Law amending and supplementing a number of articles of the Laws on tax.

Pursuant to the Law amending and supplementing a number of Articles of Tax Laws No. 71/2014/QH13 effective from January 1, 2015; Nghe An Tax Department announces a number of basic contents of the Law amending and supplementing a number of Articles of Tax Laws as follows:

I/About personal income tax (PIT)

1/ For personal business income.

- According to current regulations (before December 31, 2014): Personal income tax of business households and individuals is determined based on taxable income calculated as a percentage (%) of revenue or taxable revenue determined according to declaration minus business expenses; and business individuals are entitled to family deductions when determining taxable income and are determined according to the progressive tax table.

- From January 1, 2015, business individuals pay personal income tax at the rate of revenue for each field and business sector as follows:

+ Distribution and supply of goods: 0.5%

+ Services, construction not including materials: 2%. Particularly, property leasing activities, insurance agents, lottery agents, multi-level sales agents: 5%.

+ Production, transportation, services associated with goods, construction with contracted materials: 1.5%

+ Other business activities: 1%

2/ From January 1, 2015, personal income tax is exempted for:

- Income from salaries and wages of Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies operating internationally.

- Income of individuals who are ship owners, individuals who have the right to use ships from activities of providing goods and services directly serving offshore fishing and exploitation activities and income of crew members working on ships.

3/ For income from securities transfer of individuals.

From January 1, 2015, a tax rate of 0.1% will be applied to each securities transfer price instead of the two previous tax calculation methods. No personal income tax will be finalized for income from securities transfer.

4/ For income from real estate transfer of individuals.

From January 1, 2015, a tax rate of 2% will be applied to each transfer price of real estate instead of the two previous tax calculation methods.

II/About value added tax (VAT)

To contribute to encouraging the development of the agricultural sector, creating conditions for fishing boat owners to stay at sea and remove difficulties, contributing to promoting enterprises to participate in socialized fields, the Law has been amended and supplemented with the following provisions:

1/ Add the subjects not subject to VAT for the activities of building new offshore fishing vessels.

2/ Change 3 groups of goods subject to VAT at the rate of 5% to those not subject to VAT: Fertilizer; Animal feed, poultry, pets; Specialized machinery and equipment for agricultural production. From January 1, 2015, enterprises paying VAT according to the deduction method when selling these 3 groups of goods when making invoices, the tax rate line is not crossed out and input VAT is not deducted.

III/About resource tax

To resolve difficulties in international trade relations and meet integration requirements, the Law stipulates: Changing from tax-exempt subjects to non-taxable subjects for natural water used for agriculture, forestry, and salt production.

IV/On corporate income tax (CIT)

1/ Regarding deductible and non-deductible expenses when calculating corporate income tax.

- Additional expenses for vocational education activities are included in deductible expenses.

- Remove the 15% control on total costs for promotion, advertising, reception, customer service... stipulated in Point m, Clause 2, Article 9 of Corporate Income Tax Law No. 32/2013/QH13.

2/ Regarding corporate income tax incentives:

Apply a tax rate of 15% to: income of enterprises growing, raising, and processing in the agricultural and aquatic sectors not located in areas with difficult socio-economic conditions or areas with especially difficult socio-economic conditions. (Currently, preferential tax rates are not applied).

V/ On tax management

1/ From January 1, 2015, the List of invoices and documents for sold goods and services (form No. 01-1/GTGT) and the List of invoices and documents for purchased goods and services (form No. 01-2/GTGT) in monthly and quarterly VAT declarations will be abolished.

2/ On the currency used to determine revenue, expenses, taxable prices and taxes paid to the state budget.

In case the taxpayer generates revenue, expenses, and taxable prices in foreign currency or the taxpayer is obliged to pay in foreign currency but is permitted by a competent state agency to pay tax in Vietnamese Dong, the foreign currency must be converted into Vietnamese Dong at the actual transaction exchange rate at the time of occurrence. (Currently: must be converted at the average interbank exchange rate announced by the State Bank at the time of occurrence).

3/ Reduce late payment fee:

In the context of bank interest rates remaining stable at low levels, businesses' awareness of tax compliance has increased, to remove difficulties for businesses, the Law stipulates the application of a late payment fee of 0.05%/day during the period of late tax payment.

4/ Do not apply coercive measures and do not charge late payment fees in cases where taxpayers provide goods and services paid for by state budget funds but have not been paid, so they do not pay taxes on time, leading to tax debt, in order to ensure fairness in the rights and obligations of the State towards enterprises.

For detailed content of Law No. 71/2014/QH13, please refer to the website of the General Department of Taxation and Nghe An Tax Department./.

NGHE AN TAX DEPARTMENT