Bản dịch văn bản 37/TC-TCT
Circular 37/TC-TCT
Cơ quan ban hành: Bộ Tài chính
Ngày ban hành: 1995-05-10

CIRCULAR No CIRCULAR No.37-TC/TCT ON THE 10th OF MAY 1995 PROVIDING GUIDELINES ON TAX REGULATIONS APPLICABLE TO FOREIGN ECONOMIC ORGANIZATIONS AND INDIVIDUALS DOING BUSINESS IN VIETNAM OUTSIDE THE FOREIGN INVESTMENT FORMS PROVIDED FOR BY THE LAW ON FOREIGN INVESTMENT IN VIETNAM Pursuant to the Laws and Ordinances on Taxes in force; Pursuant to the Decrees of the Government providing detailed guidance for the implementation of the Laws and Ordinances on Taxes in force; Pursuant to Decree No.178-CP on the 28th of October 1994 issued by the Government on the tasks, powers and organization of the Ministry of Finance; The Ministry of Finance provides the following guidelines on tax regulations applicable to foreign economic organizations and individuals doing business in Vietnam outside the foreign investment forms provided for by the Law on Foreign Investment in Vietnam: I. SCOPE OF REGULATION : 1. Tax obligations provided for in this Circular apply to all foreign organizations and individuals doing business in Vietnam outside the foreign investment forms provided for by the Law on Foreign Investment in Vietnam with the status of a Contractor for Vietnamese organizations and individuals or a Sub-contractor. This Circular is not applicable to the following subjects: - Foreign organizations or individuals having revenues brought about by copyright payments provided for in the Ordinance on Transfer of Foreign Technology to Vietnam on the 5th of December 1988 and the Regulation on Licensing attached to Decree No.201-HDBT on the 28th of December 1988 of the Council of Ministers, shall have to pay copyright tax in accordance with the guidelines of Circular No.08-TC/TCT on the 5th of February 1994 of the Ministry of Finance; - Petroleum Contractors entering into contracts to explore and exploit oil and gas in Vietnam under Section 8, Article 3 of the Law on Oil and Gas; - Foreign individuals working in Vietnam on the basis of labor contracts with Vietnamese organizations and individuals, or foreign individuals assigned by foreign organizations or individuals to work in Vietnam and receive salary or allowances for their work. These persons shall have to pay personal income tax in accordance with the Ordinance on Income Tax for High Income Earners; - Purely commercial contracts entered into by Vietnamese buyers and foreign sellers. 2. In this Circular, the following terms shall have the following meanings: - "Contractor" refers to a foreign organization or an individual doing business or providing services in Vietnam on the basis of contracts (outside foreign investment forms provided for by the Law on Foreign Investment in Vietnam) entered into with a Vietnamese organization or individual (hereafter referred to as "Vietnamese Contractual Party"); - The term "Contractor" also designates foreign organizations and individuals providing "oil and gas services" in accordance with the Law on Oil and Gas; - The term "Sub-contractor" refers to an organization or an individual providing services for the Contractor or performing part of the Contractor's work. - The term "Vietnamese Contractual Party" designates: + an organization or legal entity established in accordance with Vietnamese law; + joint venture enterprises, enterprises with 100 per cent foreign-owned capital, and parties to a business co-operation contract operating under the Law on Foreign Investment in Vietnam; + oil and gas Contractors who have entered into "oil and gas contracts" in accordance with the Law on Oil and Gas; + joint venture banks and branches of foreign banks in Vietnam licensed by the State Bank of Vietnam; + branches of foreign companies licensed to operate in Vietnam; + foreign organizations based in Vietnam; + Vietnamese individuals. - "Contractor's Contract" is a contract entered into by the Contractor and the Vietnamese Contractual Party; - The "Sub-contractor's Contract" is a contract entered into by the Sub-contractor and Contractor. 3. In case an international treaty, convention or commitment which the State or Government of Vietnam has signed with international organizations or other States or Governments provides otherwise concerning matters in this Circular, that treaty, convention or commitment shall prevail. II. APPLICABLE TAXES: 1. Turnover Tax: The Contractor or Sub-contractor who earns a turnover from their operations in Vietnam shall have to pay turnover tax in accordance with the provisions of the Law on Turnover Tax. 1.1. Taxable Turnover : Taxable turnover is the turnover earned by the Contractor or Sub-contractor from their operations in Vietnam in accordance with the principles stipulated in the Law on Turnover Tax and other legal documents guiding the implementation of this Law. - In case the Contractor enters into a contract with the Sub-contractor to perform part of the Contractor's work under the contract with the Vietnamese Contractual Party, the taxable turnover of the Contractor shall not include the value of