NATIONAL ASSEMBLY      THE SOCIALIST REPUBLIC Of VIETNAM
                         Independence-freedom-Happiness
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                                  Hanoi, May 19th, 1994

ORDINANCE ON INCOME TAX Of HIGH INCOME EARNERS (AMENDED)

To contribute to implementing social equality, mobilizing a part of income of individual earning high income to the state budget,

Based on Article 91 of the 1992 Constitution of the Socialist Republic of Vietnam,

Based on the Resolution of the National Assembly 9th legislature, 4th session on the 1994 state budget estimates,

The present Ordinance governs the income tax of high income earners.

Chapter I: GENERAL PROVISIONS
- Article 1.
  Vietnamese citizens in the country or abroad, individual other than Vietnamese citizens residing in Vietnam who have income; foreigner working in Vietnam who has income shall pay income tax under this ordinance.
- Article 2.
  Incomes which are subject to income tax include the following:
  - 1. Regular income in the form of: salaries, wages, allowances and bonuses; incomes other than salaries, wages received from conducting business, service which are not subject to profit tax, except incomes provided for by Article 3 of this Ordinance.
  - 2. Irregular income in the form of:
    - - Money or other items sent by overseas residents.
    - - Income derived from the transfer of technology, copyright, patent, trade mark, know-how, construction and engineering design, industrial design and other services.
    - - Lottery winnings.
  Article 3.
  - 1. Incomes which derived from interests of money kept in bank, savings, credit-cards, periodical credit-cards, stock-shares are provisionally not subject to income tax.
  - 2. Income tax shall not be levied on the following:
    - a/ Allowance for work at night, allowance for noxious or dangerous working conditions, allowance paid with respect to different zones in the country, allowance for working in off shore islands or frontier areas where living conditions are difficult; allo wance for the purpose of promoting Labour force; other allowances for the state officers; allowance for expenses of commission; feeding-up allowance or particular allowance for various branches and occupations as stipulated by the Government and other all owances from the state budget.
    - b/ Remuneration for technical innovation and invention, international or national rewards, remuneration accompanied together with honor titles gives by the State or other remuneration from the state budget.
    - c/ Social and unemployment benefits, insurance compensation, allowance for dismissal from work, benefits paid as consideration for being moved to another production unit in accordance with regulations of the State.
    - d/ Profits earned by the owner of a private business which profits are already subject to tax pursuant to the law relating to profits tax.
    - e/ Income by a foreigner in Vietnam who resides in the country for a period not exceeding 30 days.
- Article 4.
  In the event of there being any inconsistencies between this ordinance and any international agreement to which Vietnam is a party or which it has adopted, the provisions of such international agreement shall apply.
- Article 5.
  A person subject to income tax shall have obligation to pay tax in full as stipulated by this Ordinance.
- Article 6.
  To fail paying such tax, delay to pay or any violation to provisions of this Ordinance shall be prohibited.
- Article 7.
  The state institutions, social organizations, units of people's armed forces and all citizens shall have duty to control over and assist the tax offices and tax collectors in executing the task of collecting income tax.
Chapter II: THE BASE fOR INCOME TAX CALCULATION AND THE INCOME TAX TARIfF.
- Article 8.
  The Base for tax calculation is the in come and tax rate.
- Article 9.
  Regular income which is subject to tax under paragraph 2 Article 1 of this Ordinance is the total sum of money earned for year by each individual and monthly average sum is higher than 1,200,000 VND in respect of Vietnamese citizens and persons other than Vietnamese Citizens; Such sum is higher than 5,000,000 VND in respect of foreigners residing in Vietnam of Vietnamese Citizens working in foreign country. With respect to foreigners who do not reside in Vietnam, their regular incomes which are subject to tax shall be total income from working in Vietnam.
  A foreigner shall be deemed to be a resident in Vietnam if he resides in the country for a period exceeding 183 days within 12 months; Such a period is counted from the date of his coming in Vietnam. A foreigner shall not deemed to be a resident in Vietna m if he reside in the country for a period less than 183 days.
- Article 10.
  Rate of tax of regular income.
  - 1. As for Vietnamese residents and other individuals in Vietnam.
    Partially progressive tariff
    Unit: 1,000d
```
Grade           Average income per man/month            Tax Rate

01              up to     1,200                         0
02              1,200 -   2,000                         10
03              2,000 -   3,000                         20
04              3,000 -   4,000                         30
05              4,000 -   6,000                         40
06              6,000 -   8,000                         50
07              over      8,000                         60
```
