Official Dispatch No. 3847/TCT-TNCN dated August 23, 2016 of the General Department of Taxation on introduction to new contents of Circular No. 96/2016/TT-BTC

THE MINISTRY OF FINANCE
THE GENERAL DEPARTMENT OF TAXATION

Official Dispatch No.3847/TCT-TNCN dated August 23, 2016 of the General Department of Taxation on introduction to new contents of Circular No. 96/2016/TT-BTC

To:Provincial Departments of Taxation

On June 28, 2016, the Ministry of Finance promulgated Circular No. 96/2016/TT-BTC on documents and procedures for grant of exemption from personal income tax to foreign experts participating in programs and projects funded by foreign non-governmental aid in Vietnam, which comes into force from August 15, 2016.

Provincial Departments of Taxation shall disseminate the Circular among tax officials and taxpayers in their provinces, especially the following contents:

1.Scope of adjustment

Circular No. 96/2016/TT-BTC replaces Circular No. 55/2007/TT-BTC dated May 29, 2007 and comes into form from August 15, 2016. Circular No. 96/2016/TT-BTC only provides for documents and procedures for grant of exemption from personal income tax to foreign experts who directly participate in programs and projects funded by foreign non-governmental aid in Vietnam. Policies on exemption from personal income tax shall comply with the Prime Minister’s Decision No. 06/2016/QD-TTg dated February 22, 2016, which consist of: scope, taxpayers eligible for exemption, conditions for exemption, tax-free incomes.

2.Documents and procedures for grant of tax exemption

Pursuant to Article 2 of Circular No. 96/2016/TT-BTC:

2.1. Application for tax exemption

An application for tax exemption consists of:

- The confirmation of foreign experts’ participation and request for personal income tax exemption submitted by the governing body (in case the foreign expert has a contract with the governing body) or foreign non-governmental aid manager (in case the foreign expert has a contract with the foreign NGO or aid manager) on the income from direct participation in a non-governmental program/project in Vietnam (template No. 01/XNCG-DNMT enclosed with the Circular);

- Relevant documents:

+ A copy of the Decision to approve the foreign non-governmental aid program/project in Vietnam.

+ A copy of the program/project instrument approved by a Vietnamese competent authority.

+ A copy of the contract between the foreign expert and the foreign NGO or governing body or aid manager.

Previous regulationsdid not specify documents relevant to foreign experts’ tax-free income.

2.2. Deadline for submitting application for tax exemption

The application shall be submitted within 30 days from the effective date of the foreign expert’s contract. The governing body or aid manager shall send the application to the tax authority.

Previous regulationsdid not specify the deadline for submitting applications for tax exemption and foreign experts shall send their applications to the tax authority.

2.3. Receiving body:

The receiving body varies on a case-by-case basis:

- If the foreign expert has a contract with the governing body, the application shall be submitted to the Provincial Department of Taxation of the province where the governing body is located.

- If the foreign expert has a contract with the foreign NGO or aid manager, the application shall be submitted to the Provincial Department of Taxation of the province where the aid manager’s office is located.

According to previous regulations,the application for tax exemption shall be submitted to Provincial Department of Taxation of the province where the project management board or project owner s office is located.

2.4. Procedures for granting tax exemption:

Within 15 working days from the day on which the satisfactory application is received, the tax authority shall issue a confirmation of personal income tax exemption (template No. 02/XNMT enclosed herewith) or a notice of ineligibility for tax exemption (template No. 03/TB-KMT enclosed with the Circular)

Previous regulationsdid not specify a deadline for the tax authority to issue a confirmation of personal income tax exemption or a notice of ineligibility for tax exemption.

2.5. In case of replacement of a foreign expert while the application for tax exemption has been sent to the tax authority, the governing body or aid manager shall send the application as if it is submitted for the first time.

For the Director

The Deputy Director

Cao Anh Tuan