CIRCULAR

TO GUIDE THE TAX BRANCHES OF FOREIGN TOBACCO COMPANIES IN VIETNAM

Considering to the decree No 187 dated October 1994 of Vietnamese Government about the duty, the right and the organizing financial machinery:
Regarding to the documents No 2108-QHQT dated April 22nd 1994 of the Government of Socialist Republic of Vietnam about the permission for foreign tobacco enterprises cooperated in cigarettes producing with Vietnamese general tobacco company to set up branch offices in Socialist Republic of Vietnam.
With the reference to the fiscal law and current fiscal decree of Socialist Republic of Vietnam.
Without the government's regulations to set up and to operate branches of foreign tobacco enterprises in Vietnam, after having consent with ministry of Commerce, SCCI, National Bank.

Ministry of finance has timely guided about policy of tax for branches of foreign enterprises in Socialist Republic of Vietnam (branches) as follows:

I- KIND OF TAXES AND FINANCIAL DUTIES.

1. Profit tax:

Regarding to the regulation of law of profit tax dated June 30th 1990 and the complements, amendments for some articles of the law of tax of profit dated July 5th 1993, branches have responsibility to pay the tax for all benefits arise from business operations.

The tax rates of profit, procedures of declaration and payment of the profit tax must be implemented in accordance with the regulations of circular No 73ATC/TCT dated August 30th 1993 of the Ministry of finance which is guiding the implementation of decree No55-CP dated

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For the sale of cigarettes sealed foreign labels in Vietnamese market, the profit tax must be paid with the tax rates of 2% per the turnover of sale or 14% per the gap between the price of sale and the price of purchase if branches have accounting documents, document proofs,

Branches have to make a list and register to pay the tax with local tax bureau. 5th of the next month is the latest date for branches to make the tax declaration of the month before to send to the tax bureau and to pay the tax to the treasury. In all circumstances, the term of this month's tax payment must be by 15th of the following month. If the profit tax of the month before is paid after 5 days of the following month, the fine will be 0

2. Export-import duty.

All the goods (including cigarette production), equipment, materials of branches which are authorized to import in Vietnam to serve the operation of branches or allowed to export and to entrust, are the objects of export and import taxes. So, the import duty or export duty must be paid in accordance with regulations of the law of import-export taxes. The procedures of declaration for the payment of import-export duty according to the circular No 72A TC/TCT dated

August 30th 1993 of the ministry of finance which is guiding the implementation of the Government's decree No 54-CP dated August 28th 1993 regulating details for the fulfillment of the law of import-export duty and the amendment and complement of the law of export-import duty.

3. Land rental

Branches which are allowed to next lands, surface of maters, surface of seas to build bureaus, stores, shops and other constructions have the obligation to pay the money to the Government of Socialist

Republic of Vietnam for lands, surface of waters, surface of seas rental under the regulations of the land law and other law guide-documents.

The local tax bureau where branches obtain permission to rent lands, have the responsibility to conduct, to check, to collect money from lands, waters seas rental according to the regulations.

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4. Revenue tax

Branches have the responsibility to pay revenue tax for all the revenues arise from trading operation, the revenues taken out of the right to property, the right to make use of the branches'assets inside and outside Vietnamese territory.

Tax rates of revenue tax 25%

The may that identifying the taxed revenue, procedures of declaration, payment of revenue tax and tax balance under the regulations of circular implementation of tax regulations applying for enterprises with foreign capital investment and trading cooperation of foreigners on the basis of contracts under the law for foreign investments in Vietnam.

In the procession of identifying the profits and expenditures to calculate taxed - revenues, the nationality of contracts of purchases and sales, product supply, service and account relations among the branch and other companies, branches in the same company or the company, which controls the branch, will be considered by the tax bureau if these contracts rest on the basis of fair transmission or not.

Revenue taxes that is timely paid every three months and the revenue taxes of all the years must be balanced when a financial year is over.

5. Tax of revenue transference to oversea.

Branches have the obligation to pay the tax for revenue transference to oversea according to the regulations of current law for the tax of revenue transference to oversea.

The tax rates of tax of revenue transference to oversea: 10%.

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6. Personnel income tax for persons who have high income.

Foreigners and Vietnamese people who work in the branch have the duty to pay personnel income tax under the regulations of the decree of income tax on the persons who have high income published on May 19th 1994.

7. Other financial obligations:

Beside the above mentioned taxes, the branch has the responsibility to pay trade-licence tax, tax of copyright income (if any), and other kinds of taxes regarding to the current law of Socialist Republic of Vietnam.

Moreover, branches have the duty to declare, to deduct and to pay for the State of Vietnam the tax of copyright income, profit tax and revenue tax (if any) of foreign organizations and individuals doing business in Vietnam on the basis of contracts that is signed with branches unlisted in the regulations of foreign investment law in Vietnam.

II. COMPLAINTS AND SETTLING THE CONTRAVENTION

1. The right to complaint

The branch has the right to complain in the case of disagreement with the settlement about the tax of the tax bureau.

The complaint petition must be sent to the tax bureau where have issued the settled decision for tax within 30 days since the branch received settled decision for tax. In the time before settling the complaint, the branch has the obligation to implement all the decisions of the tax bureau.

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2. The Responsibility of the tax bureau in settling the complaint petition.

The tax bureaus at various levels have to consider, settle the complaints in the term of 15 days since they received the complaints petition. For complicated cases that need to be investigated, considered for a longtime, the tax bureau has to

3. Settling the contravention:

Every

Republic of Vietnam.

3.1. If tax payers implement the procedures of the declaration, registration of tax make up the accounting book, use and keep the proofs unregarding to the regulations, the fore warning and the fine will depend on the level of contraction.

3.2. Tax payers are responsible for the reliabilities and the accuracy of tax declaration in the term of 10 years. If the tax bureau find out that tax payers declare unhonestly, dodge taxes at any moment of time within this term, he tax payers have not only to pay enough tax considering to the law but also to be fined from 1 to 3 times as the fraudulent tax.

3.3. If the tax payers delay the payment of taxes or fines on tax announcement, ordinance of tax collection or other settlement of the tax bureau they have to pay enough tax or fines regarding to the law.

In addition, the fine will be 0

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This circular comes into force since the signed date. All the changes (if any) of tax law after the issue of this circular will come into force to apply for all the kinds of taxes in this circular.

In the procession of implementing this Circular, Branches and tax bureaus should reflect the impediments (if any) to the ministry of finance (General department of tax) to get more conduction.

FOR THE MINISTRY OF FINANCE
DEPUTY MINISTER




Pham Van Trong