the contract executed by the Sub-contractor. The Sub-contractor shall have to pay tax on the whole value of the contract entered into with the Contractor. The Contractor is, for his part, responsible for requiring the Sub-contractor to provide a copy of the receipt of the tax already paid by the Sub-contractor which shall be produced to the tax collection agency having jurisdiction over the Contractor. If the above-mentioned receipt is not produced, the Contractor has to pay tax on the whole value of the contract. - In case the Contractor or Sub-contractor executes a construction contract including the installation of machinery and complete equipment, the taxable turnover on the construction shall not include the value of the machinery and equipment installed. - If the Contractor's contract or Sub-contractor's contract does not clearly specify the place where the business or service activities of the Contractor or of the Sub-contractor are performed (in Vietnam or a foreign country), the taxable turnover is the whole turnover earned under the contract. - In case the Contractor enters into partnership with a Vietnamese economic organization or individual to jointly sign and implement (in the form of partnership) a Contractor's contract and the turnover arising out of the Contractor's contract is shared proportionally to the percentages(%) contributed to the parties to the partnership, the taxable turnover of the Contractor is the turnover distributed to the Contractor in accordance with the above proportion (the turnover not yet deducted of any expenses). - In case the Contractor enters into partnership with a Vietnamese economic organization or individual to execute the Contractor's contract in the form of profit sharing or turnover sharing after deducting expenses, the taxable turnover of the Contractor is calculated according to the proportion agreed upon in the contract based on the total turnover resulting from the implementation of the contract. 1.2. Turnover Tax Rates: Turnover tax rate for each kind of business or service shall apply according to the Turnover Tax Bracket attached to Decree No.55-CP on the 28th of August 1993 of the Government providing details for the implementation of the Law on Turnover Tax, and other documents of the Government on turnover tax rates. With regard to oil and gas service activities, the Ministry of Finance, pursuant to Decree No.55-CP on the 28th of August 1993 of the Government provides the following guidance: PRIVATE No.ActivitiesTax Rates1Rental services such as drilling platforms, drilling ships, seismic ships, planes, equipment, facilities and other means (except rental means specified at Section 10, Part VI, Turnover Tax Bracket):2Technical services : seismic activities,, construction geology,, bedrock testing, cement pumping, document analysis in Vietnam: 4%3Services to supply water, food and food-stuff:4Services to supply material, chemical products, cement, drilling solutions, derricks, drilling jumper and crane: 2%5Consultants, advice, construction supervision, labor supply services:4%6Medical insurance services:4%7Other oil and gas services:4% 2. Profit Tax: Profits earned by the Contractors and Sub-contractors from the execution of the Contractor's or Sub-contractor's contracts, are subject to the profit tax in accordance with the Law on Profit Tax. Profit tax rates are prescribed in Article 10 of the Law on Profit Tax. In order to collect and pay the tax conveniently, the Ministry of Finance prescribes the taxable profits based on the percentages of the turnover derived from the execution of the contract according to each kind of business. The detailed rates are prescribed as follows: PRIVATE No.OperationsTaxable profits based on turnover (%)Tax rates of profit tax bracket under the Law on Profit Tax (%)Equivalent payable profit tax based on turnover (%)Operation in the fields with a profit tax rate of 25%: construction, transportation (not including transportation activities of foreign ships subject to applicable fees in accordance with Circular No.85-TC/TCT on the 24th of October 1994 of the Ministry of Finance): 8% 25% 2%Operation in the fields with a profit tax rate of 10% 35% 3.5%Operation in the fields with a profit tax rate of 45%: Oil and gas services: 14% 10% 45% 45% 6.3% 4.5% 3. Other taxes such as import-export tax, personal income tax, copyright tax, ...shall be paid in accordance with the current stipulations on taxes. III. PROCEDURES FOR TAX DECLARATION AND PAYMENT 1. Procedures for tax registration: - Within 10 days after signing the contract with the Contractor, the Vietnamese Contractual Party shall declare and register the operation of the Contractor and Sub-contractor in Vietnam under the contracts entered into with the Vietnamese Contractual Party at the tax agency at the place where the head office of Vietnamese Contractual Party is located. Registration procedures shall include: + A tax payment declaration. + A copy of the Contractor's and Sub-contractor's contract in Vietnamese. With regard to the oil and gas service contracts