THE MINISTRY OF FINANCE No. 128/2014/TT-BTC | THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom – Happiness Hanoi, September 5, 2014 |
CIRCULAR
Guiding the personal income tax reduction for persons working in
economic zones[1]
Pursuant to the 2007 Personal Income Tax Law and the 2012 Law Amending and Supplementing a Number of Articles of the Personal Income Tax Law;
Pursuant to the 2006 Tax Administration Law and the 2012 Law Amending and Supplementing a Number of Articles of the Tax Administration Law;
Pursuant to the Government’s Decree No. 65/2013/ND-CP of June 27, 2013, detailing a number of articles of the Personal Income Tax Law and the Law Amending and Supplementing a Number of Articles of the Personal Income Tax Law;
Pursuant to the Government’s Decree No. 83/2013/ND-CP of July 22, 2013, detailing a number of articles of the Tax Administration Law and the Law Amending and Supplementing a Number of Articles of the Tax Administration Law;
Pursuant to the Government’s Decree No. 29/2008/ND-CP of March 14, 2008, providing industrial parks, export-processing zones and economic zones;
Pursuant to the Government’s Decree No. 164/2013/ND-CP of November 12, 2013, amending and supplementing a number of articles of the Government’s Decree No. 29/2008/ND-CP of March 14, 2008, providing industrial parks, export-processing zones and economic zones;
Pursuant to the Prime Minister’s Decision No. 72/2013/QD-TTg of November 26, 2013, promulgating financial mechanisms and policies applicable to border-gate economic zones;
Pursuant to the Government’s Decree No. 215/2013/ND-CP of December 23, 2013, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
At the proposal of the General Director of Taxation;
The Minister of Finance guides the personal income tax reduction for persons working in economic zones and border-gate economic zones (below collectively referred to as economic zones) as follows:
Article 1. Taxpayers and scope of application
Taxpayers eligible for personal income tax reduction under this Circular are residents and non-residents as defined in the personal income tax law who are working in economic zones, including:
1. Persons who sign labor contracts with economic zone management boards or state management agencies based in economic zones and actually work in economic zones.
2. Persons who sign labor contracts with organizations or individuals having business establishments based in economic zones and actually work in economic zones.
3. Persons who sign labor contracts with organizations or individuals based outside economic zones but are sent to work in economic zones to perform economic contracts signed between organizations or individuals based outside economic zones and economic zone management boards, state management agencies based in economic zones or organizations or individuals conducting investment, production and business activities in economic zones.
4. Individuals and groups of individuals that have fixed places of business in economic zones and conduct production and business activities under their business registration certificates in economic zones.
5. Persons who sign labor contracts with organizations in economic zones and actually work in economic zones’ hazardous waste treatment plants which, according to state regulations on environment and approved economic zone master plans, must be located outside economic zones.
Article 2. Taxable incomes used as a basis for tax reduction
Incomes used as a basis for calculation of personal income tax amounts to be reduced under this Circular include:
1. Taxable income from salaries or wages paid to persons working in economic zones by economic zone management boards, state management agencies based in economic zones, or organizations or individuals having business establishments based in economic zones.
2. Taxable income from salaries or wages paid by organizations or individuals based outside economic zones to persons who are sent to work in economic zones to perform economic contracts signed with economic zone management boards, state management agencies based in economic zones or organizations or individuals conducting investment, production and business activities in economic zones.
3. Taxable income from production and business activities conducted in economic zones by individuals or groups of individuals that are granted business registration certificates in economic zones.
4. Taxable income from salaries and wages of persons who work in economic zones’ hazardous waste treatment plants based outside economic zones.
Taxable income from salaries or wages and income from business activities shall be determined in accordance with the personal income tax law.
Article 3. Determination of to-be-reduced tax amounts:
1. For residents:
a/ In case residents only earn taxable incomes as guided in Article 2 of this Circular (below collectively referred to as taxable incomes in economic zones):
a.1/ Determination of temporarily paid tax amounts to be reduced:
Temporarily paid income tax amount to be reduced | = | Deductible or temporarily paid personal income tax amount (on a monthly or quarterly basis or when it arises) | x | 50% |
a.2/ Determination of payable tax amounts to be reduced:
Personal income tax amount to be reduced | = | Total payable personal income tax amount in the tax year | x | 50% |
In which: The total payable personal income tax amount is the payable personal income tax amount in accordance with the personal income tax law.
b/ For residents who earn both taxable income in economic zones and income from salaries or wages and income from business activities outside economic zones:
b.1/ Determination of temporarily paid tax amounts to be reduced:
Temporarily paid personal income tax amount to be reduced | = | Deductible or temporarily paid personal income tax amount (on a monthly or quarterly basis or when it arises) corresponding to taxable income in economic zone | x | 50% |
b.2/ Determination of payable tax amounts to be reduced:
Personal income tax amount
to be reduced in the year | = | Total payable personal income tax amount in the year | x | Taxable income earned in economic zone | x | 50% |
Total taxable income in the tax year |
In which: The total payable personal income tax amount in the year is determined on the basis of the total taxable income from salaries, wages and business activities in the tax year in accordance with the personal income tax law.
2. For non-residents:
Personal income tax amount to be reduced | = | Total taxable income earned in economic zones | x | Personal income tax rate applicable to non-residents | x | 50% |
Article 4. Tax declaration, payment and settlement
Persons mentioned in Article 1 of this Circular who earn taxable incomes as guided in Article 2 of this Circular shall declare, pay and settle personal income tax in accordance with the tax administration law.
Article 5. Effect
1. This Circular takes effect on October 20, 2014, and replaces the Ministry of Finance’s Circular No. 176/2009/TT-BTC of September 9, 2009.
2. Persons doing business in economic zones before January 1, 2009, and earning income from business activities who are currently enjoy investment incentives under the Law on Enterprise Income Tax through December 31, 2008, while the enterprise income tax exemption period has not yet expired, may shift to enjoy personal income tax exemption until this tax exemption period expires and after that, they will be entitled to a 50% reduction of personal income tax under this Circular.
3. Any problems arising in the course of implementation should be reported to the Ministry of Finance (the General Department of Taxation) for consideration and settlement.-
For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN
Vietnamese
Circular 128/2014/TT-BTC DOC (Word)
Circular 128/2014/TT-BTC PDF (Original)
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