Decree No. 65/2013/ND-CP dated June 27, 2013 of the Government detailing a number of articles of the Law on Personal Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax

THE GOVERNMENT

Decree No. 65/2013/ND-CP detailing a number of articles of the Law on Personal Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the November 21, 2007 Law on Personal Income Tax; and the November 22, 2012 Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax;

At proposal of the Minister of Finance,

The Government promulgates the Decree detailing a number of articles of the Law on Personal Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree details and guides a number of articles of the Law on Personal Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax.

Article 2. Taxpayers

1. Personal income taxpayers include resident and non-resident individuals who earn taxable incomes specified in Article 3 of the Law on Personal Income Tax and Article 3 of this Decree. Taxpayers’ taxable incomes are determined as follows:

a/ Taxable incomes of resident individuals are incomes earned inside and outside the Vietnamese territory, regardless of where the incomes are paid;

b/ Taxable incomes of non-resident individuals are incomes earned in Vietnam, regardless of where the incomes are paid.

2. A resident individual means a person who satisfies any of the following conditions:

a/ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of his/her presence in Vietnam;

An individual present in Vietnam under this Point means a person who is present in the Vietnamese territory.

b/ Having a place of habitual residence in Vietnam in either of the following cases:

- Having a registered place of permanent residence under the law on residence;

- Having rented a house for residence in Vietnam in accordance with the law on housing under a rent contract with a term of 183 days or more in a tax year.

A person having a place of habitual residence under this Point who is actually present in Vietnam for less than 183 days in a tax year but cannot prove the country of his/her residence is a resident in Vietnam.

3. A non-resident individual means a person who does not satisfy the conditions specified in Clause 2 of this Article.

Article 3. Taxable incomes

Taxable incomes of an individual include:

1. Incomes from production or business activities, including:

a/ Incomes from goods production or trading or service provision as prescribed by law. Particularly for incomes from agricultural or forest production, saltmaking, aquaculture and fishing activities, personal income tax will be imposed only on individuals who do not fully satisfy the conditions for tax exemption specified in Clause 5, Article 4 of this Decree;

b/ Incomes from independent professional practice of individuals possessing practice licenses or certificates under law.

2. Employees’ salaries or wages received from employers, including:

a/ Salaries, wages and amounts of similar nature receivable in monetary or non-monetary form;

b/ Allowances and subsidies other than:

- Monthly preferential allowances and subsidies and lump-sum allowances paid under the law on preferential treatment of persons with meritorious services;

- Monthly and lump-sum allowances for persons participating in resistance wars or fatherland protection or performing international duties, or volunteer youth having fulfilled their duties;

- Defense or security allowances; allowances for armed forces;

- Hazard or danger allowances for persons working in sectors, occupations or jobs at places where exist hazardous or dangerous elements;

- Incentive allowances for persons working in particular sectors or regions;

- Allowances for sudden difficulties, labor accident or occupational disease allowances; lump-sum maternity or child adoption allowances; working capacity loss allowances, lump-sum retirement allowances, monthly survivor allowances, severance and job loss allowances and other allowances provided in the Labor Code and the Social Insurance Law;

- Allowances for social security beneficiaries as prescribed by law;

- Service allowances for senior leaders;

- Lump-sum allowances for persons moving to work in areas with extremely difficult socio-economic conditions, lump-sum allowances for cadres and civil servants engaged in sea and island sovereignty work as prescribed by law. Lump-sum expatriation allowances for foreigners residing in Vietnam and Vietnamese working abroad;

- Allowances for village health workers;

- Particular occupational allowances;

Allowances and subsidies not accounted as taxable incomes specified at this Point must be prescribed by competent state agencies.

c/ Remunerations receivable as brokerage commissions, payments for participation in schemes or projects, royalties, and other commissions and remunerations;

d/ Sums of money earned from the participation in business associations, boards of directors, control boards, management councils, professional associations and societies and other organizations;

dd/ Other monetary or non-monetary benefits other than salaries and wages paid by employers for taxpayers in any form:

- House rents, charges for electricity, water and associated services (if any);

- Accumulated premiums of life insurance and other optional insurance, accumulated monetary contributions to the voluntary pension fund paid or contributed by employers for their employees. Before paying insurance money or pensions to individuals, insurance firms or voluntary pension fund management companies shall withhold a tax of 10% of the accumulated premiums or contributions corresponding to the amounts bought or contributed by employers for their employees from July 1, 2013.

