested.
        
        Keep full documents for inspection.
      - Tax offices' responsibilities in tax refund
        
        Collect dossiers.
        
        Examine dossiers, classify subjects, ensure strict management.
        
        Notify/return dossiers for ineligible businesses.
        
        Check figures, determine refundable amounts.
        
        Issue refund decisions.
        
        Examine/audit if doubtful signs or violations.
      - Responsibilities of State Treasuries
        
        Refund VAT to taxpayers within 3 days of receiving refund decisions.
  - - - Tax declaration for production and business activities.
        
        Obligation: File VAT declarations to tax offices (even with no turnover/tax).
        
        Dependent Units:
        
        Independent accounting: File own declarations.
        
        Dependent accounting: Head office declares for both.
        
        Outside province/city: Dependent units file own declarations (if direct sales). If no direct sales, declare at head office.
        
        Extra-provincial mobile construction/installation/goods sale: File to district-level tax departments where activity occurs.
        
        Credit Method with leftover input tax: Deduct in following tax period (regardless of calendar/fiscal year).
        
        Tax Period:
        
        Monthly basis (default)
        
        Quarterly basis: Total revenue <= VND50 billion in preceding year.
        
        Upon incurrence of tax: Extra-provincial business, casual businesspeople.
        
        Deadlines for Submission:
        
        Monthly: 20th of month following tax incurred month.
        
        Quarterly: Last day of first month of quarter following tax incurred quarter.
        
        Upon incurrence: Within 10 days since tax incurred day.
        
        Errors in declarations: Additional declaration can be filed any working day.
        
        Specific Declaration Cases:
        
        Entrusted Import (Credit Method): No VAT declaration on imported goods, but list invoices for goods delivered to entrusting parties.
        
        Both Taxable & Exempt Items (Credit Method, unseparated input VAT): Creditable input VAT based on proportion of taxable turnover to total turnover (temporary monthly, official end of year).
        
        Taxable items at government-prescribed prices with subsidies: Calculate output tax on government-prescribed prices. Subsidies not subject to VAT, included in corporate income tax.
        
        Assorted goods/services with different rates: Declare separately for each rate. If not separable, use highest rate.
        
        Gold, silver, gems (Direct Method) / Direct Method with negative added value: Negative added value carried forward to next month (for calculation), but NOT carried forward to subsequent year at finalization.
      - Declaration for imported goods
        
        Importers: Declare upon each importation (coincides with import tax declaration to customs).
    - - For production and trade establishments
        
        Tax payment deadlines:
        
        Taxpayer calculation: By last day of tax return submission deadline.
        
        Tax office calculation/assessment: As stated in tax office notices.
        
        Tax payment places and procedures:
        
        Directly at State Treasury, tax offices, authorized organizations, commercial banks, credit institutions.
        
        Cash or account transfer.
        
        Tax-receiving agencies remit to state budget within 8 working hours (5 days for remote areas).
        
        Handling of overpaid tax amounts:
        
        Offset against tax/fine arrears.
        
        Offset against payable amounts in subsequent period.
        
        Refunded if no tax/fine arrears.
        
        Currency: Vietnam dong (unless permitted foreign currency).
      - For imported goods
        
        Pay upon each importation.
        
        Deadline coincides with import tax payment deadline.
  - - - Credit Method Businesses: Use value added invoices (except special types with total payment prices).
      - Direct Method Businesses: Use normal invoices.
      - Exporters: Use export invoices.
      - Invoice Contents: Fully and correctly fill all items. Value added invoices: Before-VAT price, surcharge, VAT, total payment.
      - Special Cases:
        
        Selling exempt items/taxable to VAT-exempt entities/gold, silver, gems (Credit Method): Use value added invoices, leave tax rate/VAT blank/crossed out, state "exempt" or "sold to VAT-exempt entity".
        