    With respect to those individuals who have an average income of over 5,000,000 dong per month, then apart from the maximum tax rate described in the above tariff, they shall have to pay surcharge tax of 30 per cent to the income exceeding 5,000,000 dong.
  - 2. With respect to foreigner residing in Vietnam and Vietnamese citizens working abroad.
    Partially progressive tariff
    Unit: 1,000d
```
Grade          Average income monthly/head             Tax rate

01             up to     5,000                         0
02             5,000 -  12,000                         10
03            12,000 -  30,000                         20
04            30,000 -  50,000                         30
05            50,000 -  70,000                         40
06            over      70,000                         50
```
  - 3. With respect to foreigners not residing in Vietnam, a unified rate of 10% of total income shall apply.
- Article 11. Irregular income which is subject to the tax is income earned irregularly by individual and a sum of money et each time of its receipt is over 2,000,000 dong in accordance with paragraph 2, Article 2 this Ordinance.
- Article 12. The partially progressive tariff for the irregular income is stipulated as follows:
  Unit: 1,000d
```
Grade          Each earning             Rate (%)

1              up to   2,000             0
2              2,000 - 4,000             5
3              4,000 -10,000             10
4             10,000 -20,000             15
5             20,000 -30,000             20
6             over    30,000             30
```
  Particularly, with respect to:
  - + Income derived from the transfer of technology in a sum higher than 2,000,000 shall be subject to a unified fixed rate of 5 per cent.
  - + Income derived from a lottery wining in a sum higher than 12,500,000 shall be subject to a unified fixed rate of 10 per cent.
  - + Money or other items sent by overseas residents in a sum higher than 2,000,000d shall be subject to a unified fixed rate of 5 per cent.
- Article 13. Income received in kind or in foreign currency shall have to be converted into Vietnamese currency as a basis for tax calculation.
  Income received in kind shall be calculated in accordance with the market price at the time when the income received in kind is generated.
  foreign currency shall be calculated by reference to the purchasing price of that currency as published by the State Bank of Vietnam at the time when the income in foreign currency is earned.
  With respect to the foreign currency the exchange rate of which has not been published by the State Bank of Vietnam, it shall be calculated according to the exchange rate provided by the Ministry of finance.
Chapter III: DECLARATION AND PAYMENT Of INCOME TAX
- Article 14.
  Income tax relation to the regular incomes shall be paid on annual calculation, monthly declaration and temporary payment. In the end of the year or by the expiry of the contract of the year, it shall be recalculated and paid with the Tax Office not late r than february 28 of the next year or 30 days after date at which the contract expires.
- Article 15.
  Income Tax in relation to the irregular incomes shall be paid in accordance with each earning or each period.
- Article 16.
  The income tax payer shall have to implement the full and timely declaration and payment of the tax in accordance with the regime stipulated by the Ministry of finance.
- Article 17.
  The Ministry of finance organizes the collection of income tax and delegates the State agencies economic and social organizations, called in short as the organization to implement the extraction of income tax before pay of the income.
  The delegated organization which extracts the income tax shall be titled to enjoy 0.5 per cent to 1.0 per cent of the income tax already paid to the State budget in accordance with regulations of the Ministry of finance.
- Article 18.
  The organization delegated to extract the income tax shall be responsible for:
  - 1/ Making a full declaration with the Tax Office the number of people of the taxable unit, its regular and irregular incomes under taxation.
  - 2/ Keeping the accounting books and documents in relation to the taxable incomes of the income earners who are paid by the unit concerned and submit them to the Tax Office once required to do it.
  - 3/ Receiving the declarations of the tax payers and submit them to the Tax Office.
  - 4/ Extracting and informing the number of payable taxes of each person, and paying it to the state budget as stipulated.
- Article 19.
  The Tax Office has duties and power to:
  - 1/ Guide, examine, supervise and speed up the declaration calculation and payment of income tax.
  - 2/ Make the tax book, collect the income tax and give the receipt of tax collection.
  - 3/ Make a report and impose administrative penalties in accordance with its authorization or propose to prosecute criminal responsibility against the breaches of the ordinance on Income Tax for High Income Earners.
  - 4/ Consider and revolve the claims, denunciations concerning the income tax.
Chapter IV: EXEMPTION, REDUCTION Of INCOME TAX
Article 20.
- 1/ Where there is a natural disaster enemy inflicted destruction, accident affecting the life of the tax payers, the tax payers shall get the reduction or exemption of the payable income tax.
- 2/ Exemption, reduction of Income tax shall be considered in a number of special cases provided for by the Government.
The Government stipulates in detail the form of exemption or reduction of the income tax.