- Membership fees and charges for other services such as healthcare, recreation, sports, entertainment and beauty care, which are provided for individuals upon their request;

- Other benefits as prescribed by law.

e/ Monetary or non-monetary rewards in any form, including also bonus securities, other than:

- Rewards accompanying honorary titles conferred by the State, including also rewards accompanying emulation titles and commendation forms prescribed by the law on emulation and commendation;

- Rewards accompanying national or international prizes recognized by the Vietnamese State;

- Rewards for technical renovations, innovations or inventions recognized by competent state agencies;

- Rewards for detection of and reporting on illegal acts to competent state agencies.

g/ The following amounts are not included in taxable incomes:

- Employers’ supports for the examination and treatment of dangerous diseases for employees and their relatives (parents, spouses and children);

- Amounts received under regulations on the use of vehicles in state agencies, public non-business units, party organizations and mass organizations;

- Amounts received under the public-duty house regime as prescribed by law;

- Amounts received in addition to salaries and wages for participating in and serving activities of the Party, Youth Union or National Assembly or for elaborating legal documents of the State;

- Mid-shift meal allowances paid by employers to employees, which do not exceed the level prescribed by the Ministry of Labor, War Invalids and Social Affairs;

- Return air tickets paid on behalf of (or for) foreign employees or Vietnamese employees working overseas who return home on leave once a year;

- School fees for children of foreign employees studying in Vietnam or overseas-working Vietnamese employees’ children studying abroad from preschool to upper secondary education paid by employers on behalf of their employees.

3. Incomes from capital investment, including:

a/ Loan interests;

b/ Share dividends;

c/ Incomes from capital investment in other forms, including also capital contributions in kind, reputation, land use rights, creations or inventions; except incomes from government bond interests.

4. Incomes from capital transfer, including:

a/ Incomes from the transfer of capital holdings in economic organizations;

b/ Incomes from the transfer of securities;

c/ Incomes from the transfer of capital in other forms.

5. Incomes from the transfer of real estate, including:

a/ Incomes from the transfer of the rights to use land and assets attached to land, including construction works to be formed in the future;

b/ Incomes from the transfer of the right to own or use houses, including houses to be formed in the future;

c/ Incomes from the transfer of the right to lease land or water surface;

d/ Other incomes earned from the transfer of real estate in any form.

Taxable incomes provided in this Clause also include incomes from the authorization of real estate management under which the authorized party has the right to transfer real estate or the right like the real estate owner as prescribed by law.

6. Incomes from prizes won in cash or in kind, including:

a/ Lottery prizes;

b/ Sales promotion prizes in all forms;

c/ Betting or casino winnings;

d/ Winnings in prized games and contests and other forms of winning.

7. Incomes from copyright, including:

a/ Incomes from the assignment or licensing of intellectual property objects: copyright and related rights; industrial property rights; rights to plant varieties;

b/ Incomes from technology transfer: technical know-how, technical knowledge, solutions to production rationalization and technology renewal.

8. Incomes from commercial franchising under the Commercial Law.

9. Incomes from inheritances that are securities, capital holdings in economic organizations or business establishments, real estate and other assets subject to ownership or use registration.

10. Incomes from gifts that are securities, capital holdings in economic organizations or business establishments, real estate and other assets subject to ownership or use registration.

Article 4. Tax-exempt incomes

1. Incomes from the transfer of real estate (including houses and construction works to be formed in the future under the law on real estate business) between spouses; parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.

2. Incomes from the transfer of houses, rights to use residential land and assets attached to residential land received by individuals who have a single house and land use rights in Vietnam.

An individual having a single house and land use rights in Vietnam prescribed in this Clause must satisfy the following conditions:

a/ At the time of transfer, that person has the right to own or use only one house or one residential land lot (including land attached with houses or construction works);

b/ That person has the right to own or use the house or residential land for at least 183 days counted to the time of transfer;

c/ The entire house or residential land is transferred;

The determination of the right to own or use a house or residential land is based on the house ownership certificate or land use right certificate. Individuals having houses or residential land on transfer shall make declaration and take responsibility before law for the accuracy of their declaration. Those detected by competent agencies to make untruthful declaration may not enjoy tax exemption and will be handled in accordance with law.

3. Incomes from the value of land use rights of individuals who are allocated land by the State without having to pay land use levy or with reduced land use levy under law.

4. Incomes from the receipt of inheritances or gifts that are real estate (including houses and construction works to be formed in the future under the law on real estate business) between spouses, parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.

5. Incomes of households and individuals directly engaged in agricultural or forest production, salt making, aquaculture, fishing of aquatic products which are unprocessed or preliminarily processed.

Households and individuals directly engaged in production activities specified in this Clause must satisfy the following conditions:

a/ Having lawful land or water surface use rights for production, and being directly engaged in agricultural or forest production, salt making or aquaculture. For fishing activities, having the right to own or use ships, boats or fishing gears and be directly engaged in these activities;

b/ Actually residing under the law on residence in localities where agricultural or forest production, salt making or aquaculture activities are carried out.