        Entrusted Import (Credit Method):
        
        If entrustee paid import VAT: Make value-added invoice for consignor (basis for input tax credit).
        
        If entrustee NOT paid import VAT: Use ex-warehousing-cum-internal transport bill + internal transfer order (for circulation); make VAT invoice ONLY after paying import VAT.
        
        VAT invoice for entrusted import: Before-VAT price (CIF + import tax + excise + other), VAT rate/amount from customs notice, total payment = (i) + (ii).
        
        Entrustee also makes separate VAT invoice for commission.
        
        Internal Transfers (dependent cost-accounting establishments):
        
        Option 1: Use value added invoices (for VAT declaration/payment in each unit).
        
        Option 2: Use ex-warehousing-cum-internal transport bills + internal transfer orders; use delivery bills for agency sale + internal transfer orders.
        
        Dependent units/agents: Make invoices when selling goods, send lists of sold goods to head office for VAT invoice issuance.
        
        Direct retail/services below prescribed value: Not required to make invoices, but if purchaser requests, must issue. If no invoice, make retail lists for tax.
        
        Irregular VAT-subject activities (non-business organizations/individuals): Tax office provides separate invoices for specific cases.
  - - - Who applies this method?
        
        Businesses observing accounting, invoice, document regulations, AND:
        
        Annual revenue from goods/services sales >= VND1 billion (except business households/people using direct method)
        
        Voluntarily apply (except business households/people using direct method)
        
        Foreign entities/individuals providing petroleum exploration/extraction services (authorize Vietnamese party to deduct/pay)
      - 4.4.1.2. Determinant of VAT amount payable
        
        VAT Payable = Output VAT - Deductible Input VAT
        
        Output VAT:
        
        Base price of taxable goods/services * Applicable rate
        
        Supplier includes on invoice (before-VAT price, output VAT, total payment)
        
        If only total payment stated, calculate output VAT from total payment
        
        Wrong rates on invoices: If higher, pay at invoice rate; if lower, pay at legal rate
        
        Deductible Input VAT:
        
        Total VAT on value added invoice for purchased goods/services for production/trading (VAT-subject)
        
        VAT on import tax payment vouchers for imported goods
        
        VAT paid on behalf of foreign parties (as per MoF guidance)
        
        Special-type invoices (VAT-inclusive price): Base on VAT-inclusive price
        
        Wrong rates on invoices: If higher, deduct at legal rate; if lower, deduct at invoice rate (unless tax office certifies seller's correct declaration)
        
        Principles for Deductible Input Tax:
        
        Principle 1: Only input VAT for goods/services used for taxable production/trading is deductible.
        
        Input VAT for non-taxable (exempt) items is NOT deductible.
        
        Businesses must separate input tax for taxable vs. exempt items.
        
        If not separable: Allocate input VAT based on ratio of (turnover of taxable items + turnover of transactions exempt from declaring/paying VAT) to (total turnover).
        
        Special cases relating deductible input tax:
        
        Lost/damaged goods (natural disasters, fire, theft) with compensation identified/received: Input tax NOT deductible.
        
        Specific fixed assets (weapons, credit institutions, hospitals, civil aircraft/yachts not for commercial use): Input VAT NOT creditable, included in historical cost/deducted costs.
        
        Passenger cars (9 seats or less, not for commercial transport/tourism/hotel/trial driving) valued > VND1.6 billion: Input VAT for excess over VND1.6 billion NOT credited.
        
        Input VAT on fixed assets for worker facilities (canteen, recreation, housing, medical) in industrial parks: FULLY deductible.
        
        Input VAT on goods/services for humanitarian aid/non-refundable aid: FULLY deductible.
        
        Input VAT on goods/services exempt from declaring/paying VAT: FULLY deductible.
        
        Corporation offices/subsidiary administrative/non-business units (hospitals, schools) not liable to pay VAT: NOT entitled to credit input tax or refund.
        
