Official Dispatch 2943/TCT-TNCN 2017 conversion of after-tax incomes into pre-tax incomes

The General Department of Taxation received Official Dispatch No. 05052017/Statkraft dated May 5, 2017, from the Representative office of Statkraft Holding Singapore Pte. Ltd and Official Dispatch No. 27042017/MOF-Itochu dated April 27, 2017, from the Representative office of Itochu Corporation, regarding the conversion of after-tax incomes into pre-tax incomes before July 1, 2013, and Official Dispatch No. 5961/VPCP-DMDN dated June 8, 2017, of the Government Office, regarding Mr. Satoshi Goto’s proposal, regarding the conversion of after-tax incomes into pre-tax incomes before July 1, 2013. After consulting leaders of the Ministry of Finance, the General Department of Taxation has the following opinions:

Pursuant to the instructions provided in Item 2.1.6 Clause 2 Section II Part A of Circular No. 84/2008/TT-BTC dated September 30, 2008.

Pursuant to the instructions provided in Point a Clause 4 Article 7 of the Ministry of Finance's Circular No. 111/2013/TT-BTC dated August 15, 2013.

The General Department of Taxation issued Official Dispatch No. 1578/TCT-TNCN dated April 28, 2009; Official Dispatch No. 3565/TCT-TNCN dated September 14, 2010, and Official Dispatch No. 336/TCT-TNCN dated January 24, 2014, regarding conversion of tax-exclusive incomes into pre-tax incomes.

Pursuant to the aforesaid instructions, if an individual receives after-tax incomes and pays compulsory insurance premiums, the conversion of tax-exclusive incomes shall be carried out as follows:

- For the period prior to July 1, 2013: tax-exclusive incomes shall be converted in accordance with Item 2.1.6 Clause 2 Section II Part A of the Ministry of Finance's Circular No. 84/2008/TT-BTC dated September 30, 2008, and the following guiding documents of the General Department of Taxation: Official Dispatch No. 1578/TCT-TNCN dated April 28, 2009; Official Dispatch No. 3565/TCT-TNCN dated September 14, 2010, and Official Dispatch No. 336/TCT-TNCN dated January 24, 2014. Accordingly, the compulsory insurance premiums shall not be deducted when converting after-tax incomes into pre-tax incomes.

- The formula for conversion of tax-exclusive incomes into pre-tax incomes in the period prior to July 1, 2013, which complies with Circular No. 84/2008/TT-BTC, is not yet scientific. Therefore, the Ministry of Finance issued Circular No. 111/2013/TT-BTC dated August 15, 2013, amending and supplementing Circular No. 84/2008/TT-BTC. To be specific: From July 1, 2013, tax-exclusive incomes shall be converted in accordance with Point a Clause 4 Article 7 of the Ministry of Finance's Circular No. 111/2013/TT-BTC dated August 15, 2013. Accordingly, the compulsory insurance premiums shall be deducted when converting after-tax incomes into pre-tax incomes.

The General Department of Taxation hereby informs the Representative office of Statkraft Holding Singapore Pte. Ltd and the Representative office of Itochu Corporation for implementation./.