6. Incomes from the transformation of agricultural land allocated by the State to households and individuals for production.

7. Incomes from interests of savings deposits at banks or credit institutions or interests from life insurance policies.

8. Incomes from foreign exchange remittances.

9. Salary or wage amounts paid for night shift or overtime work, which are higher than those paid for day shifts or working hours as prescribed by law.

10. Retirement pensions paid by the Social Insurance Fund in accordance with the Law on Social Insurance, monthly retirement pensions received from the Voluntary Retirement Fund. Individuals living and working in Vietnam are exempt from personal income tax on pensions paid by foreign parties.

11. Incomes from scholarships, including:

a/ State-funded scholarships;

b/ Scholarships (including also subsistence allowances) granted by domestic or foreign organizations under their study promotion programs.

12. Incomes from indemnities paid under life insurance policies, non-life insurance policies, health insurance policies, compensations for labor accidents, state compensations and other compensations as prescribed by law.

13. Incomes received from charity funds operating for charity, humanitarian or non-profit purposes which are licensed or recognized by competent state agencies.

14. Incomes received from governmental or non-governmental foreign aid for charity or humanitarian purposes approved by competent state agencies.

The Ministry of Finance shall specify procedures and dossiers for identification of tax-exempt incomes provided in this Article.

Article 5. Tax reduction

1. Taxpayers facing difficulties caused by natural disasters, fires, accidents or dangerous diseases which affect their tax payment ability may be considered for tax reduction corresponding to the extent of their damage but not exceeding the payable tax amounts.

2. The Ministry of Finance shall specify procedures, dossiers and consideration of personal income tax reduction provided in this Article.

Chapter II

TAX BASES FOR SOME KINDS OF INCOME OF RESIDENT INDIVIDUALS

Section 1

INCOMES FROM BUSINESS ACTIVITIES AND INCOMES FROM SALARIES AND WAGES

Article 6. Taxed incomes from business activities, salaries and wages   

1. Taxed incomes from business activities, salaries or wages are determined to equal taxable incomes from business activities, salaries or wages specified in Articles 7 and 11 of this Decree minus (-) the following amounts:

a/ Premiums of social insurance, health insurance, unemployment insurance and compulsory professional liability insurance for some professions, and contributions to the voluntary retirement fund.

The level of contributions to the voluntary retirement fund which may be deducted from the taxed incomes specified in this Clause must not exceed VND 1 million/month (VND 12 million/year) under the Ministry of Finance’s guidance;

For a resident individual in Vietnam who works overseas, earns incomes from business activities, salaries or wages overseas and has paid premiums of compulsory insurance, such as social insurance, health insurance, unemployment insurance and compulsory professional liability insurance for some professions, as required by the law of the country in which this individual buys such insurance, he/she may have those insurance premiums deducted from his/her taxable incomes when determining taxed incomes from business activities, salaries or wages.

b/ Deductions based on family circumstances provided in Article 12 of this Decree;

c/ Contributions to charity funds, humanitarian funds and study promotion funds specified in Article 13 of this Decree.

2. Taxed incomes of individuals who earn taxable incomes from both business activities and salaries or wages are the total of their taxable incomes from business activities plus (+) their taxable incomes from salaries or wages minus (-) the amounts specified at Points a, b and c, Clause 1 of this Article.

Article 7. Taxable incomes from business activities

Taxable incomes from business activities are determined to equal the turnover for calculation of taxable incomes provided in Article 8 of this Decree minus (-) reasonable expenses provided in Article 9 of this Decree.

Article 8. Turnover for calculation of taxable incomes from business activities

1. Turnover for calculation of taxable incomes from business activities means the total of sales of goods, earnings from subcontract processing, commissions and goods or service provision charges generated in a tax period.

The time of determining turnover is the time of transfer of ownership of goods or completion of services or the time of billing for goods sale or service provision, regardless of whether such turnover has been received or not.

2. In some cases, turnover for calculation of taxable incomes is specified as follows:

a/ Turnover of goods sold by installment payment is determined according to the sale price of goods paid in a lump sum exclusive of the deferred payment interest;

b/ Turnover of goods or services used for exchange or donation is determined according to the sale price of the same or equivalent product, goods or service at the time of exchange or donation;

c/ Turnover from subcontract processing of goods means sums of money earned from subcontract processing activities, including remunerations, costs of fuel, power and auxiliary materials and other expenses for the subcontract processing;

d/ Turnover from lease of assets means rents periodically paid by lessees under lease contracts. In case lessees pay rents for years in advance, the turnover for calculation of taxable incomes may be allocated to the number of years of advance rent payment or determined based on the lump-sum rent amount;

dd/ The Ministry of Finance shall specify turnover for calculation of taxable incomes in other cases.