        Principle 2: Deductible input VAT arises in the period is declared for credit immediately.
        
        Regardless of delivery for use or still in stock.
        
        If not declared in period, accepted for deduction in following period (unless tax audit announced).
        
        Conditions for Deductibility (all 3 must be met):
        
        Condition 1: Establishment registered to pay VAT under credit method.
        
        Condition 2: Purchase supported with legitimate invoices/vouchers.
        
        Illegal invoices: VAT non-deductible (e.g., no VAT amount, incorrect seller info, fake, erased, false, value not true).
        
        Condition 3: Non-cash payment for purchases of VND20,000,000 or more.
        
        Exported goods with customs certification but no bank payment proof: No output tax, no input VAT deduction.
        
        Export services without bank payment proof: No output tax, no input VAT deduction.
        
        Transitionally processed/on-spot exported goods lacking documents: Calculate/pay VAT as domestic sale.
    - - For trading of gold, silver, and gemstones:
        
        VAT Payable = Added Value × 10%
        
        Added Value = Selling Price - Cost of Gold, Silver, Gemstones Sold (both VAT-inclusive)
      - Cases in which VAT is calculated by directly multiplying a rate (%) by the revenue
        
        VAT Payable = Taxable Revenue × Deemed VAT Rates
        
        Who applies:
        
        Companies/cooperatives with annual revenue < VND1 billion (except those voluntarily applying credit method)
        
        Business households/businesspeople
        
        Foreign entities doing business in Vietnam without Investment Law compliance
        
        Organizations failing accounting/invoicing practice (except petroleum exploration/extraction)
        
        Taxable Revenue: Total revenue from selling goods/services, inclusive of surcharges
        
        Deemed VAT Rates:
        
        Goods distribution/supply: 1%
        
        Services/construction (exclusive of building materials): 5%
        
        Manufacturing, transport, services with goods, construction (inclusive of building materials): 3%
        
        Other lines: 2%
        
        If multiple lines: Sorted by rate, or highest rate applies if not sorted.
        
        Flat-rate business households/people: Depends on declaration, tax authority data, investigation, Tax Advisory Council.
        
        Multiple business lines (flat rate): Rate on primary business line.
  - - - Organizations & individuals producing/trading VAT-subject goods/services in Vietnam
      - Importers
      - Organizations/individuals purchasing services overseas subject to VAT
    - - All goods and services for production, business, consumption in Vietnam (including imported)
      - Exceptions: Non-taxable/Exempt items
    - - Necessities (e.g., education, health)
      - Social & Charity objectives (e.g., humanitarian aid, gifts, personal effects within diplomatic/duty-free limits)
      - Products of Preferential Fields (e.g., unprocessed agricultural products, seeds)
      - Imported goods not for use in VN (e.g., transit goods, temporary import/export for re-export, raw materials for export production)
      - Non-profit aims (e.g., public bus transport, some cultural services)
      - Government-paid goods/services (e.g., imported weapons, state broadcast)
    - - Monetary compensation, bonus, allowance, emission permit transfer, other non-sales revenues
      - Internally circulated goods (supplies/semi-finished products for own operation)
      - Transfer of depreciated in-use assets between related entities for VAT-subject activities
      - Purchase of services from foreign entities/non-resident overseas individuals (e.g., repair, advertising, training outside VN)
      - Non-business organizations/individuals selling their assets
      - Companies/cooperatives using credit method selling unprocessed/preprocessed farming products to other companies/cooperatives
      - Entities transferring investment projects for VAT-subject activities to other companies/cooperatives
      - Revenue from goods/services sold by agents, commissions paid to agents (specific types like postal, lottery, air tickets, insurance)
    - - Definition: Total revenue received/receivable, exclusive of VAT
      - Specific Determinations:
        
        Imported Goods: Import duty base price + Import duty (if any) + Excise duty (if any) + Environmental protection tax (if any)
        
