To: 4 Oranges Co., LTD.

Below is the response of General Department of Taxation to Official Dispatch No. 13/2021/CV-KETO dated 30/12/2021 of 4 Oranges Co., LTD. (hereinafter referred to as "the Company") regarding declaration and payment of tax on behalf of household businesses and individual businesses that pay fixed tax:

1. Regarding sales promotion gifts

- Article 92 of the Law on Commerce No. 36/2005/QH11 on forms of sales promotion:

"Article 92. Forms of sales promotion:

1. Giving samples of goods or providing samples of services to customers for trial use free of charge.

2. Gifting goods or providing free-of-charge services to customers.

3. Selling goods or providing services at prices lower than goods sale prices or service provision charge rates previously applied during the period of sales promotion already registered or announced. In case of goods or services subject to price management by the State, the sales promotion in this form shall comply with regulations of the Government.

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5. Selling goods or providing services together with prize-contest entrance tickets to customers, for purpose of selecting prize winners according to the rules and prizes already announced.

6. Selling goods or providing services together with opportunities for customers to participate in games of chance, the participation in which comes after the purchase of goods or services and the winning of prizes depends on the luck of participants according to the rules and prizes already announced.

7. Organizing programs for frequent customers whereby gifts are presented to customers on the basis of the quantities or values of goods purchased or services used by such customers and expressed in forms of customers’ cards, coupons acknowledging the purchase of goods or services, or other forms.

8. Organizing cultural, artistic or entertainment programs or other events for customers for the purpose of sales promotion.

9. Other forms of sales promotion if approved by the State management agency in charge of commerce.

- Clause 10 Article 3 of the Law on Personal Income Tax dated 21/11/2007 of National Assembly of Vietnam:

"Incomes from gifts that are securities, capital holdings in economic organizations or business establishments, real estate and other assets subject to ownership or use registration."

Pursuant to the aforementioned regulations: When the Company gifts assets subject to registration of right to ownership and right to enjoyment to customers without accompanied purchase or sale of goods, the gifts received by the customers are subject to personal income tax on gifts. In case the Company pays assistance in cash or in kind to household businesses that meet revenue targets, regulations of Point dd Clause 5 Article 7 of the Government’s Decree No. 126/2020/ND-CP dated 19/10/2020 elaborating some Articles of the Law on Tax Administration shall apply.

2. Regarding sales promotion bonuses and discounts

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3. Regarding taxes paid by the Company on behalf of customers receiving sales promotion bonuses and discounts

- Clause 2 Article 12 of the Law on Value-added Tax dated 03/6/2008 of National Assembly of Vietnam:

 "2. Conditions on a business establishment to be entitled to input value-added tax credit are specified as follows:

a) Having an added-value invoice on goods or service purchase or a document proving the payment of value-added tax at the stage of importation;

b) Having proof of payment by bank transfer for the purchased goods or services, except goods or services valued at under twenty million Vietnam dong upon each time of purchase;

c) For exported goods and services, apart from the conditions specified at Points a and b of this Clause, the business establishment must also have a contract signed with a foreign party on goods sale or processing or service provision, a goods or service sale invoice, a proof of payment by bank transfer and a customs declaration.

Payment for exported goods or services by clearing between exported goods or services and imported goods or services or paying debts on behalf of the State is regarded as payment by bank transfer."

- Clause 5 Article 1 of the Law on Amendments to some Articles of the Law on Corporate Income Tax dated 19/6/2013 of National Assembly:

"Article 9. Deductible and non-deductible expenditures

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a) Actual expenditures related to the business of the enterprise; expenditures on National defense and security of enterprise according to law;

b) Expenditures that have sufficient invoices and documents according to law. The invoice for any purchase of goods or services of at least 20 million VND must be enclosed with proof of cashless payment, except for the cases in which proof of cashless payment is not required by law.

Pursuant to the aforementioned regulations, when providing gifts as sales promotion, discounts, etc. for individuals and pay tax on behalf of these individuals, the Company must not deduct input VAT and must not record them as deductible expenditures when determining income subject to corporate income tax regarding the taxes paid on behalf of these individuals.

For your information./.

ON BEHALF OF DIRECTOR GENERAL
PP DIRECTOR OF TAX ADMINISTRATION FOR SMALL AND MEDIUM ENTERPRISES, HOUSEHOLD BUSINESSES AND INDIVIDUAL BUSINESSES
DEPUTY DIRECTOR




Ta Thi Phuong Lan