Article 9. Reasonable expenses related to the generation of taxable incomes from business activities

1. Reasonable expenses specified in this Article must be amounts actually paid for individuals’ production or business activities and have sufficient invoices and documents as prescribed by law.

2. Deductible reasonable expenses include:

a/ Salaries, wages, allowances, remunerations and other payments to employees;

Salaries or wages of individuals who are heads of business households may not be accounted as deductible reasonable expenses.

b/ Expenses for raw materials, materials, fuels, energy and goods actually used for goods production and trading or service provision, which are related to the generation of turnover and taxable incomes in a period and calculated according to their reasonable consumption rates and actual ex-warehousing prices determined by business households or individuals themselves that shall take responsibility before law for such determination;

c/ Expenses for depreciation, regular repair and maintenance of fixed assets used for goods production and trading or service provision. The fixed asset depreciation level is determined based on the value of fixed assets and depreciation duration as prescribed by the Ministry of Finance;

d/ Interests paid on loans for production and business activities directly related to the generation of turnover and taxable incomes;

dd/ Management expenses;

e/ Paid taxes, charges, fees and land rents for production, business or service activities as prescribed by law other than personal income tax and other taxes, charges, fees and other payments which are not accounted as expenses as prescribed by relevant laws;

g/ Other expenses related to the generation of incomes.

The Ministry of Finance shall specify other reasonable expenses which are deductible upon calculation of taxable incomes.

Article 10. Taxable incomes and taxed incomes of business individuals who fail to strictly comply with the law on accounting, invoices and documents

1. For business individuals who fail to strictly comply with the law on accounting, invoices and documents and cannot calculate turnover, expenses and taxable incomes, competent tax agencies shall assess turnover and the ratio of taxable incomes in order to determine taxable incomes suitable to each production or business line.

2. For business individuals who can account only turnover but not expenses, the turnover for calculation of taxable incomes is determined in accordance with Article 8 of this Decree. Tax agencies shall assess their taxable incomes.

3. The Ministry of Finance shall specify the assessment of turnover and taxable income against turnover.

Article 11. Taxable incomes from salaries and wages

1. Taxable incomes from salaries or wages are determined in accordance with Clause 2, Article 3 of this Decree.

2. Time of determination of a taxable income from salary or wage is the time when an employer pays salary or wage to a taxpayer or when a taxpayer receives his/her income.

Article 12. Deductions based on family circumstances

Resident individuals who earn incomes from salaries or wages or business activities may enjoy family circumstances-based deductions from their taxable incomes before tax calculation as follows:

1. Levels of deduction based on family circumstances:

a/ Deduction for a taxpayer himself/herself, which is VND 9 million/month (VND 108 million/year);

b/ Deduction for each dependant of a taxpayer, which is VND 3.6 million/month given from the month the taxpayer’s obligation to nurture the dependant arises.

When the National Assembly Standing Committee adjusts the levels of deduction based on family circumstances provided in Clause 4, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax, the levels set by the National Assembly Standing Committee apply from the next tax period.

2. Each dependant may be counted only once for tax reduction for a taxpayer in a tax year. In case several taxpayers share a dependant they are obliged to nurture, they shall reach agreement on registration of this dependant for one among them.

3. Persons to be identified as dependants of taxpayers provided in Clause 1 of this Article and grounds for dependant identification are as follows:

a/ Under-18 children (including blood children, lawfully adopted children, children of wife or husband);

b/ Children with disabilities (including blood children, lawfully adopted children, children of wife or husband) who are aged 18 or older and have no working capacity;

c/ Children (including blood children, lawfully adopted children, children of wife or husband) who are studying at universities, colleges, professional secondary schools or vocational schools, or are aged 18 or older and attending schools of general education, and have no income or have incomes not exceeding the level specified in Clause 4 of this Article;

d/ Persons who are beyond the working age, or are at the working age prescribed by law but suffer disabilities and have no working capacity, and have no income or have incomes not exceeding the level specified in Clause 4 of this Article, including:

- Spouses of taxpayers;

- Blood parents, stepparents, lawfully adoptive parents and parents-in-law of taxpayers;

- Other helpless persons whom taxpayers are obliged to nurture directly.

4. The income level as a basis for identification of dependants to be counted for deduction based on family circumstances is the average monthly income of VND 1 million or less from all sources of income in a year.

5. Taxpayers shall themselves declare the number of their dependants proved by lawful papers and be held responsible before law for the accuracy of their declaration.

6. The Ministry of Finance shall specify procedures and dossiers for declaration of dependants to be counted for deduction based on family circumstances under this Article.