        Services by Foreign Parties: Service price payable by Vietnamese parties
        
        Subject to Excise Duty: Price inclusive of excise duty (exclusive of VAT)
        
        Subject to Environmental Protection Tax: Price inclusive of EP tax (exclusive of VAT)
        
        Subject to both: Price inclusive of both (exclusive of VAT)
        
        Barter/Presents/Gifts/Salary Payments: Price of same/equivalent types at time of activity
        
        Sales Promotion (conformable with law): Zero (0)
        
        Sales Promotion (not conformable): Treated as presents/gifts/donated
        
        Internal Consumption (not for production): Selling price of same/equivalent types at time of consumption
        
        Leasing Services: Rent exclusive of VAT (installments/prepaid based on contract/prescribed bracket)
        
        Installments/Deferred Payment: Lump-sum price exclusive of VAT (excluding interest)
        
        Goods for Processing: Total processing expenses (labor, fuel, materials, other processing expenses) exclusive of VAT
        
        Ocean Shipping Agency/Brokerage/Export-Import Entrustment: Earned remuneration/commission exclusive of VAT
        
        Transportation/Loading/Unloading: Freight/charges exclusive of VAT
        
        Specific Nature Goods/Services (tickets, stamps with VAT-inclusive price): (Payment Price) / (1 + Tax Rate)
      - Additional Fees/Surcharges: Included in base price (excluding state budget remittances)
      - Discounted Sale Prices: Discounted prices on invoices
      - Time of Determination: When ownership/right to use is completely transferred
      - Tax Rates
        
        3 Rates: 0%, 5%, 10%
        
        0% Rate
        
        Applicable to: Exported goods/services, construction/installation overseas & in free trade zones, international transport
        
        Exported Goods: Goods exported overseas, sold to non-tariff zones, delivered outside VN, parts for foreign entities' repairs, etc.
        
        Conditions: Bank receipts, legitimate economic contract, customs declaration
        
        Exported Services: Services to overseas organizations/individuals consumed overseas; services to non-tariff zones consumed within
        
        Conditions: Contracts with overseas purchasers, bank receipts
        
        Exceptions (0% NOT applicable): Exported credit/derivatives, overseas reinsurance, royalty/copyright transfer overseas, outcoming telecom/post service overseas, unprocessed mineral resources, goods/services to non-business households in non-tariff zones, re-exported tobacco/alcohol (input VAT not deductible), automobiles to non-tariff zones, gasoline in domestic market to non-tariff zone entities, specific services in non-tariff zones (leases, transport, food/drink except catering)
        
        5% Rate
        
        Applicable to: Goods/services basically used for production/consumption (e.g., clean water, medicines, teaching aids)
        
        10% Rate
        
        Applicable to: Goods/services not listed in 0% or 5% categories
  - - - Derived from turnover tax
      - Proposed by Carl Friedrich von Siemens (1917)
      - First applied in France (1954, officially 1968)
      - Helped increase revenue & prevent double taxation
      - Applied in over 130 countries
    - - Multi-phased consumption tax
        
        Imposed at all phases of production/distribution
        
        Charged only on added value of each phase
        
        Consumption tax - ultimately borne by end consumer
        
        Added Value Calculation
        
        Addition Method: Profit + Wages
        
        Deduction Method: Selling Price - Purchase Price
    - - Not a cost to seller
      - Collected via deduction system (output tax - input tax)
      - Ensures neutrality regardless of transactions
    - - Legal payers: Suppliers
      - Tax burden: Consumers (shifted via price
    - - Same VAT amount paid regardless of income
      - Less effect on high-income group
    - - Act of VAT (Law on VAT) enacted 1997, effective Jan 1, 1999
      - Revised in 2003, 2005, 2008, 2013, 2014, 2016
- - - - Revenue generation (significant for developing countries)
      - Promote efficiency in resource allocation (internalize social costs of excessive consumption/production)
      - Achieve equity in distribution (higher tax on goods disproportionately consumed by the rich)
    - - Tax imposed on certain special goods and services imported or produced within a country
    - - Firstly: One-stage consumption tax
        