Chapter V: HANDLING Of BREACHES AND REWARDS

1. The handling of breaches of the Ordinance on income tax for High Income Earners is stipulated as follows:
- a/ Any individual or organization that does not follow the provisions on the procedures concerning declaration, the making of accounting books and documents on the income tax does not extract the payable income tax as stipulated shall depending on the deg ree of much or less seriousness, give warning or impose fine up to 500,000 dong.
- b/ Any individual or organization that has an act of false declaring or evading the tax payment shall, apart from the full payment of income tax as stipulated in the Ordinance, be fined from one to three times of the defrauded tax.
  - - for the first breach: one penalty.
  - - for the second breach: two penalties.
  - - for the third breach: three penalties.
  In the case the breach has some serious details, then only the first breach could be penalized with from two to three times of the defrauded tax.
- c/ Any individual or organization that delays the payment of taxes or fines described in the tax collection order on the penalty decision shall, apart from the full payment of the taxes or the fines as stipulated in this Ordinance, be fined with 0.2 per c ent of the delayed payable sum for each day of delay.
- d/ Any individual or organization that drags on their feet in the payment of taxes or fines shall be handled as follows:
  - + The deposited money of that individual or organization at the bank shall be extracted to pay the tax and fine. The Bank is held responsible for executing the priority regime in extracting money of that individual or organization deposited at the bank to pay the taxes and fines to the State Budget in accordance with the order of tax collection and the Decision made to handle the case by the Tax Office:
  - + Make an inventory of the assets as stipulated by the law so as to ensure the collection of the taxable money and the fines that are still lacking.
2. Any individual that evades paying tax in a great quantity or has already been handled administratively in accordance with points a, b, c, and d paragraph 1 of this Article still violates or evades paying taxes in a very great quantity or committed brea ches and crimes in other serious cases, then he/she shall be executed for criminal responsibility in accordance with the stipulation in Article 169 of the Criminal Code.