or contracts having technical contents, a summary of the contract's main contents can be submitted concerning operations implemented in accordance with the contract, the mode of payment, contract duration, rights and obligations of the contracting parties. + Other documents as required by the tax agency (if necessary). + In case the Contractor or Sub-contractor wishes to pay tax directly to the tax agency, an application for a direct tax payment shall be enclosed. Within 10 days after receiving the application for tax registration, the local tax agency shall have to inform the Vietnamese Contractual Party of the tax payment procedures for the Contractor and Sub-contractor such as tax payment time-limit, budget account at the State Treasury, and inform the Contractor, Sub-contractor and the Vietnamese Contractual Party whether or not it approves the Contractor's or Sub-contractor's direct tax payment, and the reason in case of refusal; - The Vietnamese Contractual Party is empowered by the Ministry of Finance to deduct and remit the amount of tax of the Contractor and Sub-contractor to the State budget on their behalf. With regard to the Contractor and Sub-contractor operating in the field of oil and gas, the Ministry of Finance may empower the Vietnam Oil and Gas Corporation to collect the taxes (except when the Contractor or Sub-contractor is allowed by the tax agency to pay tax directly to the tax agency as stipulated in this Circular). 2. Procedures for tax declaration and payment: 2.1 With regard to the Vietnamese Contractual Party empowered by the Ministry of Finance to deduct tax for the Contractor and Sub-contractor: - For each payment under the Contract to the Contractor and /or Sub-contractor, the Vietnamese Contractual Party shall declare the payable amount of tax to the tax agency and shall have to deduct the payable amount of the turnover and profit taxes of the Contractor or Sub-contractor and remit them to the State Treasury in accordance with guidelines provided by the tax agency within 5 days after payment to the Contractor and/or Sub-contractor. In case the declaration or calculation of the payable tax is found incorrect, the tax agency shall notify the Vietnamese Contractual Party of the payable amount of tax within 5 days. - 10 days at the latest after termination of the Contractor's or Sub-contractor's contract, the Vietnamese Contractual Party shall have to calculate with the tax agency the actually payable amount of tax in accordance with the termination of the contract. - In case the payable amount of tax at the time of calculation is bigger than the amount of tax already paid, the Vietnamese Contractual Party shall have to pay the deficient amount to the State budget within 5 days from the date of tax calculation. - In case the payable amount of tax, at the time of calculation, is smaller than the amount of tax already paid, the Ministry of Finance shall reimburse the excess amount to the Vietnamese Contractual Party. To certify the reimbursement of the difference, the Vietnamese Contractual Party shall submit to the Ministry of Finance the following documents: + A calculating report on the termination of the contract; + A confirmation by the local tax agency of the payable amount of tax and the amount of tax already paid for the whole contract; + An official letter of the Vietnamese Contractual Party proposing reimbursement for the excess amount; + A confirmation by the State Treasury office of the amount of tax already paid. - Within 30 days after receiving the above file, the Ministry of Finance shall reimburse the excess amount to the account of the Vietnamese Contractual Party. - The Contractors and Sub-contractors operating in the oil and gas industry (except Contractors and Sub-contractors allowed by the Ministry of Finance for direct tax payment) shall make an annual tax calculation for the Contractor's and Sub-contractor's Contract. Periodically on the 15th of the first month of each quarter, the Oil and Gas Corporation shall report to the tax agency the payable amount of tax of the Contractor and Sub-contractor, the amount of tax already remitted to the State budget, the Contractor's and Sub-contractor's Contracts which are signed or have been terminated in the period. 2.2 Procedures for tax declaration and payment for the Contractors and Sub-contractors who are allowed for direct tax payment : - In case a direct tax payment is allowed, the Contractors, Sub-contractors shall fill the procedures for tax payment declaration with the tax agency. Procedures for declaration and payment of the turnover and profit taxes are done in accordance with provisions of the Law on Turnover Tax, the Law on Profit Tax, and current documents providing details for the implementation of these Laws. - In case the Contractor who is allowed for direct tax payment enters into a Sub-contractor's Contract with a Sub-contractor and this Sub-contractor is not allowed for direct tax payment, the Contractor shall have to deduct and remit the amount of the Sub-contractor's tax to the State Treasury