        Contrasts with multi-stage taxes (VAT, turnover tax)
        
        Charged at either production or importation (goods) or supply (services)
        
        Paid by producers or importers, not distributors/retailers
      - Secondly: Narrow scope
        
        Small number of excisable goods/services
        
        Normally luxurious, or harmful to environment/human health
        
        Examples: cosmetics, air-conditioners, passenger vehicles, liquors, cigarettes, massage, casino
        
        Categories vary by country based on government viewpoint
      - Thirdly: Higher rates than other sales taxes
        
        Justification: Achieve aims more effectively
        
        Collect large revenue
        
        Promote distributional equity (on luxury goods)
        
        Reduce production/consumption of harmful goods
  - - - Organizations and individuals (establishments) that:
        
        Produce and/or import goods subject to excise duty
        
        Provide services subject to excise duty
      - Exporters who purchase excisable goods from producers for export but then sell domestically shall pay excise tax.
      - Principle: Producer and/or importer of excisable goods, and provider of excisable services.
    - - Goods (11 items/groups):
        
        Cigarettes, cigars, processed tobacco products
        
        Liquors
        
        Beers
        
        Under-24-Seat passenger vehicles (automobiles), semi-passenger automobiles
        
        Airplanes
        
        Yachts
        
        Gasoline of various kinds
        
        Air conditioners of a capacity of 90,000 BTU or less (even if parts sold/imported separately)
        
        Playing cards
        
        Votive gilt paper, votive objects
        
        Motors with cylinder capacity of over 125 cm3
      - Services (6 items):
        
        Dancing halls (Discotheques)
        
        Massage parlors, karaoke bars
        
        Casinos, electronic games with prizes
        
        Betting tickets business
        
        Golf business (sale of membership cards, playing tickets)
        
        Lottery business
      - General characteristic: Mostly luxurious or harmful to environment/health.
    - - Goods/services not listed as excisable are inherently non-taxable.
      - Specific excisable goods transactions NOT subject to excise duty:
        
        Exported goods (including under entrustment, or sold to trading company for export)
        
        Importation of goods for:
        
        Humanitarian aid, non-refundable aid, gifts for state/political/social organizations/armed forces
        
        Diplomatic immunities, personal effects within duty-free quotas
        
        Transshipped, transited, or transported through Vietnam's border
        
        Temporarily imported for re-export, or temporarily exported for re-import (during duty-free period)
        
        Duty-free sale under regulations
        
        Specialized passenger vehicles (ambulance, criminal, funeral, mobile TV, radio signal test, armored, under-24-seat with standing places, other specialized cars)
        
        Aircraft and passenger boats sold for goods/passengers carrying and tourist business
        
        Aircraft used for specific purposes (firefighting, pesticide, maps, filming, security, defense)
        
        Air conditioners (90,000 BTU or less) designed for parts of transport vehicles (coaches, buses, cars, aircraft, train, boats, ships)
        
        Reformate components, condensate, naphtha directly imported by producers for non-gasoline products
        
        Importation into non-tariff zones, sale from domestic market into non-tariff zones for use only in non-tariff zones (except under-24-seat passenger vehicles), transport between non-tariff zones.
      - Rationale: Goods not actually consumed in Vietnam, socio-economic reasons, international practices, or scope adjustments.
    - - Principle: Selling price exclusive of excise duty, exclusive of VAT, and exclusive of environmental protection tax (if any).
      - Specific Cases:
        
        Imported goods sold domestically by importer & domestically made goods:
        
        Base Price = (Selling price exclusive of VAT - Environment tax (if any)) / (1 + Excise duty rate)
        
        Imported goods at importation:
        
        Base Price = Import tax base price + Import tax
        
        (Import tax base price from import/export duty law; if exempted/reduced, exclude that amount)
        
        Goods sold under deferred/installment plan:
        
        Lump-sum selling price exclusive of VAT, EP tax (if any), and excise tax; exclusive of interest.
        
