VietnameseOfficial Dispatch No. 1329/BTC-TCT dated January 29, 2010 of the Ministry of Finance on implementation of Circular 130/2008/TT-BTC of December 26 2008
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Official Dispatch No. 1329/BTC-TCT dated January 29, 2010 of the Ministry of Finance on implementation of Circular 130/2008/TT-BTC of December 26 2008
| 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: | 1329/BTC-TCT | Signer: | Do Hoang Anh Tuan |
| Type: | Official Dispatch | Expiry date: | Updating |
| Issuing date: | 29/01/2010 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Tax - Fee - Charge |
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Effect status: Known
THE MINISTRY OF FINANCE ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom – Happiness --------- |
No. 1329/BTC-TCT Re: Implementation of Circular 130/2008/TT-BTC of December 26 2008 | Hanoi, January 29, 2010 |
To: The Provincial-level Tax Departments
In the course of implementation of the Finance Ministry’s Circular No. 130/2008/TT-BTC of December 26, 2008, guiding business income tax, the Ministry of Finance has received requests of some Tax Departments and enterprises for clearer guidance on a number of points in this Circular. In response to these requests, the Ministry of Finance gives the following guidance:
1. Guidance on the inclusion in deductible expenses of the amounts paid by enterprises into unemployment insurance funds.
- Article 102 of the Social Insurance Law and Article 25, Chapter IV of Decree No. 127/2008/ND-CP of December 12, 2008, detailing the implementation of the Social Insurance Law regarding unemployment insurance, which took effect on January 1, 2009, stipulate: “Sources for the formation of unemployment insurance funds comply with Article 102 of the Social Insurance Law.
1. Laborers’ payment of 1% of the monthly salary or remuneration for unemployment insurance premiums are based.
2. Employers’ payment of 1% of the fund of monthly salaries and remuneration of laborers who participate in unemployment insurance on which unemployment insurance premiums are based.
3. The State’s monthly budgetary support equivalent to 1% of the fund of the salaries and remuneration of laborers covered by unemployment insurance on which unemployment insurance premiums are based, which is transferred once a year.”
- Point 2.11, Section IV, Part C of Circular No. 130/2008/TT-BTC guides: “To disallow the inclusion in deductible expenses of “amounts remitted into social insurance, health insurance and trade union funds in excess of prescribed levels.”
Accordingly, unemployment insurance contributions paid for laborers by enterprises under the Social Insurance Law and Decree No. 127/2008/ND-CP of December 12, 2008, detailing the implementation of the Social Insurance Law are compulsory insurance, and therefore enterprises are allowed to include in deductible expenses the unemployment insurance contributions which are not exceeding the prescribed levels.
2. Guidance on non-inclusion of personal income tax amounts in deductible expenses
Point 2.31, Section IV, Part C of Circular No. 130/2008/TT-BTC guides: To disallow inclusion in deductible expenses of “… personal income tax amounts.”
Personal income tax amounts disallowed to be included in deductible expenses for determining business taxable incomes are tax amounts withheld by enterprises from taxpayers’ incomes for payment into the state budget. In case an enterprise signs labor contracts stipulating that salaries and remunerations paid to laborers are exclusive of personal income tax, personal income tax amounts paid by the enterprise for its laborers may be included in deductible expenses for determining business taxable incomes.
3. Guidance on payment of taxes assessed on the basis of revenues from the sale of goods or provision of services by non-business units.
Clause 4, Part B of Circular No. 130/2008/TT-BTC guides: “Non-business units that conduct goods and service business operations subject to business income tax (at the rate of 25%), after subtracting the reduced or exempted business income tax amounts (if any), and can calculate revenues but cannot determine expenses for and incomes from these operations, shall declare and pay business income tax in a percentage of revenues from the sale of goods or provision of services, specifically as follows:
- For services: 5%;
- For goods trading: 1%;
- For other business operations: 2%.”
Under the above guidance, non-business units that conduct goods and service business operations subject to business income tax and can calculate revenues but cannot determine expenses for and incomes from these operations shall declare and pay business income tax in a percentage of revenues from the sale of goods or provision of services.
Those which are entitled to business income tax incentives may enjoy such incentives only when they comply with accounting and invoice regulations, register and file tax return and pay business income tax accordingly, when applying for business income tax incentives, shall not calculate business income tax according to the revenue-based percentages mentioned above.
4. Guidance on collection of business income tax for real estate transfer.
4.1. Enterprises implemented projects to build houses for sale before 2008 and already sold some completely built houses attached with land use rights. For projects completed in 2009 on, when making business income tax finalization for the whole project, an enterprise shall separate houses already delivered together with land use rights to customers in 2008 or before for which it paid taxes under the tax policy applied in 2008 and before, and shall calculate and pay business income tax under Business Income Tax Law No. 09/2003/QH11 and guiding documents. For houses sold together with land use rights from January 1, 2009 on, it shall calculate and pay business income tax under Business Income Tax Law No. 14/2008/QH12 and guiding documents.
