CIRCULAR

GUIDING WITHHOLDING PERSONAL INCOME TAX OF LOTTERIES' AGENTS AND LOTTERY WINNERS

Pursuant to the Law on Personal Income Tax dated 21 November 2007 and its implementing guidelines; Pursuant to the Law on Management of Tax dated 29 November 2006 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 tax registration, withholding tax, and tax finalization and declaration of personal income tax of lotteries' agents, and withholding personal income tax on income payable to lottery winners:

Article 1. Applicable scope:

1. Individuals who directly sign an agency contract with a lotteries company and which have taxable income. Taxable income from agency activities comprises income being agent's commission, bonuses in all forms, and other subsidies and payment receivable from the agent's principal.

2. Individuals who win lotteries.

Article 2. Tax registration

1. Individuals acting as lotteries' agents must conduct tax registration pursuant to the Law on Management of Tax and its implementing guidelines.

2. An application file for tax registration shall comprise:

- Declaration of tax registration on standard form 3 DK-TCT issued with Circular 85/2007/TT-BTC of the Ministry of Finance dated 18 July 2007 implementing the Law on Management of Tax regarding tax registration.

- Copy people's identity card or passport.

- Business registration certificate or agency contract signed with a lotteries company.

3. Location for lodging application files for tax registration: Individuals acting as lotteries' agents shall directly lodge their files with the Tax Department in the district where they reside.

Article 3. Withholding tax on income payable to agents

- Lotteries companies paying income to individuals who have directly signed an agency contract with such company shall be responsible to withhold personal income tax from income payable to agents in accordance with the following scale:

Unit: 1,000 VND

- Lotteries companies shall be responsible to issue certificates of tax withheld on request from their agents.

- An agent's income in accordance with the above tariff means the agent's income without deductions for dependants, or for compulsory insurance premiums or for contributions to charitable funds and so forth.

Article 4. Tax finalization declaration

1. Applicable to lotteries companies:

- Each month, based on the amount of PIT withheld on behalf of agents, a lotteries company shall complete the tax declaration on standard form 1 issued with this Circular and lodge it with the tax office directly managing such company. Monthly tax declarations must be lodged no later than the 20th day of the following month.

If the amount of tax withheld each month is less than five million dong, then a quarterly tax declaration shall be lodged.

The time-limit for lodging the quarterly tax declaration shall be no later than the 30th day of the first month of the following quarter.

- Lotteries companies must complete a tax finalization declaration for PIT withheld on behalf of agents in accordance with standard form 2, and shall also prepare the list on standard form 2A issued with this Circular.

The time-limit for lodging the tax finalization file shall be no later than ninety days after the end of the western calendar year.

2. Individuals acting as agents and having taxable income must make a tax finalization declaration in the following cases:

- The amount of tax payable by them in a year is greater than the amount withheld or provisionally paid, or they have income arising in the year at a level on which tax is payable but such tax has not yet been withheld or provisionally paid.

- They claim a tax refund or set-off in the following tax period of tax already paid.

Tax finalization declaration files and time-limits for lodging them must comply with clause 2.4 of section 2 of Part D of Circular 84/2008/TT-BTC of the Ministry of Finance dated 30 September 2008 applicable to business individuals.

If an individual who is an agent claims deductions for dependants, then his or her tax finalization declaration must enclose the file proving that he or she has dependents.

- Tax finalization shall not be required in other cases.

Article 5. Withholding tax on income paid to lottery winners

- Any individual winning a lottery with a prize valued at above ten million dong on one lottery ticket shall be a personal income taxpayer.

- Assessable income from lottery winnings shall be that part of the prize on each lottery ticket which exceeds ten million dong as receivable by the winner.

- Lotteries companies shall be responsible to withhold PIT on behalf of any individual with a winning ticket valued at above ten million dong.

- Each month, a lotteries company shall collate all the PIT items withheld on winnings above ten million dong and declare same on standard form 3 issued with Circular 84 referred to above, and lodge such declaration and pay the tax withheld into the State budget in accordance with regulations. At the end of the year, a lotteries company must conduct tax finalization of the amount PIT withheld on standard form 6 and also complete the list on standard form 6D issued with Circular 84 referred to above.

Article 6. Organization of implementation

1. 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 of lotteries' agents as from 1 January 2009.

2. Guidelines on income tax applicable to high incomer earners and on corporate income tax applicable

to individuals acting as lotteries' agents are hereby repealed.

3. Other matters not guided in this Circular shall be implemented in accordance with Circular 84/2008/TT-BTC of the Ministry of Finance dated 30 September 2008 guiding implementation of the Law on Personal Income Tax and Decree 100/2008/ND-CP of the Government dated 8 September 2008 on the Law on Personal Income Tax.

Any problems arising during implementation should be promptly reported to the Ministry of Finance (General Department of Taxation) for resolution.