        Exporter buys excisable goods from manufacturer & sells domestically (instead of exporting):
        
        Base Price = (Selling price exclusive of VAT - Environment tax (if any)) / (1 + Excise duty rate)
        
        Services:
        
        Base Price = (Before-VAT price of services) / (1 + Excise duty rate of goods)
        
        Special Services:
        
        Dance halls: Before-VAT price exclusive of excise duty, includes tickets & all goods sold (beers, alcohol, cigarettes, juice, etc.)
        
        Entertainment with bet tickets: (Sales from bet tickets) - (Prize paid to winners)
        
        Golf business: VAT-exclusive revenue from membership cards & golf tickets (includes training, maintenance, buggies, caddies, deposits). Excludes hotel, F&B, other non-excisable sales.
        
        Goods/services for exchange, internal consumption, gift, sales promotion:
        
        Base price of same/equivalent type at time of activity.
      - Inclusions: Surcharges received by businesses.
      - Currency: Vietnam dong (convert foreign currencies at real exchange rate at turnover generation).
    - - Rates vary widely (150% highest, 5% lowest).
      - General principle: Higher for more luxurious or environmentally harmful items.
      - (Table of rates as provided in the text, too long to list here in detail)
        
        Examples: Cigarettes (75%), Liquors (20°+ 65%, <20° 35%), Beer (65%), Cars (9 seats: 1500cc- 35%, 6500cc+ 150%), Electric Cars (9 seats: 15%), Motorbikes >125cc (20%), Air conditioners 90,000 BTU- (10%), Playing cards (40%), Dancing halls (40%), Massage/Karaoke (30%), Casino (35%), Golf (20%), Lottery (15%).
    - - Subject for excise tax deduction
        
        Taxpayers producing excisable goods from excisable raw materials.
        
        Importers selling excisable imported goods domestically (deduct tax paid at importation).
      - Determination excise tax deduction amount
        
        For raw materials from domestic producers:
        
        Excise tax paid by buyer = Taxable price × Excise duty rate
        
        Taxable price = [VAT exclusive buying price - Environmental protection tax (if any)] / (1 + Excise tax rate)
        
        Deductible amount = Payable excise tax OR paid excise tax on quantity of materials used for goods sold in period.
    - - For goods imported:
        
        Excise duty payable = Base price of goods imported × Tax rate
      - For goods/service sold in domestic market:
        
        If no tax deduction:
        
        Excise Duty payable = Base price of goods/service × Tax rate
        
        If there is tax deduction:
        
        Excise tax amount payable = (Excise tax for excisable goods sold in period) - (Excise tax paid at importation OR excise tax paid for excisable material used)
        
        Deductible excise tax corresponds to excisable items sold during the tax period.
    - - Tax declaration
        
        Self-assessment system. Taxpayers calculate amounts.
        
        File excise duty returns to tax offices.
        
        Monthly basis.
        
        Deadline for filing: 20th day of the month following the tax liability month.
        
        Imported goods: Same deadline as import duty declaration.
        
        Dependent units:
        
        Same province/city: File to tax authorities in charge of them.
        
        Outside province/city: Dependent units file to tax authorities in charge of them.
        
        No fixed place of business/households (construction, transport, self-employed): File to district-level tax departments where activities are conducted or they reside.
        
        Start-up businesses/dependent units: Last day of month of business operation commencement.
        
        Exporter buys excisable goods from manufacturer for export but sells domestically: Must declare and pay excise duty.
      - Tax payment
        
        Deadline: Due date of filing tax declaration form (monthly: 20th day of following month).
        
        Imported goods: Same as import duty.
        
