Circular No. 72/2006/TT-BTC dated August 10, 2006 of the Ministry of Finance, amending and supplementing the Finance Ministry’s Circular No. 100/2004/TT-BTC dated October 20, 2004, guiding the application of Value Added Tax and Enterprise Income Tax in the securities domain

CIRCULAR

AMENDING AND SUPPLEMENTING THE FINANCE MINISTRY’S CIRCULAR No. 100/2004/TT-BTC OF OCTOBER 20, 2004, GUIDING THE APPLICATION OF VALUE ADDED TAX AND ENTERPRISE INCOME TAX IN THE SECURITIES DOMAIN

Pursuant to the 1997 Value Added Tax (VAT) Law and the 2003 Law Amending and Supplementing a Number of Articles of the VAT Law and the guiding documents;

Pursuant to the 2003 Enterprise Income Tax (EIT) Law and the guiding documents;

Pursuant to the Government’s Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Finance Ministry;

The Finance Ministry hereby amends and supplements a number of contents in its Circular No. 100/2004/TT-BTC of October 20, 2004, guiding the application of VAT and EIT in the securities domain as follows:

1. To replace Item 2.2, Point 2, Section III of Circular No. 100/2004/TT-BTC with the following new one:

“2.2. Other organizations, including foreign investment funds, foreign organizations, which are established under foreign laws, do not have the legal person status in Vietnam but open their securities investment accounts in Vietnam, organizations established and operating under Vietnamese law (except for securities companies, fund management companies and organizations defined in Item 2.1, Point 2, Section III of Circular No. 100/2004/TT-BTC) shall pay presumptive EIT as follows:

a/ Payable presumptive tax amount:

- For the transfer of securities (stocks, investment fund certificates, bonds, excluding tax-free bonds), the payable tax amount shall be equivalent to 0.1% of the total value of securities sold at the time of transfer.

- For bond interests (except for tax-free bonds), the payable tax amount shall be equivalent to 0.1% of the total value of bonds (including bond par value and receivable interests) at the time of receipt of interests.

Profits earned from investment in stocks and investment fund certificates for which EIT has been paid shall not be subject to EIT.

b/ Declaration and payment of presumptive tax:

- For listed securities: Securities companies shall have to withhold EIT amounts and, on behalf of investing organizations, make tax declarations (according to a set form, not printed herein), payment and finalization under the guidance at Point 3 of this Circular.

- For unlisted securities:

In cases where securities companies are authorized to manage all the lists of investors and carry out procedures for transferring stocks among investors, the withholding of tax amounts and EIT declaration, payment and finalization shall also be made as in the case of listed securities.

In cases where securities companies are not authorized to manage the lists of investors or manage the securities transfer or are only authorized to partially manage lists of investors for transfer registration and payment of dividends (in cases investors are outside or far away from such companies), the EIT declaration and payment shall be made as follows:

For investing organizations being foreign investment funds or foreign organizations without legal person status in Vietnam, which only open bank accounts in Vietnam for securities investment, commercial banks where foreign investment funds or foreign investing organizations open their securities investment accounts shall have to withhold EIT amounts and, on behalf of investing organizations, make tax declaration (according to a set form, not printed herein), payment and finalization with tax offices under the guidance at Point 3 of this Circular.

For domestic organizations, joint-stock companies and investment fund management companies, bond interest-paying organizations shall have to withhold tax amounts and, on behalf of investing organizations, make tax declaration (according to a set form, not printed herein), payment and finalization under the guidance at Point 3 of this Circular.”

2. To replace the last paragraph of Point 2, Section III of Circular No. 100/2004/TT-BTC with the following new Item 2.3:

“2.3. In cases where securities investment organizations defined in Item 2.1, Point 2, Section III of Circular No. 100/2004/TT-BTC and Item 2.2, Point 1 of this Circular make securities investment through securities investment funds, they shall pay EIT under the guidance at Point 3, Section III of Circular No. 100/2004/TT-BTC.”

3. To replace Point 1 and Point 2, Section IV of Circular No. 100/2004/TT-BTC with the following new ones:

“1. The tax registration, declaration, payment and finalization and the handling of tax-related violations committed by organizations and individuals operating in the securities domain shall comply with the current provisions of VAT and EIT laws.

Apart from performing the tax obligations, securities companies, securities investment fund management companies, joint-stock companies, commercial banks and bond interest-paying organizations shall also have to make tax withholding and declaration with tax offices directly managing them (according to a set form, not printed herein) and pay tax on behalf of investing organizations into the State Treasury. The tax declaration, payment and finalization shall be made within 30 days after taxable incomes of investing organizations are generated.

2. Securities companies, securities investment fund management companies, joint-stock companies, commercial banks and bond interest-paying organizations which withhold tax amounts of investing organizations, and declare and pay tax on behalf of investors shall enjoy a remuneration equivalent to 0.8% of the actual collected tax amount but not exceeding VND 50 million for each time of tax declaration and payment. Such remuneration shall be deducted from the collected tax amount before it is remitted into the state budget and shall be used to cover tax collection and payment expenses, commend and reward individuals involved in tax collection and payment.”

4. To replace “Form No. 01” promulgated together with Circular No. 100/2004/TT-BTC with “Form KT/CK” promulgated together with this Circular.

5. This Circular shall take effect 15 days after its publication in “CONG BAO.”

Cases of transfer of bonds and receipt of bond interests before the effective date of this Circular shall comply with the provisions of relevant legal documents effective at the time of transfer of bonds or receipt of interests.

Any problems arising in the course of implementation should be promptly reported to the Finance Ministry for study and additional guidance.

BUSINESS INCOME TAX (BIT) DECLARATION

(Used for securities companies, securities investment fund-managing companies, joint-stock companies, commercial banks and bond interest-paying organizations which withhold, declare and pay BIT on behalf of investment organizations having incomes from securities investment)

Name of the unit withholding, declaring and paying BIT: ………….

Address: ………..

Telephone: …… Fax: ……. Email: ……….

Tax Identification No.: ……………

Deposit account number: ………. at: ………. (bank)

Total tax amount to be paid on behalf of: …………..

In words: …………….

(To be specified according to the Table below)

Date …

Recipient:

- Tax authority: ……..

- Address: ……….

Declaration-receiving tax authority:

- Date of receipt: ……..

- Recipient (signature, full name and position): …….

Note: This declaration is made in two copies, one to be sent to the tax authority and the other to be kept at the company withholding and paying BIT on behalf of the investment organization having incomes from securities investment.