VietnameseCircular No. 18/2008/TT-BTC dated February 18, 2008, of the Ministry of Finance guiding financial regulations and customs procedures applicable to Southeastern Nghe An economic zone, Nghe An Province
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Circular No. 18/2008/TT-BTC dated February 18, 2008, of the Ministry of Finance guiding financial regulations and customs procedures applicable to Southeastern Nghe An economic zone, Nghe An Province
| Issuing body: | Ministry of Finance | Effective date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Official number: | 18/2008/TT-BTC | Signer: | Truong Chi Trung |
| Type: | Circular | Expiry date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Issuing date: | 18/02/2008 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Customs , Finance - Banking |
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THE MINISTRY OF FINANCE --------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------- |
No. 18/2008/TT-BTC | Hanoi, February 18, 2008 |
CIRCULAR
GUIDING FINANCIAL REGULATIONS AND CUSTOMS PROCEDURES APPLICABLE TO SOUTHEASTERN NGHE AN ECONOMIC ZONE, NGHE AN PROVINCE
Pursuant to the State Budget Law;
Pursuant to the Laws and Ordinances on taxes, charges and fees;
Pursuant to the Prime Ministers Decision No. 85/2007/QD-TTg of June 11, 2007, establishing Southeastern Nghe An Economic Zone, Nghe An province, and promulgating its operation regulation;
After reaching agreement with the Peoples Committee of Nghe An province in Official Letter No. 7551/UBND-TM of November 16, 2006, the Finance Ministry guides financial regulations and customs procedures applicable to Southeastern Nghe An Economic Zone as follows:
I. GENERAL PROVISIONS
1. Scope of application
Financial regulations and customs procedures provided in this Circular (below referred to as financial regulations for short) apply in Southeastern Nghe An Economic Zone, Nghe An province (below referred to as Southeastern Nghe An EZ for short).
Financial regulations provided in this Circular apply only to business activities conducted in Southeastern Nghe An EZ. If an organization or individual conducts business activities in both Southeastern Nghe An EZ and inland Vietnam, it/he/she shall account separately business activities conducted in Southeastern Nghe An EZ so as to have a ground for the determination of applicable financial regulations. The separate accounting complies with legal provisions on accounting. The separate accounting of incomes, turnover and expenditures for the determination of enterprise income tax complies with legal provisions on enterprise income tax (applicable to production or business establishments that have registered and declared enterprise income tax payment).
Foreign-invested enterprises and foreign parties to business cooperation contracts that have been granted investment licenses; domestic business establishments that have been granted investment preference certificates in Southeastern Nghe An EZ before the effective date of the Prime Ministers Decision No. 85/2007/QD-TTg of June 11, 2007 (below referred to as Decision No. 85/2007/QD-TTg for short), but have not fully enjoyed the incentives may enjoy the incentive policies provided for in this Circular for the remaining incentive period. If a project has enjoyed incentives higher than those provided for in this Circular, it may continue enjoying those incentives for its remaining duration according to the investment license.
2. Subjects of application
Subject to this Circular are investors of all economic sectors operating under the Investment Law, the Enterprise Law or the Cooperative Law, individual business households and independent practitioners, organizations and individuals conducting business activities in Vietnam in accordance with Vietnamese law.
3. Interpretation of terms
In this Circular, the terms below are construed as follows:
a/ Non-tariff area means a geographical area segregated by solid fences from other functional areas within Southeastern Nghe An EZ according to the provisions of Articles 7 and 8 of Decision No. 85/2007/QD-TTg.
b/ Inland Vietnam consists of functional areas within Southeastern Nghe An EZ and the rest of the Vietnamese territory (except for non-tariff areas specified in Clause 1, Article 5 of the 2005 Import Tax and Export Tax Law, and Clause 2, Article 1 of Decree No. 149/2005/ND-CP of December 8, 2005, which are below referred to as other non-tariff areas).
c/ Customs control gate: The non-tariff area has two customs control gates: one at the contiguity between the non-tariff port and the sea, called gate A for short; and the other at the contiguity between the non-tariff port and inland Vietnam, called gate B for short.
d/ List of commodities originating from the non-tariff area means the list of commodities promulgated by the Management Board of Southeastern Nghe An EZ (referred to as the Management Board for short) for a given period (referred to as the list of commodities of non-tariff area origin for short), which includes commodities produced, processed, recycled or assembled in the non-tariff area without the use of raw materials or components imported from abroad.
4. Conditions for application of financial and customs regulations concerning the non-tariff area
The financial mechanisms provided for the non-tariff area in Southeastern Nghe An EZ apply only when the non-tariff area fully satisfies the following conditions:
- Having a solid fence to ensure the isolation of activities within it from those in other functional areas in Southeastern Nghe An EZ;
- Having no population quarter, no permanent or temporary residents (including foreigners);
- Having customs offices to perform the customs functions and tasks defined in the Customs Law with regard to goods and vehicles entering or leaving the non-tariff area.