Article 13. Deductions for charity or humanitarian donations

1. Resident individuals who earn incomes from business activities, salaries or wages may have their charity or humanitarian donations deductible from their taxable incomes, including:

a/ Donations to organizations or establishments that care for or nurse children in special plights, people with disabilities or helpless elderly people;

b/ Donations to charity funds, humanitarian funds or study promotion funds.

2. The organizations, establishments and funds specified at Points a and b, Clause 1 of this Article must be those licensed or recognized by competent state agencies and operating for charity, humanitarian, study promotion or non-profit purposes.

3. Charity or humanitarian donations made in a year are deductible from taxable incomes of that year and may not be carried forward for deduction from taxable incomes of the subsequent tax year.

Article 14. Partially progressive tariff

1. The partially progressive tariff applies to taxed incomes from business activities, salaries or wages.

2. The partially progressive tariff is specified below:

Section 2

INCOMES FROM CAPITAL TRANSFER

Article 15. Taxed incomes from transfer of contributed capital amounts

1. Taxed income from the transfer of a contributed capital amount is determined to equal the transfer price minus (-) the buying price of the contributed capital amount and reasonable expenses related to the generation of income from capital transfer.

2. Transfer price means the sum of money receivable by an individual under a capital transfer contract.

3. Buying price of a contributed capital amount is the value of that capital amount at the time of capital transfer, which is the total of the initially contributed capital amount and additionally contributed or bought amounts.

4. Reasonable expenses related to the generation of income from capital transfer are actually paid expenses with lawful invoices and documents, including:

a/ Expenses for completion of legal formalities required for the transfer;

b/ Charges and fees paid by the transferor into the state budget under law;

c/ Other expenses.

Article 16. Taxed incomes from securities transfer

1. A taxed income from securities transfer is determined to equal the selling price minus (-) the buying price of securities and expenses related to the transfer.

2. The selling price of securities is:

a/ The actual transfer price at the Stock Exchange, for securities listed on the stock exchange;

b/ The actual transfer price stated in the transfer contract or the price recorded in accounting books of the unit whose securities are transferred at the time of transfer, for securities other than those specified at Point a of this Clause.

3. The buying price of securities is:

a/ The actual buying price at the Stock Exchange, for securities listed on the stock exchange;

b/ The actual buying price stated in the purchase contract or the price recorded in accounting books of the unit whose securities are transferred at the time of purchase, for securities other than those specified at Point a of this Clause.

4. Expenses related to the transfer of securities are actually paid expenses with lawful invoices and documents, including:

a/ Charges for securities transfer and receipt of transferred securities;

b/ Securities trust expense;

c/ Other expenses.

Article 17. Tax rates

1. The tax rate for incomes from the transfer of contributed capital is 20% of the taxed income from each transfer.

2. The tax rate for incomes from securities transfer is 20% of the taxed income of a whole year and applies only to taxpayers that have documents and can compute their taxed incomes under Article 16 of this Decree. For other taxpayers, the tax rate of 0.1% of the securities transfer price applies for each transfer.

Section 3

INCOMES FROM REAL ESTATE TRANSFER   

Article 18. Taxed incomes from land use rights transfer

1. Taxed income is determined to equal the land use rights transfer price minus (-) the cost price and related reasonable expenses.

2. The land use rights transfer price is:

a/ The actual price stated in the transfer contract at the time of transfer;

b/ Determined based on the land price bracket set by the provincial-level People’s Committee, in case the actual price is unidentifiable or the price stated in the transfer contract is lower than the land price set by the provincial-level People’s Committees at the time of transfer.

3. In some specific cases, the cost price of land use rights transfer is:

a/ Based on receipts of land use levy, for land areas allocated by the State with payment of land use levy;

b/ Based on the price stated in the transfer contract at the time of receipt of land use rights (when buying), for land transferred from organizations or individuals;

c/ The winning bid, in case of auction of land use rights;

d/ Determined based on the dossier proving the fulfillment of financial obligations toward the State when obtaining the land use rights certificate, for land other than those specified at Points a, b and c of this Clause.

4. Reasonable expenses related to the transfer of land use rights are actually paid expenses with lawful invoices and documents, including:

a/ Charges and fees related to the grant of land use rights as prescribed by law;

b/ Expenses for land revamp and ground leveling (if any);

c/ Other expenses directly related to the transfer of land use rights.

Article 19. Taxed incomes from transfer of land use rights associated with construction works on land, including construction works to be formed in the future

1. Taxed income is determined to equal the transfer price minus (-) the cost price and related reasonable expenses.

2. The transfer price is specifically:

a/ The actual price stated in the transfer contract at the time of transfer;

b/ In case the transfer price is not stated in the transfer contract or the transfer price stated in the contract is lower than the price set by the provincial-level People’s Committee, the transfer price is determined as follows:

- The value of transferred land is determined based on the land price bracket set by the provincial-level People’s Committee at the time of transfer;

- The value of houses, infrastructure and architectural works attached to land is determined based on the price used for calculation of the house registration fee set by the provincial-level People’s Committee. In case this price is not available, such value is determined under the Ministry of Construction’s regulations on house classification, capital construction standards and norms, and the actual residual value of works on land.

