CIRCULAR

ON DEFERMENT OF TIME FOR PAYMENT OF PERSONAL INCOME TAX

Pursuant to the Law on Personal Income Tax2 and its implementing guidelines;
Pursuant to Decree 118-2008-ND-CP of the Government dated 27 November 2008 on functions, duties, powers and organizational structure of the Ministry of Finance;
The Ministry of Finance hereby provides the following guidelines on deferment of time for payment of PIT:

Article 1. Taxpayers entitled to deferment of time for payment of PIT

1. Taxpayers entitled to deferment of time for payment of PIT stipulated in this Circular shall comprise:

- Resident individuals having taxable income from business, income from salary and wages, income from capital investments, income from capital transfers (including transfer of securities), income from copyright, income from franchises, income from inheritances, or income from receipt of a gift;

- Non-resident individuals having taxable income from capital investments, from capital transfers (including transfer of securities), income from copyright, or income from franchises.

2. Taxpayers not entitled to deferment of time for payment of PIT [shall comprise]:

- Resident individuals having income from real property transfers, or income being winnings or prizes;

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Article 2. Deferment of time for payment of PIT

1. The period of deferment shall be from 1 January 2009 to 31 May 2009 inclusive.

2. Determining the amount of PIT eligible for deferment of time for payment:

The amount of PIT eligible for deferment of time for payment shall be determined as follows:

2.1. With respect to income from salary and wages of resident individuals, the amount of PIT eligible for deferment of time for payment shall be the amount of PIT required to be deducted [and withheld] by the income-paying entities on a monthly basis or shall be the amount of PIT directly declared by individuals on a monthly basis (applicable to individuals required to directly declare tax).

2.2. With respect to income from capital investments, from capital transfers (including transfer of securities), from copyright or from franchises, the amount of PIT eligible for deferment of time for payment shall be the amount of PIT which must be declared or which income-paying entities must deduct [and withhold] on each occasion when income arises.

2.3. With respect to income from inheritances or income from receipt of a gift of resident individuals, the amount of PIT eligible for deferment of time for payment shall be the amount of PIT which must be declared on each occasion when income arises.

2.4. With respect to business income of resident individuals:

(a) In respect of cases where the amount of PIT is provisionally paid in each quarter:

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- Where a business individual is only able to account for his or her turnover from business but not for his or her expenses, the amount of PIT eligible for deferment of time for payment shall be the amount of PIT provisionally payable for the quarter which is calculated in accordance with declared turnover and taxable income ratio.

- Where a business individual pays tax on the basis of a fixed level of turnover, the amount of PIT eligible for deferment of time for payment shall be the amount of PIT on a fixed level of turnover payable in a quarter as notified by the tax office.

(b) With respect to individuals leasing out a house or assets with collection of one lump sum payment for many months, the amount of PIT eligible for deferment of time for payment shall be the amount of PIT corresponding to the [number of] months for which payment is deferred.

(c) In a case where itinerant traders or business individuals who pay tax on a fixed level of turnover need to issue a one-off invoice, the amount of PIT eligible for deferment of time for payment shall be equal to the amount of PIT provisionally payable over turnover from each journey of goods or over turnover recorded on the one-off invoice.

(d) With respect to individuals who accept to act as agents selling goods with receipt of commission (e.g. insurance agents, lottery agents etc), the amount of PIT eligible for deferment of time for payment shall be the amount of PIT provisionally deducted [and withheld] by the commission-paying entities every month.

With respect to cases in which payment of PIT is not deferred, income-paying entities and individuals having income shall still implement declaration and payment of tax in accordance with Circular 84-2008-TT-BTC of the Ministry of Finance dated 30 September 2008 providing guidelines for implementation of a number of articles of the Law on Personal Income Tax and Decree 100-2008-ND-CP of the Government dated 8 September 2008 making detailed provisions on a number of articles of the Law on Personal Income Tax.

3. Order and procedures for deferment of time for payment of PIT:

3.1. In respect of income subject to withholding, income-paying entities must deduct personal income tax of taxpayers entitled to the deferment of time for payment of PIT, and must still calculate the deductible amount of PIT when paying income and notify the individuals receiving income of the deductible amount of PIT eligible for the provisional deferment of time for payment, and must prepare a declaration of such withheld amount of PIT on a monthly basis in accordance with current regulations and lodge such declaration with the tax office so that the tax office knows the amount of PIT arising but eligible for the deferment of time for payment.

3.2. In respect of income which must be directly declared with the tax office by individuals paying tax:

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3.3. Individuals having income shall be entitled to retain the amount of PIT eligible for the deferment during the [stipulated] period of deferment.

By May 2009, the Government shall submit to the National Assembly a decision on dealing with the amount of PIT eligible for the deferment of time for payment, and [thereafter] the decision of the National Assembly shall be implemented.

4. Dealing with breaches

During the period of deferment, any organization or individual withholding tax and any individual having income eligible for deferment of time for payment of PIT shall be deemed not to have committed a breach of late payment of PIT and shall not be subject to any administrative penalty for late payment of PIT with respect to the amount of PIT eligible for deferment of time for payment.

Other breaches relating to withholding tax or tax declaration shall still be subject to administrative penalties in accordance with the Law on Tax Management.

Upon expiry of the period of deferment, organizations and individuals entitled to deferment of time for payment of PIT must comply with guidelines of the Ministry of Finance.

Article 3. Organization of implementation

This Circular shall be of full force and effect after forty-five (45) days from the date of its signing, and shall apply to income arising from 1 January 2009. Any problems arising during implementation should be reported to the Ministry of Finance for prompt resolution.

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