5. General provisions on customs procedures applied in the non-tariff area
5.1. Organizations and individuals operating in the non-tariff area may export to or import from abroad all kinds of goods and services not banned by Vietnamese law. The policy on imports and exports complies with the Prime Ministers regulations on goods import and export management and the guiding documents of the Ministry of Industry and Trade and other line ministries.
5.2. Biannually, enterprises in the non-tariff area shall send to customs offices and the Management Board of Southeastern Nghe An EZ reports on the finalization of goods imported or exported in the period and reports on warehoused, ex-warehoused or unsold products. Customs offices shall conduct examination and comparison for the inspection and determination of payable tax amounts and, send, when necessary, those reports to tax offices of localities where domestic enterprises bringing goods into the non-tariff area are located.
5.3. Imported, exported or transited goods and luggages; means of transport on entry, exit or transit in the non-tariff area are subject to customs procedures provided for them respectively.
5.4. Imported, exported or transited goods; means of transport on entry, exit or transit into/from/through the non-tariff area are allowed to go through and subject to customs procedures carried out at gates A and B only under the Ministrys legal documents guiding customs procedures, inspection and supervision.
6. Principles on investment incentives
Investment projects in Southeastern Nghe An EZ enjoy the maximum incentives provided for those in areas meeting with exceptional socio-economic difficulties under the investment law, enterprise income tax law, value added tax law and other preferences under treaties and agreements to which Vietnam is a contracting party.
If legal documents provide different levels of incentives for the same subject matter, the incentive level defined in the document of higher legal effect applies.
If legal documents promulgated by the same agency provide for the same subject matter differently, the provisions of the latest document prevail.
II. SPECIFIC PROVISIONS
1. Tax policies for Southeastern Nghe An EZ
1.1. Enterprise income tax
1.1.1. Investment projects of domestic and foreign organizations and individuals on the formation of new production or business establishments in Southeastern Nghe An EZ enjoy the enterprise income tax rate of 10% for 15 years after they commence their business operation; are exempt from enterprise income tax for 4 years after their taxable incomes are generated; and are entitled to a 50% reduction of payable tax amounts for 9 subsequent years.
1.1.2. Hi-tech investment projects of domestic and foreign organizations and individuals in Southeastern Nghe An EZ, which satisfy the requirements defined in Clause 2, Article 5 of the Governments Decree No. 99/2003/ND-CP of August 28, 2003, promulgating the Regulation on Hi-Tech Parks; large-scale investment projects of domestic and foreign organizations and individuals in Southeastern Nghe An EZ, which are significant to the development of branches or sectors or socio-economic development of the region and approved by the Prime Minister; and investment projects on construction and commercial operation of infrastructure of the non-tariff area enjoy the enterprise income tax rate of 10% throughout the project execution duration.
1.1.3. Production or business establishments investing in the building of new production lines, expansion of operation scope, technology renewal, eco-environmental improvement or raising of production capacity shall comply with current provisions of law.
1.1.4. Taxable incomes from the transfer of land use rights or land rent right are liable to income tax under the guidance in the Governments Decree No. 24/2007/ND-CP of February 14, 2007, detailing the implementation of the Enterprise Income Tax Law and guiding documents.
1.1.5. In the course of operation, after finalizing taxes with tax offices, if suffering losses, enterprises may carry forward their losses to subsequent years for credit from taxable incomes and notify such in writing to tax offices together with annual enterprise income tax returns. The duration for carrying forward losses must not exceed 5 years.
1.1.6. In order to enjoy enterprise income tax incentives, organizations and individuals having investment projects in Southeastern Nghe An EZ shall submit copies of their business registration certificates (for domestic enterprises) or investment licenses (for foreign-invested enterprises) to tax offices where the enterprises make tax payment declaration.
1.1.7. Enterprises shall register with tax offices of localities where they make tax payment declarations the enterprise income tax exemption or reduction duration as mentioned at this Point. The foresaid enterprise income tax incentives and loss carrying-forward apply only to production or business establishments that have fully and properly observed financial and accounting regulations and registered tax payment according to declarations.
1.2. Income tax on high-income earners
1.2.1. Laborers (including Vietnamese and foreigners) working in Southeastern Nghe An EZ enjoy a 50% reduction of income tax amounts payable by high-income earners (below referred to as personal income tax).
1.2.2. The personal income tax declaration, payment and finalization shall comply with current legal documents guiding personal income tax. When making personal income tax declaration or temporary payment, income-paying agencies shall withhold 50% of monthly payable personal income tax amounts of laborers working in Southeastern Nghe An EZ.
1.2.3. Particularly for Vietnamese and foreign laborers who have worked in Southeastern Nghe An EZ for less than one year (12 months), the personal income tax amount to be reduced for their working duration in Southeastern Nghe An EZ is determined as follows:
a/ For Vietnamese:
Every month, income-paying agencies shall temporarily withhold 50% of payable personal income tax amounts and at the end of a year make tax finalization and calculate payable tax amounts and tax amounts of the whole year eligible for reduction according to the following formula:
Personal income tax amount eligible for reduction in a year | = | Personal income tax amount payable in the year | x | Taxable income earned in the duration of working in Southeastern Nghe An EZ | x | 50% |
Total taxable income amount in the taxation year |
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