The value construction works to be formed in the future is determined based on the ratio of contributed capital to the total contract value multiplied by (x) the price used for calculation of the construction work registration fee set by the provincial-level People’s Committee. In case the provincial-level People’s Committee has not set the unit price, the value is determined based on the work construction investment capital ratio announced by the Ministry of Construction and applicable at the time of transfer.

3. The cost price is determined based on the price stated in the transfer contract at the time of purchase. For real estate not originated from a transfer, the cost price is determined based on the dossier of fulfillment of financial obligations toward the State at the time of obtaining the certificate of the right to own or use real estate.

4. Related reasonable expenses are actually paid expenses with lawful invoices and documents, including:

a/ Charges and fees related to the grant of land use rights as prescribed by law;

b/ Expenses for land revamp and ground leveling;

c/ Expenses for repair or renovation of construction works on land;

d/ Other expenses directly related to the transfer.

Article 20. Taxed incomes from transfer of the right to own or use houses

1. Taxed income is determined to equal the selling price minus (-) the buying price and related reasonable expenses.

2. The selling price is the actual transfer price determined based on the market price and stated in the transfer contract.

When the house transfer price stated in the transfer contract is lower than the price used for calculation of the house registration fee set by the provincial-level People’s Committee at the time of transfer or is not stated in the transfer contract, the transfer price is determined based on the price used for calculation of the house registration fee set by the provincial-level People’s Committee. For transfer of houses to be formed in the future, the transfer price is determined to equal the ratio of contributed capital to the total contract value multiplied by (x) the price used for calculation of the house registration fee set by the provincial-level People’s Committee.

3. The buying price is the price stated in the purchase contract. For houses not originated from a transfer or re-transfer, the buying price is based on the dossier of fulfillment of financial obligations toward the State at the time of obtaining the certificate of the right to own or use a house.

4. Related expenses are actually paid expenses with lawful invoices and documents, including:

a/ Charges and fees related to the grant of the right to own houses as prescribed by law;

b/ Expenses for house repair, renovation and upgrading;

c/ Other expenses directly related to the transfer of houses.

Article 21. Taxed incomes from transfer of the right to lease land or water surface

1. Taxed income from the transfer of the right to lease land or water surface is determined to equal the sublease rent minus (-) the lease rent and related reasonable expenses.

2. The sublease rent is determined based on that stated in the contract.

When the sublease rent rate stated in the contract is lower than the rate set by the provincial-level People’s Committee at the time of sublease, this rent rate is determined based on the rent rate bracket set by the provincial-level People’s Committee.

3. The rent is determined based on the lease contract.

4. Related expenses are actually paid expenses with lawful invoices and documents, including:

a/ Prescribed charges and fees related to the right to lease land or water surface as prescribed by law;

b/ Expenses for land or water surface revamp;

c/ Other expenses directly related to the sublease.

Article 22. Tax rates

1. The tax rate applicable to incomes from real estate transfer is 25% of taxed incomes.

2. In case taxpayers fail to determine or there is no dossier to determine cost prices and no lawful documents to determine related expenses, which serve as a basis for determining taxed incomes, the tax rate of 2% of the transfer price applies.

Section 4

INCOMES FROM INHERITANCES AND GIFTS

Article 23. Taxed incomes from inheritances and gifts

1. Taxed income from inheritance or gift is the value of an inherited asset or a gift, such as real estate, another asset subject to compulsory registration of ownership or use rights, including also securities or capital holding in an economic organization or business establishment, which exceeds VND 10 million, received by a taxpayer upon each time of inheritance or gift receipt.

2. The determination of taxed incomes from various inherited assets or gifts must be based on market prices of these assets at the time of arising the incomes, specifically as follows:

a/ For securities:

- Taxed incomes are determined based on prices quoted on the Stock Exchange on the date of receiving the inheritance or gift or the preceding date;

- For securities which have not been listed on the Stock Exchange, taxed incomes are determined based on the securities value recorded in accounting books of the companies having the securities on the date of receiving the inheritance or gift or the preceding date.

b/ For capital holdings in economic organizations or business establishments: Taxed incomes are determined based on the capital holding value recorded in accounting books of those economic organizations or business establishments at the time of receiving the inheritance or gift or the preceding date;

c/ For real estate:

- The value of land is determined based on land price brackets set by provincial-level People’s Committees at the time of receiving the inheritance or gift;

- The value of houses, infrastructure works and architectures attached to land is determined based on the price used for calculating the house registration fee set by provincial-level People’s Committees, or under the Construction Ministry’s regulations on house classification; capital construction standards and norms; and the actual residual value of works on land in case provincial-level People’s Committees have not set the price for calculating the house registration fee.

d/ For other assets: Taxed incomes are determined based on the prices of the assets or assets of the same kind (if any) which are used for calculating the registration fee.