        Currency: Vietnam dong (convertible foreign currencies permitted).
    - - Excisable goods producers facing difficulties from natural disasters, enemy sabotage, or accidents.
      - Reduction amount: Corresponding to loss, up to 30% of excise duty payable for the tax year.
      - Exemption: If loss is severe and establishment cannot continue operation or afford to pay tax.
- - - - Mục đích
        
        Tăng Ngân sách nhà nước
        
        Điều tiết vĩ mô
        
        Khuyến khích đầu tư trong nước
        
        Tạo sự công bằng xã hội
      - Core of tax base
        
        profit from business + other incomes
      - Four main characteristics corporate income tax
        
        Direct tax
        
        less sensitive than personal income tax
        
        pay tax are stockholders
        
        CIT is not neutral
        
        it depend on the profitability
        
        double taxation.
        
        regarded as withholding of personal income tax
  - - - Taxpayers
        
        Taxpayers are goods and service production and business organizations which
        
        have taxable incomes under the provisions of this Law (below referred to as enterprises),
        
        including:
        
        a) Enterprises established under Vietnamese law;
        
        b) Enterprises established under foreign laws with or without Vietnam-based permanent
        
        establishments;
        
        c) Organizations established under the Law on Cooperatives;
        
        d) Non-business units established under Vietnamese law;
        
        e) Other organizations engaged in income-generating production and business activities
      - Tax period:
        
        Tax period is the calendar year or fiscal year of the enterprises if it is different from
        
        If the first tax period or last tax period is less than 3 months, enterprises are allowed to
        
        When enterprises change their tax period, the cumulated period must not exceed 12
        
        Enterprises change their tax period during preferential CIT time have the right to choose:
        
        a) Preference in the year of change
        
        b) Payment of tax at the ordinary rate in the year of change and enjoy tax preference
        
        from the next year.
  - - - subsidies and surcharges enjoyed by enterprises
      - excluded
        
        Quality discount, good returns and price reduction
        
        Triết khấu thương mại
        
        Giam giá bán hàng
        
        hàng bán bị trả lại
        
        cash discount and discount for early payment (sale discount) are not subtracted from the
    - - Base turnover – Some specific cases
        
        Installment sale
        
        Bán hàng
        
        turnover is lump-sum price, excluding interest on deferred payment.
        
        Donh thu chịu thuế là 100.000 đ
        
        Internal transaction or barter transaction
        
        Trao đổi giao dịch nội bộ
        
        Công ty A đổi 1 tấn gạo cho công ty B lấy 500 lít dầu ăn.
        
        Nếu giá bán thị trường 1 tấn gạo tại thời điểm đó là 12 triệu VND
        
        ➡️ Doanh thu tính thuế = 12 triệu VND
        
        Goods processing activities
        
        Chế biến hàng hóa
        
        Property leasing activities
        
        cho thuê tài sản
        
        Base turnover per year is the advance-paid rent divided by contract years.
        
        Phân bổ theo từng năm
    - - Base turnover is the total amount of advance-paid rent recorded for the year of
    - - Ghi nhận một lần toàn bộ trong năm nhận tiền
      - Foreign enterprises permanent establishments
        
        Subtopic 1
    - - Deductible expenses
        
        They are actual expense used for generating income or for business purpose.
        
        They are proved by legitimate source documents.
        
        They are non-cash payment with total payment exceed VND 20 millions
      - Non-Deductible expenses
        
        Expenses that do not match with base turnover under matching principle
        
        Subtopic 1
        
        Capped expenses: For some expenses, a ceiling are imposed, and the excessive
      - amount is not deductible
        
        Trang phục cho nhân viên
        
        5tr/ người/ năm
        
        Bảo hiểm nhân thọ
        
        3tr/ người
        
        Phụ cấp ăn trưa
        
        1tr/người
    - - Specific expenses
        
        Depreciation and amortization
        
        Chi khấu hao tài sản đôi với tài sản cô diinhj không sử dụng cho hoạt động kinh doanh sản xuất
        