Article 22.
The authorization to handle the breaches as stipulated in paragraph 1, Article 21 of this Ordinance is provided as follows:
- 1. With respect to the breaches stipulated at point a:
  - a/ The head of a tax collection station is empowered to impose fines up to 100,000dong.
  - b/ The head of the district tax collection sub-department or the similar level is authorized to impose fines of up to 400,000 dong.
  - c/ The head of the provincial Tax collection Department or the similar level is authorized to impose fines of up to 1,000,000 dong.
- 2. With respect to the breaches stipulated in point b:
  - a/ The head of the district Tax Collection sub-department or the similar level is authorized to impose one time of the fine against the defrauded tax.
  - b/ The head of the provincial Tax Collection Department or the similar level is authorized to impose up to three times of the fine against the defrauded tax.
  - 3. The head of the Tax collection Sub department directly controlling income tax payers is authorized to impose the fines against the delayed tax payment as stipulated in point c and d, paragraph 1, Article 21 of this Ordinance.
Article 23.
Any individual who obstructs or incites the other person to obstruct the implementation of the Ordinance on Income Tax for High income Earner or obstructs the investigation and handling of the breaches of this Ordinance shall, depending on the degree of the much or less seriousness of the breaches, be penalized administratively or prosecuted for criminal responsibility as stipulated by the Law.
Article 24.
The Tax Collector or other individual who takes advantage of his/her position and power to appropriate or embezzle the income tax shall compensate the State all the taxes already appropriated or embezzled and shall, depending on the degree of the much or less seriousness of the breaches, be penalized administratively or prosecuted for criminal responsibility as stipulated by the Law.
Any tax collector or individual who takes advantage of his or her position and power to protect the violator of the ordinance on income tax for high income earner intentionally goes against or lacks the responsibility in the implementation of this ordinan ce shall depending on the degree of much or less seriousness of the breaches be penalized administratively ex prosecuted per criminal responsibility as stipulated by the law.
Any tax collector who lacks the sense of responsibility or intentionally mishandled the case, causing damage to the tax payers or the handled person shall compensate the damage-inflicted person.
Article 25.
The Government shall stipulate the reward regime for:
- 1. The tax offices, the tax collectors for their satisfactory performance of the assigned task.
- 2. The person who has discovered the breach of the Ordinance on Income Tax for High Income Earner.

Chapter VI: CLAIMS, VALIDITY

Article 26.
Any organization or individual has the right to lodge claims against the incorrect implementation of the Ordinance on Income Tax for High Income Earner forward the organization itself or the individual himself.
The claim shall be sent to the Tax Office which directly controls and decides the handling within 30 days after the date of receiving a notice of the extraction, tax collection order or the handling decision.
Sending the resolution, the claimant shall have to pay all and in time the tax and fines already informed.
The claim receiving agency shall consider and solve the issue within 15 days after the date of receipt of the claim. With respect to the complicated cases, the time limit may be extended, but not exceeding 30 days after the date of receipt of the claim.

Article 27.
If the claimant does not agree with the decision of the claim receiving agency which leaves the claim beyond the above-said time limit without any resolution the claimant is entitled to lodge further claim to the agency higher over the claim receiving age ncy.

Article 28.
The Tax Office shall have to give the refund of the incorrectly collected tax or fines and the compensation (if any) within 15 days after the date of receipt of the decision on the handling from the senior level.

Article 29.
If there is any tax maldeclaration, tax evasion or mistakes in tax calculation, the Tax Office is entitled to render the order to collect or get the refund of tax within 3 years after the date of tax maldeclaration, tax evasion or mistake in tax calculat ion.
Chapter VII: ORGANIZATION Of IMPLEMENTATION

Article 30.
The Government leads the organization of implementing the income tax throughout the country. In event where the Market price changes from 20% and higher, the Government shall submit appropriate correction of amount of money in the tax tariffs to the stand ing committee of the National Assembly.

Article 31.
The Minister of finance is responsible for organizing the implementation and examination of the income tax through the country; for resolving all claims and petitions concerning the income tax within his authority.

Article 32.
The Chairmen of the People's Committees at various levels given the direction to the implementation and examination of the implementation of the Ordinance on Income Tax for High Income Earner in their own localities.

Chapter VIII: IMPLEMENTING PROVISIONS

Article 33.
This Ordinance takes legal effect from June 01, 1994. All the previous provisions contrary to this Ordinance shall be repealed.

Article 34.
The Government shall issue detailed provision for the implementation of this Ordinance.

Hanoi, May 19th, 1994
for the Standing Committee of the National Assembly
Chairman

NONG DUC MANH

ORDINANCE ON INCOME TAX Of HIGH INCOME EARNERS (AMENDED)

Chapter I: GENERAL PROVISIONS

Chapter III: DECLARATION AND PAYMENT Of INCOME TAX

Chapter IV: EXEMPTION, REDUCTION Of INCOME TAX

Chapter V: HANDLING Of BREACHES AND REWARDS