CIRCULAR

GUIDING THE APPLICATION OF TAX AND REGISTRATION FEE PREFERENCES PROVIDED FOR IN ARTICLE 13 OF DECREE No.44/1998/ND-CP OF JUNE 29, 1998 ON THE TRANSFORMATION OF STATE ENTERPRISES INTO JOINT STOCK COMPANIES

Pursuant to the current tax laws and ordinances;
Pursuant to the Law on Domestic Investment Promotion (amended) of May 20, 1998;
Pursuant to Decree No.44/1998/ND-CP of June 29, 1998 of the Government on the transformation of State enterprises into joint stock companies;
The Ministry of Finance hereby guides the application of tax and registration fee preferences provided for in Article 3 of Decree No.44/1998/ND-CP of June 29, 1998 of the Government on the transformation of State enterprises into joint stock companies, as follows:

I. THE CONTENTS OF TAX AND REGISTRATION FEE PREFERENCES

1. Regarding the profit tax (enterprise income tax).

a) For State enterprises, which have been transformed into joint stock companies, a new investment form, and fully qualified for preferences under the Law on Domestic Investment Promotion (amended):

The conditions for enjoying tax preferences; the tax preference levels; the procedures, order and competence for considering the tax preferences shall comply with provisions of the Law on Domestic Investment Promotion (amended) and guiding documents of the Government and the Ministry of Finance.

b) For State enterprises, which have been transformed into the joint stock companies but not qualified for preferences under the Law on Domestic Investment Promotion (amended):

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The 50% reduction of profit tax (enterprise income tax) for 2 consecutive years (24 months) from the date the equitized enterprises are granted business registration certificates to commence their operation under the Law on Companies.

b.2) The procedures, competence and order for effecting the preferences:

Within 10 days from the date it is granted business registration certificate, a joint stock company eligible for profit tax reduction according to the guidance in Point 1.b of this Circular shall have to make tax declaration and registration then compile and send a dossier to the tax agency directly managing it, requesting the tax reduction as prescribed. The dossier shall comprise:

- The decision of the competent agency to transform the State enterprise into a joint stock company (the notarized copy or the copy with true-copy seal of the unit);

- The business registration certificate (the notarized copy or the copy with the true-copy seal of the unit);

- The declaration for lax registration;

- An application for profit tax reduction (enterprise income tax) with signature of the lawful representative and seal of the unit.

Within 10 days from the date of receiving the dossier, the tax agency shall have to notify the company of the tax reduction duration according to regulations. If it finds that the company’s dossier is invalid or incomplete, it shall have to notify the company thereof so that the latter can remake or supplement such dossier within 7 days from the date of receiving the dossier.

The consideration for profit tax reduction (enterprise income tax) for subjects defined in Point 1.b of this Circular shall be conducted by the tax agency directly managing the concerned companies when making annual tax settlement and such tax reduction shall be stated in the annual tax notices sent to the companies.

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In cases where laborers who work in equitized enterprises receive and use income amounts divided from the remainder of reward funds and welfare funds before such enterprises are equitized to buy equities, such income amounts shall not be accounted into the taxable incomes (if any) of such laborers. If after receiving such income amounts, the laborers do not use them to buy equities, such amounts shall be accounted into the taxable incomes (if any).

3. Regarding the registration fee:

According to Clause 2, Article 13 of Decree No.44/ 1998/ND-CP of June 29, 1998 of the Government, the properties under the management and use of equitized State enterprises, which are now placed under the ownership of joint stock companies, shall not be subject to registration fee.

The procedures for non-collection of registration fee shall be carried out as follows:

A joint stock company (as the result of equitizing State enterprise), when registering its ownership over properties subject to registration fee (previously under the management and use of the State enterprise), shall have to produce to the tax agency (where the properties are registered) the following papers:

- The declaration of registration fee made according to the set form for each kind of property;

- The competent agency’s decision on the actual value of the to-be-equitized enterprise enclosed with the written record on the determination of the enterprise’s actual value (the notarized copy);

- The competent agency’s decision to transform the State enterprise into a joint stock company in accordance with Article 17 of Decree No.44/1998/ND CP (the notarized copy or the copy with true-copy seal of the unit).

The tax agency shall examine the dossier and write its certification on the registration fee declaration that the properties are not subject to the registration fee which shall be registered by the company with the State management agency. For the joint stock Company’s properties subject to the registration fee, which are not stated in the competent agency’s decision on the actual value of the equitized enterprise, the tax agency shall collect registration fee according to the prescribed regime.

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For the State enterprises already transformed into joint stock companies and eligible for profit tax reduction according to Clause 1, Article 10 of Decree No.28-CP of May 7, 1996 of the Government, but not yet considered for tax reduction, the tax reduction shall be effected in accordance with the above stipulations and such companies shall have to mark complete dossiers requesting the entitlement to tax preferences and send them to the tax agencies directly managing them for consideration and settlement in accordance with guidance in Point I.1.b.2 of this Circular. If the tax reduction period enjoyed by companies falls within the fiscal year of 1996 or 1997, the actual amounts of profit tax reduction for the companies shall be deducted from the profit tax amount to-be paid by the companies in the 1998 fiscal year.

This Circular takes effect after its signing. Any difficulties and/or problems arising in the course of implementation shall be reported by the enterprises and tax agencies to the Ministry of Finance for consideration and timely settlement.

FOR THE MINISTER OF FINANCE
VICE MINISTER




Pham Van Trong