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THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No. 112/1998/TT-BTC

Hanoi, August 04, 1998

 

CIRCULAR

GUIDING TAX EXEMPTION AND REDUCTION UNDER THE PROVISIONS OF ARTICLE 9 OF DECREE No. 20/1998/ND-CP OF MARCH 31, 1998 OF THE GOVERNMENT ON TRADE DEVELOPMENT IN MOUNTAINOUS, ISLAND AND ETHNIC MINORITY AREAS

- Pursuant to the current tax laws and tax ordinances;
- In furtherance of Article 9, Decree No.20/1998/ND-CP of March 31, 1998 of the Government on the trade development in mountainous, island and ethnic minority areas;
The Ministry of Finance hereby provides guidance on tax exemption and reduction prescribed in the said Decree as follows:

I.- SCOPE OF APPLICATION

1. Subjects of application

Subjects entitled to the exemption and/or reduction of turnover tax and profit tax under the provisions of Article 9, Decree No.20/1998/ND-CP as well as guidances in this Circular are traders of different economic sectors who conduct trade activities (stipulated in Section IV of the Turnover Tax Table issued together with Decree No.96-CP of December 27, 1995) in the mountainous, island and ethnic minority areas, including:

- State enterprises;

- Enterprises of political organizations, socio-political organizations, social organizations, socio-professional organizations, armed force units and non-business administrative units;

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- Cooperatives;

- Limited liability companies and joint stock companies;

- Private enterprises;

- Cooperation groups, family households and individuals that have registered business and are operating under Decree No.66/HDBT of March 2, 1992 of the Council of Ministers (now the Government);

The above-said subjects shall be entitled to the tax exemption and/or reduction under the guidances in this Circular only if:

- They have registered their business and operated in strict compliance with the registered business lines.

- They have made tax registration and declaration in accordance with the provisions of law.

- They have opened accounting books, recorded and kept on file accounting books, vouchers and invoices, which are related to their trade activities according to law.

2. Area of application

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II. GUIDANCE ON THE IMPLEMENTATION OF TAX EXEMPTION AND REDUCTION

According to the provisions of Article 9, Decree No.20/1998/ND-CP, traders operating in mountainous, island and ethnic minority areas shall be entitled to the exemption and/or reduction of turnover tax and profit tax as follows:

1. Levels of preferential treatment and tax exemption and/or reduction duration

a/ Traders operating in Region III of mountainous, island and ethnic minority areas shall enjoy:

- The 50% reduction of the payable turnover tax amount for four (4) years from the date Decree No.20/1998/ND-CP takes effect (April 15, 1998) or from the month the taxable turnover is generated, for traders who have newly supplemented or registered business after April 15, 1998;

- The profit tax exemption for the first four (4) years after the taxable turnover is generated and the 50% profit tax reduction for 7 more years. They shall also enjoy the 50% profit tax reduction for two more years if they annually employ an average of 20 laborers or more.

b/ Traders operating in Region II of mountainous, island and ethnic minority areas shall enjoy:

- The 50% reduction of turnover tax on the turnover earned from the sale of goods items covered by social policies as well as agricultural and forest products that have been purchased under the freight subsidy policy for 4 years from April 15, 1998, or from the month the taxable turnover is generated, for traders who have newly supplemented or registered their business lines after April 15, 1998;

- The exemption of profit tax for the first two years after the taxable profit is generated and the 50% reduction of the payable profit tax amount for five following years. They shall enjoy the 50% profit tax reduction for two more years if they annually employ an average of 20 or more laborers.

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- The 25% turnover tax reduction for three (3) years from April 15, 1998 or from the month the taxable turnover is generated, for traders who have newly supplemented or registered their business lines after April 15, 1998;

- The profit tax exemption for the first two (2) years after the taxable profit is generated and the 50% profit tax reduction for four (4) subsequent years. They shall also enjoy the 50% profit tax reduction for two more years if they annually employ an average of 20 or more laborers.

In order to enjoy tax exemption and/or reduction according to Items a, b and c, Point II.1 of this Circular, traders shall have to account separately the taxable turnover and taxable profit from trade activities arising in mountainous, island and ethnic minority areas, which shall serve as basis for the tax authorities to consider tax exemption and/or reduction.