on its behalf within 5 days from the date of each payment in accordance with the Sub-contractor's Contract. - The content of tax calculations and measures for the deficient or excess tax payment of the Contractor and Sub-contractor are implemented in the same way as with the Vietnamese Contractual Party. IV. RESPONSIBILITIES OF THE VIETNAMESE CONTRACTUAL PARTY, CONTRACTOR AND SUB-CONTRACTOR: 1. Responsibilities of the Vietnamese Contractual Party: - Within 10 days after signing the contract with the Contractor, the Vietnamese Contractual Party shall declare and register with the tax agency the operations of the Contractors and Sub-contractors in Vietnam in accordance with the contracts entered into with the Vietnamese Contractual Party (whether that Contractor registers for direct tax payment or not). - To deduct the payable amount of tax of the Contractors and Sub-contractors who are not allowed for direct tax payment, and remit that amount of tax to the State budget on their behalf in full and on time as prescribed in this Circular. - To calculate the payable tax of the Contractors and Sub-contractors for the tax agency. 2. Responsibilities of the Contractor, Sub-contractor: - The Contractor shall have the following responsibilities : + To provide adequate information for the Vietnamese Contractual Party in order to declare and register at the tax agency ; + Within 5 days after signing a Sub-contractor's Contract, provide a copy of the contract (or a summary of the contract) for the Vietnamese Contractual Party in order to register it at the tax agency, or personally register at the tax agency if the Contractor is allowed for direct tax payment; + Deduct the payable amount of tax of the Sub-contractors who are not allowed for direct tax payment, and remit that amount of tax to the State budget on their behalf; + The Contractors who are allowed for direct tax payment shall have to remit the payable amount of tax in full and on time to the State budget; to make calculation of the payable amount of tax with the tax agency; - The Sub-contractor shall have the following responsibilities: + To provide adequate information for the Contractor in order to declare and register at the tax agency; + The Sub-contractors who are allowed for direct tax payment shall have to remit the payable amount of tax in full and on time to the State budget; make calculation of the payable amount of tax for the tax agency. V. HANDLING OF VIOLATIONS AND SETTLING COMPLAINTS: 1. Handling of violations: The Contractor, Sub-contractor and the Vietnamese Contractual Party shall have the responsibilities to comply strictly with the current provisions of the Law on Taxes and the guidelines of this Circular. The Vietnamese Contractual Party or the Contractor, Sub-contractor who fail to declare or register tax thus causing losses in tax collection make, overdue tax payment or false declarations to evade tax, shall be penalized in accordance with the current laws. 2. Settling complaints: Complaints of the Contractor, Sub-contractor or the Vietnamese Contractual Party regarding tax shall be settled by the tax agency with competence of direct management. If the complainant is not satisfied with the settlement of the tax agency that has the competence of direct management, he can send his complaint to the General Department of Taxation and the Ministry of Finance. The decision of the Minister of Finance is final. The complainant shall comply with the conclusion of the local tax agency with the competence of direct management while awaiting a decision of the competent agency. Complaints of the Contractors or Sub-contractors regarding the tax related to a treaty entered into between the Vietnamese Government and another foreign Government shall be resolved in accordance with the dispute and claim procedures provided in that treaty. VI. IMPLEMENTATION ORGANIZATION : 1. The Vietnamese Contractual Party and the Contractor, Sub-contractor who are authorized to deduct tax and remit it to the State budget on behalf of Contractors and Sub-contractors (as the case may require), shall be rewarded an allowance equal to 0.8% of the amount of tax collected. This allowance shall be deducted from the collected amount of tax before it is remitted to the account of the State budget, and used to cover expenses for tax collections, payments and awards for individuals involving in the tax collection and payment by the Vietnamese Contractual Party, the Contractor or Sub-contractor. 2. This Circular takes effect from the 1st of June 1995 and replaces Circular No.07-TC/TCT on the 30th of March 1992 and Circular No.30-TC/TCT on the 18th of July 1992 of the Ministry of Finance, applied to the contracts signed after the 1st of June 1995. The contracts signed before the 1st of June 1995 shall continue to apply the regulations in Circular No.30-TC/TCT concerning payments under the contracts until the end of the 30th of September 1995. The regulations under this Circular shall apply from the 1st of October 1995. For the Minister of Finance Vice Minister VU MONG GIAO