        Chi phí với tài sản cố định không có giấy tờ
        
        Không theo chế độ quản lý tài sản hiện hành
        
        Trích khấu hao vượt mức quy định của bộ
        
        Các cách khấu hao
        
        Khấu hao theo đường thẳng
        
        Khấu hao theo số dư giảm dần
        
        Khấu hao theo số lượng sản phẩm
        
        Trích khấu hao 1.6 tỷ/ xe với xe 9 chỗ
        
        Khấu hao với tài sản cố định đã khấu hao hết giá trị
        
        Khấu hao cho tài sản công trình sử dụng cho mục đích khác
        
        Material costs
        
        Mức tiêu hao nguyên vật liệu hợp lý trong 3 tháng / vượt quá mức tiêu hao hợp lý
        
        Chi phí không có hóa đơn
        
        Chi tiêu tiền lương/ công nhân
        
        Không có hóa đơn
        
        Không mang tính chất lương thưởng
        
        Chi trang phục/ hiện vật không có hóa đơn
        
        Chi thưởng sáng kiến, cải tạo ko có kế hoạch cụ thể
        
        Chi bảo hiểm nhân thọ
        
        Chi phụ cấp đi lại ko đúng quy định
        
        các khoản chi ko đúng đối tượng
        
        Trích nộp kinh phí vượt mức
        
        Chi trả các khoản điện nước không đúng quy định
        
        Chi trả chi phí thuê tài chính vượt mức
  - - - Các khoản lỗ chuyển tiếp 5 năm
    - - Trừ vào thu nhập chịp thuế các năm tiếp
    - - Các khoản lỗ chuyển toàn bộ hoặc liên tục
  - - - (cont.) The preferential tax rate of 10% for fifteen (15) years is applicable to:
        
        • Localities with exceptionally difficult socio-economic conditions
        
        • Economic or high technological zones
        
        • Fields of high technology, scientific research and technology development
        
        • Investment in especially important infrastructure of the government
        
        • Software production
      - The preferential tax rate of 10% is applicable throughout the operation duration to:
        
        Enterprises engaging in socialization fields such as education training, health care, culture, sport and environment
        
        • Incomes of enterprises prom project on social housing business as stipulated by law
        
        • Incomes of press agencies and publishing agencies in accordance with the Press Law and Publishing Law.
        
        • Income of the enterprises from planting, tending and protecting forests; farming and
        
        processing agricultural and aquatic products in area with difficult socio-economic conditions.
      - The rate of 15% applicable to incomes from farming, breeding and agricultural processing products
        of enterprises that are not located in area with difficult socio-economic conditions.
      - The preferential tax rate of 20% (or 17% from January 1, 2016) is applicable to cooperatives and
        people’s credit funds.
    - - Tax exemption for 4 years and 50% reduction of payable tax amounts for 9 subsequent years are
        applicable to enterprises from the implementation of new investment projects engaged in:
        
        i. Localities with exceptionally difficult socio-economic conditions
        
        ii. Economic or high technological zones
        
        iii. Fields of high technology, scientific research and technology development
        
        iv. Investment in especially important infrastructure of the government
        
        v. Software production, education, training, healthcare, culture, sport and environment
    - - Business establishments that engaged in production, construction or transportation activities and
        recruit female labors can enjoy corporate tax reduction corresponding to the amount of extra
        expenses for the female labors.
      - Corporate income tax reduction is applicable to business establishment employing a large ratio of
        minority corresponding to the amount of extra expenses for minority labors.
  - - - Annual declaration: applicable to all business.
      - Monthly declaration: applicable to business that can determine base turnover but cannot
        determine expenses.
      - Declaration for each transaction: applicable to irregular operation.
      - Final declaration at the termination of business operation or contracts, transformation of
        corporate ownership or reorganization