The average number of laborers employed in a year shall include only those laborers who have signed labor contracts in strict compliance with the provisions of labor legislation and traders shall only be entitled to the 50% profit tax reduction for two more years under the guidances in Items a, b and c, Point II.1 of this Circular if during the tax reduction period they constantly use an average number of 20 laborers or more.

The profit tax exemption and/or reduction time for traders mentioned in Items a, b and c, Point II.1 of this Circular shall comply with the provisions of Point 4.b, Article 9 of Decree No.20/1998/ND-CP, as follows:

- For traders who have been operating before April 15, 1998, the tax exemption and/or reduction shall apply from April 15, 1998.

- For traders who have been operating after April 15, 1998, the tax exemption and/or reduction shall apply from the time the taxable profit is generated.

2. Competence to consider tax exemption and reduction and the order and procedures for consideration of tax exemption and reduction

Tax exemption and reduction for traders stipulated in Article 9 of Decree No.20/1998/ND-CP and under the guidances in this Circular shall be effected by the tax authorities that directly manage tax payment by traders, during the annual tax final settlement period.

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The tax authorities shall effect the tax exemption and/or reduction as guided above only for traders who have declared and paid turnover tax and profit tax with the tax authorities directly managing them in mountainous, island and ethnic minority areas, where trade activities are carried out and entitled to exemption and/or reduction of turnover tax and profit tax under the provisions of Article 9, Decree No.20/1998/ND-CP.

If a trader is simultaneously entitled to turnover tax and profit tax exemption and/or reduction according to Article 9 of Decree No.20/1998/ND-CP and the turnover tax exemption and/or reduction according to Clause 3, Article 18 of the Law on Turnover Tax; the profit tax exemption and/or reduction according to Article 21 and Article 25 of the Law on Profit Tax or turnover tax and profit tax exemption according to the Law on Domestic Investment Promotion, the exemption and/or reduction of turnover tax and/or profit tax shall comply with only one of the above-said regulations.

III. ORGANIZATION OF IMPLEMENTATION

1. Traders operating in mountainous, island and ethnic minority areas who are subject to this Circular shall have:

- To produce their establishment permits and business registration certificates to the tax authorities in their respective localities.

- To fully declare their taxable turnover and profit which arise periodically as provided for by the tax authorities.

Traders who violate the regulations on tax declaration and registration; or on accounting books and vouchers, shall not be entitled to tax exemption and reduction under this Circular and shall, depending on the seriousness of their violations, be sanctioned in accordance with the provisions of law.

2. The tax authorities of different levels shall have the following responsibilities:

- To guide and inspect traders in the implementation of this Circular.

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- The tax authorities shall have to fully and clearly state on tax vouchers, invoices, register and accounting books the payable tax amounts, the tax exemption and reduction amounts, the outstanding tax amounts and other indices. At the year end, the tax authorities shall sum up the situation of tax exemption and/or reduction according to this Circular and report it to the Ministry of Finance (the General Department of Taxation).

This Circular takes effect from April 15, 1998.

In the course of the implementation of this Circular, any problems arise shall be reported by the establishments, branches and localities to the Ministry of Finance for study and settlement.

 

 

THE MINISTRY OF FINANCE




Pham Van Trong

HIỆU LỰC VĂN BẢN

Circular No. 112/1998/TT-BTC, promulgated by the Ministry of Finance, guiding tax exemption and reduction under the provisions of article 9 of Decree No. 20/1998/ND-CP of March 31, 1998 of the Government on trade development in mountainous, island and ethnic minority areas

  • Số hiệu: 112/1998/TT-BTC
  • Loại văn bản: Thông tư
  • Ngày ban hành: 04/08/1998
  • Nơi ban hành: Bộ Tài chính
  • Người ký: Phạm Văn Trọng
  • Ngày công báo: Đang cập nhật
  • Số công báo: Đang cập nhật
  • Ngày hiệu lực: Kiểm tra
  • Tình trạng hiệu lực: Kiểm tra
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