Article 24. Time of determination of taxed incomes

1. The time of determination of the taxed income from an inheritance is the time a person carries out procedures to register the right to own or use an inherited asset.

2. The time of determination of the taxed income from a gift is the time a person carries out procedures to register the right to own or use the gift.

Article 25. Tax rate

The tax rate applicable to incomes from inheritances or gifts is 10% of taxed incomes.

Section 5

INCOMES FROM WON PRIZES

Article 26. Taxed incomes from won prizes and the time of determination of taxed incomes

Taxed incomes from won prizes and the time of determination of such incomes comply with Article 15 of the Law on Personal Income Tax. Prize-giving organizations shall withhold the personal income tax of prize winners before giving the prizes. In case organizations giving prizes of electronic games or casinos cannot determine taxed incomes of prize winners for tax withholding, they shall pay taxes on behalf of prize winners at a set rate against the total amount paid to the winners.

Pursuant to the law on tax administration, the Ministry of Finance shall set the rate against the total amount paid to prize winners provided in this Article.

Chapter III

POLICIES ON ADMINISTRATION OF PERSONAL INCOME TAX

Article 27. Tax registration and grant of tax identification numbers

1. Individuals having taxable incomes shall make tax registration with tax agencies to obtain tax identification numbers for themselves and their dependants.

2. Organizations and individuals paying taxable incomes shall make tax registration with tax agencies to obtain tax identification numbers. Those obtaining tax identification numbers before the effective date of this Decree may continue using these numbers.

Article 28. Tax withholding

1. Tax withholding means that an income-paying organization or individual deducts payable tax amounts from incomes of taxpayers before paying incomes.

2. Incomes subject to tax withholding:

a/ Incomes of non-resident individuals, including also those who are not present in Vietnam;

b/ Incomes from salaries, wages and remunerations, including also remunerations from brokerage activities;

c/ Incomes of individuals from insurance agency, lottery agency and multi-level marketing activities;

d/ Incomes from capital investment;

dd/ Incomes from capital transfer by non-resident individuals or from securities transfer;

e/ Incomes from won prizes;

g/ Incomes from copyright;

h/ Incomes from commercial franchising.

3. The Ministry of Finance shall specify cases subject to personal income tax withholding under this Article and the levels and methods of withholding.

Article 29. Cases not subject to tax withholding

1. Tax withholding does not apply to:

a/ Incomes from business activities of resident individuals;

b/ Incomes from real estate transfer;

c/ Incomes from the transfer of contributed capital of resident individuals;

d/ Incomes from inheritances or gifts of individuals.

2. In the cases specified in Clause 1 of this Article, taxpayers shall declare and pay tax directly to tax agencies.

Article 30. Declaration, payment and finalization of personal income tax

Income-paying organizations and individuals shall withhold tax and individuals having taxable incomes provided in the Law on Personal Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax shall declare, pay and finalize tax as follows:

1. Monthly tax declaration and payment apply to income-paying organizations and individuals that withhold tax for the incomes specified in Clause 2, Article 28 of this Decree with the total personal income tax amount withheld monthly for each declaration form being VND 50 million or more, except cases subject to quarterly declaration and payment of value-added tax.

2. Quarterly tax declaration and payment apply to:

a/ Income-paying organizations and individuals withholding tax for the incomes specified in Clause 2, Article 28 of this Decree that are not subject to monthly tax declaration and payment provided in Clause 1 of this Article;

b/ Business individuals or groups of business individuals;

c/ Incomes from salaries or wages paid overseas or by international organizations, embassies or consulates in Vietnam for which tax has not been withheld.

3. Tax declaration and payment upon each time of income generation apply to:

a/ Incomes from real estate transfer;

b/ Incomes from capital transfer of resident individuals;

c/ Incomes from inheritances or gifts;

d/ Incomes from goods production and trading or service provision activities of business individuals or groups of business individuals for which tax agencies have granted individual invoices;

dd/ Resident individuals’ incomes earned overseas other than incomes from salaries or wages;

e/ Non-resident individuals’ incomes earned in Vietnam but received overseas other than incomes from salaries or wages.

4. Annual tax declaration and payment apply to business individuals and groups of business individuals paying tax under Clause 1, Article 10 of this Decree.