4.2. Article 13 of the Government’s Decree No. 124/2008/ND-CP of December 11, 2008, stipulates that “incomes from real estate transfer include incomes from transfer of land use rights or land lease rights; incomes from the sub-lease of land by real estate enterprises under the land law, with or without infrastructure facilities and architectural works attached to land.”
Clause 1, Section I, Part G of the Finance Ministry’s Circular No. 130/2008/TT-BTC of December 26, 2008, guides that “incomes from real estate transfer include incomes from transfer of land use rights or land lease or sub-lease right of real estate enterprises under the land law, with or without infrastructure facilities and architectural works attached to land.”
Accordingly, from January 1, 2009, enterprises of all economic sectors that earn incomes from transfer of land use rights, transfer of land lease rights, and real estate enterprises that earn incomes from land sub-lease are liable to pay tax on incomes from real estate transfer.
5. Guidance on the determination of business income tax for enterprises applying a business income tax period different from the calendar year.
An enterprise applying a fiscal year different from the calendar year will be subject to the business income tax policy under Circular No. 134/2007/TT-BTC for the 2008 tax period, and the business income tax policy under Circular No. 130/2008/TT-BTC for the 2009 tax period. An enterprise applying a fiscal year different from the calendar year and ineligible for preferential business income tax rate, when calculating its payable business income tax, will be eligible for the business income tax rate of 25% for the number of months in 2009.
Example: An enterprise has a tax period from October 1, 2008, to September 30, 2009. In case it is currently subject to an ordinary tax rate but not a preferential tax rate, when finalizing its business income tax, the enterprise may allocate the payable tax amount as follows:
Payable business income tax | = | Taxable income in the fiscal tax period | x 3 months x 28% + | Taxable income in the fiscal tax period | x 9 months x 25% |
12 months | 12 months |
6. Guidance on the determination and carrying forward of losses.
- Clause 2, Article 7 of Decree No. 124/2008/ND-CP stipulates that “an enterprise suffering a loss may carry forward such loss to the subsequent year, which will be subtracted from taxable incomes. The time of carrying losses forward must not exceed 5 consecutive years, counting from the year following the loss-making year.”
- Clause 2, Section VII, Part C of Circular No. 130/2008/TT-BTC guides that “an enterprise that suffers a loss after making tax finalization may carry forward the loss of the tax finalization year for subtraction from subsequent years’ taxable incomes. The time of carrying losses forward must not exceed 5 consecutive years, counting from the year following the loss-making year.”
So, the time of carrying forward losses arising from 2009 on must not exceed 5 years, counting from the year following the loss-making year. Losses arising before 2009 shall be carried forward under legal documents effective at that time; If the remaining loss-carry forward time continues in 2009, it shall be calculated consecutively.
7. Guidance on other incomes.
Point 19, Section V of Circular No. 130/2008/TT-BTC guides: Other incomes: “Incomes received in cash or in kind from financing sources, excluding donations mentioned in Clause 7, Section VI of this Part.”
This provision is re-guided as follows: Other incomes: “Incomes received in cash or in kind from financing sources.”
8. Guidance on the application of business income tax incentives.
8.1. Enterprises established before January 1, 2009, that were ineligible for investment incentives and business income tax preferences but now become eligible for investment preferences under Decree No. 124/2008/ND-CP and Circular No. 130/2008/TT-BTC, are not entitled to business income tax incentives under Decree No. 124/2008/ND-CP and Circular No. 130/2008/TT-BTC for the remaining period of these incentives, except those operating in socialized domains and fully meeting all conditions on types, sizes and standards on socialized domains in the list promulgated together with the Prime Minister’s Decision No. 1466/QD-TTg of October 10, 2008, may shift to enjoy incentives guided in Clause 5, Part I of Circular No. 130/2008/TT-BTC.
8.2. Production units which were newly established from January 1, 2007, to before January 1, 2009, and possess a business registration certificate or establishment license are entitled to business income tax incentives under Decree No. 24/2007/ND-CP and Circular No. 134/2007/TT-BTC based on the actual conditions met by the enterprises. The methods of determining periods of tax exemption and reduction from the 2009 tax period comply with the guidance in Clause 4, Part I of Circular No. 130/2008/TT-BTC. Production units that have been established since January 1, 2009, but fail to meet the conditions on business lines and geographical areas enjoying investment incentives defined in Decree No. 124/2008/ND-CP and Circular No. 130/2008/TT-BTC are not entitled to business income tax incentives defined in Decree No. 124/2008/ND-CP and Circular No. 130/2008/TT-BTC.
The Ministry of Finance notify the above to provincial-level Tax Departments for information and guidance to their units for compliance.-
FOR THE MINISTER OF FINANCE DEPUTY MINISTER Do Hoang Anh Tuan |
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