5. Tax finalization declaration

Income-paying organizations and individuals; resident individuals having incomes from salaries, wages or business activities; and resident individuals transferring securities and paying tax at the rate of 20% of the incomes shall make annual tax finalization declaration, except in the following cases:

a/ Individuals have payable tax amounts smaller than the quarterly temporarily paid amounts without requesting tax refund or tax clearance against the subsequent period;

b/ Business individuals or households with only one source of incomes from business activities have paid tax under Clause 1, Article 10 of this Decree;

c/ Individuals or households with only one source of incomes from the lease of houses or land use rights have paid tax according to declarations in the localities where exist the  houses or land use rights for lease;

d/ For individuals having incomes from salaries or wages earned regularly at a unit and additional incomes earned at other places with an average monthly level of VND 10 million or less in a year for which income-paying units have withheld tax at source, such incomes are not subject to tax finalization if the individuals do not wish so;

dd/ For individuals having incomes from salaries or wages and additional incomes from the lease of houses or land use rights with an average monthly revenue of VND 20 million or less in a year and having paid tax in the localities where they have houses or land use rights for lease, such incomes are not subject to tax finalization if they do not wish so.

6. Individuals may authorize income-paying units to finalize tax for them in case they only have one source of incomes from salaries or wages earned at a single unit or in addition to salaries or wages earned at a single unit, they have other incomes provided at Points d and dd, Clause 5 of this Article.

7. Dossiers of tax declaration, payment and finalization for the cases specified in Clauses 1, 2, 3, 4 and 5 of this Article comply with the law on tax administration.

Article 31. Responsibilities of income-paying organizations, organizations in which individuals transfer capital, securities depository and issuing organizations and Vietnamese organizations signing contracts to buy services of foreign contractors not operating in Vietnam for tax withholding and declaration and information disclosure

1. When paying incomes to individuals, organizations and individuals shall withhold tax as follows:

a/ For incomes from salaries or wages paid to individuals under labor contracts, the income-paying organization or individual shall withhold tax of each individual based on his/her monthly taxed income and the partially progressive tariff; temporarily calculate deductions based on family circumstances according to taxpayers’ written declarations to calculate the tax amount payable in the month, and withhold tax and will not be held responsible before law for the declaration for temporary calculation of family circumstance-based deductions. The income-paying organization or individual shall declare and pay tax to the state budget under Clauses 1 and 2, Article 30 of this Decree and the law on tax administration;

b/ For other wages and payments for individuals who do not enter into labor contracts, the income-paying organization or individual shall temporarily withhold tax at the rate of 10% of the incomes paid to an individual. Individuals whose incomes are subject to temporary tax withholding under this Clause are not required to make monthly tax declaration.

The Ministry of Finance shall specify the income level as the basis for tax withholding and temporary withholding at the rate set at this Point.

2. Securities companies and commercial banks where individuals deposit securities and securities issuing organizations shall withhold tax for securities transfer at the rate of 0.1% of the securities selling price each time, including also cases of tax payment at the rate of 20% of the incomes earned from each securities transfer provided in Clause 2, Article 17 of this Decree.

3. Enterprises where individuals have transferred their contributed capital shall request individuals to produce documents proving their fulfillment of tax obligations for the transferred capital amounts before carrying out procedures to change lists of capital contributors or shareholders. Enterprises that carry out procedures to change lists of capital contributors or shareholders in case of transfer of capital without documents proving that capital transferors have fulfilled tax obligations, shall pay tax for those transferors.

4. Organizations established and operating under Vietnamese law (below referred to as Vietnamese parties) and signing contracts to buy services of foreign contractors that sign labor contracts with foreign employees working in Vietnam shall notify such contractors of the obligation to pay personal income tax of foreign employees and the responsibility to provide information on foreign employees, including the list of foreign employees, their citizenships, passport numbers, working duration, jobs and incomes, for Vietnamese parties to provide such information to tax agencies at least 7 days before the foreign employees work in Vietnam.

Article 32. Tax refund

Individuals may enjoy tax refund in the cases specified in Clause 2, Article 8 of the November 21, 2007 Law on Personal Income Tax when they request such refund.

Tax refund procedures and dossiers comply with the law on tax administration.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 33. Effect

1. This Decree takes effect on July 1, 2013.

2. This Decree replaces the Government’s Decree No. 100/2008/ND-CP of September 8, 2008, detailing a number of articles of the Law on Personal Income Tax, and Article 2 of the Government’s Decree No. 106/2010/ND-CP of October 28, 2010, amending and supplementing a number of articles of the Government’s Decree No. 85/2007/ND-CP of May 25, 2007, detailing a number of articles of the Law on Tax Administration and Decree No. 100/2008/ND-CP.

Article 34. Organization of implementation 

1. The Ministry of Finance shall guide the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees and related organizations and persons shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG