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NATIONAL ASSEMBLY        SOCIALIST REPUBLIC Of VIETNAM
                        Independence-freedom-Happiness

                                   Hanoi, 30 June 1990
                             As amended to 5 July 1993

LAW ON TURNOVER TAX

Pursuant to articles 80 and 83 of the Constitution of the Socialist Republic of Vietnam;

Pursuant to article 84 of the 1992 Constitution.

This Law provides for a turnover tax.

CHAPTER I General Provisions

Article 1

Organizations and individuals carrying on business in production, construction, transportation, commerce, provision of services and other businesses (herein called, business establishments) and which have turnover shall pay turnover tax.

Article 2

The following business is not subject to turnover tax:

1. Agricultural production which is subject to agricultural tax;

2. The production of commodities which are subject to special sales tax;

3. Production of goods for export.

Article 3

for the purpose of this Law, the following terms shall have the meanings ascribed to them thereunder:

1. production means mining, manufacturing, and the processing of goods. processing means production where a person who places an order delivers all, or a substantial part of, the materials to a business establishment for conversion to products and re turn on a subcontract basis.

2. construction means the activities of surveying for, designing and building premises and factories, roads, bridges, mines and earthworks, and interior decoration and includes sub-contracting and supply of building materials.

3. transportation means the carriage of goods and passengers by simple or mechanized transport by road, rail, waterway, air or pipeline.

4. trade in lots means the trading in of lots or consignments of goods, or sale of goods by a business establishment belonging to a commercial branch outside its fixed business location.

5. services means the supply of labour, and science, technical or art services supplied for the purposes of production, business, consumer and cultural activities; and the provision of banking, credit, pawn broking, and insurance services.

6. turnover means gross receipts from the sale of goods, processing goods by way of subcontract, and provision of services.

7. barter of goods or services means the use of goods or services for payment.

8. internal consumption of goods or services means the consumption, by a business establishment of its own goods or services internally or as gifts.

Article 4

A business establishment shall make full payment of taxes as stipulated by this Law.

Article 5

All acts of tax evasion including delay in tax payment and other breaches of the provisions of this Law are strictly prohibited.

Article 6

All State bodies, social organizations, units of the armed forces and all citizens shall be responsible for assisting the tax office and tax officers in carrying out their duties.

CHAPTER II The Basis for Calculation of Turnover Tax

Article 7

The basis for tax calculation is turnover and the tax rate.

Article 8

1. for the purpose of tax calculation turnover is defined as follows:

(a) The turnover from production, commerce and restaurant businesses is the revenue received.

(b) The turnover from processing is the value of labour, fuel, power, raw materials, and other expenditure.

(c) The turnover from the business of sales or purchases is the commission earned;

(d) The turnover from services is the fees paid for their provision;

(e) The turnover from banking and provision of credit is the difference between interest earned from loans or deposits and the interest paid for loans and deposits. The turnover from other service activities in the banking section is the fees or comm issions earned from the provision of the particular service. The turnover from insurance business activities is the premiums paid by customers.

2. Where turnover of a business establishment is in a foreign currency, it shall be permitted to pay tax in either foreign or Vietnamese currency and the rate exchange shall be the rate published by the State Bank of Vietnam at the time of payment.

3. Where there is barter or internal consumption of goods or services, those goods and services shall, for the purpose of calculation of tax, be valued at the market prices applicable at the time of barter or internal consumption.

Article 9

Tax rates for each type of business activity are stipulated in the tariff attached to this Law.

Where deemed necessary, the Standing Committee of the National Assembly may make and publish a decision to amend or add to the tax rates stipulated in the turnover tax tariff, and any such decision shall be submitted to the next meeting of the National As sembly for approval.

CHAPTER III Registration, Declaration and Payment of Turnover Tax

Article 10

A business establishment shall:

1. Register with the tax office and make a declaration, in accordance with the standard forms, as to its capital, labour, sector of the economy, nature of business, goods produced, services provided, and location, no less than five days before commen cement of operation, merger, demerger, change of business, or dissolution.

2. for each separate activity strictly comply with the regulations of the State on accounting standards, records, vouchers and receipts.

3. Declare in full its turnover in the manner stipulated by the Ministry of finance.

4. Provide data books of account, records, and vouchers requested by the tax office.

5. Pay taxes in full and in time.

Article 11

A business establishment shall:

1. Submit a turnover declaration to the tax office for each month within the first five days of the next month even if it has no turnover.

2. Pay turnover tax in full in the time stipulated by the tax office but no later than the 15th day of the next month.

Article 12

Business establishments which are engaged in activities in more than one sector, shall pay turnover tax in accordance with the tax rates stipulated for each activity.

Article 13

When there is barter of goods and services each party must pay turnover tax.

Article 14

Each small business establishment shall pay turnover tax every three or six months. The turn-over tax to be paid shall be determined by the tax office based on declarations by the business establishment, on investigation reports made by tax officers and open discussions held with establishments.

Small business establishments for purposes of tax calculation are those which have the following average monthly turnover in the sectors stated:

1. Commercial production sector: up to three million (3,000,000) dong.

2. Restaurant sector: up to one million five hundred thousand (1,500,000) dong.

3. Production, processing, construction, transportation, and services sector: up to seven hundred thousand (700,000) dong.

Article 15

Business establishments engaged in trade in lots shall pay turnover tax in accordance with the tax rates stipulated for the relevant category of goods and commercial branch and shall pay the tax before transportation of the goods. The turnover shall be ca lculated in accordance with the market price at the time the goods are transported.

Article 16

The tax office shall have the following powers and duties:

1. To guide, assist, and supervise business establishments to comply strictly with the standards of accounting, records and vouchers and the procedures for making declarations and payment of turnover tax.

2. To examine and supervise all business activities in order to the calculate the tax.

3. In necessary cases, to require any organization or individual to provide documents relating to the calculation and the payment of turnover tax.

4. To calculate turnover tax, prepare and approve the tax book, notify the amount of turnover tax to be paid to the State Treasury and in collecting tax to issue to the taxpayer a receipt of the Ministry of finance for tax paid.

5. In relation to any breaches of the Law on Turnover Tax, to prepare reports, impose administrative penalties within its authority, and propose prosecution for criminal responsibility.

6. To consider and resolve complaints and accusations relating to turnover tax.

Article 17

The tax office is entitled to determine the turnover for the purposes of calculating turnover tax in cases where the business establishment has not:

1. Registered with the tax office or has not made a declaration in accordance with the stipulations regarding determination of turnover tax.

2. Submitted at all, or in time, a declaration of monthly turnover.

3. Strictly complied with regulations relating to accounting standards, records and vouchers.

4. Produced the books of account, records and vouchers and invoices required by the tax office or has not supplied sufficient documents necessary for calculation of turnover for tax purposes.

The tax office shall determine the amount of turnover on the basis of the results of its investigation.

In the event that the business establishment disagrees with the amount of turnover tax levied, it may complain to the immediately superior tax office. Pending resolution of the complaint, the business establishment shall pay the amount of turnover tax lev ied.

CHAPTER IV Reduction of and Exemption from Turnover Tax

Article 18

The following may be considered for exemption from, or reduction of, turnover tax:

1. Elderly or disabled people, and small traders who only maintain a minimal living standard.

2. A business establishment which has suffered losses due to natural disasters, war or other contingencies.

3. A business establishment operating in mountainous areas or islands, which conducts scientific research, or applies new technology, and any manufacturing establishment which puts into actual or trial operation a new production line or which manufac turers import substitutes shall if faced with difficulties be considered for a reduction of tax payable of up to 50% for a period of up to two years. In the case of a business establishment which operates in mountainous areas or islands the period for re duction may be up to three years.

The Government shall stipulate the principles and procedures required for, and shall delegate the authority to grant, a tax reduction or exemption as provided for in this article.

CHAPTER V Breaches and Rewards

Article 19

1. Breaches of the Law on Turnover Tax shall be dealt with as follows:

(a) Any organization which, or individual who, breaches the stipulations relating to registration and declaration or the establishment of books of account and the keeping of records and vouchers as stated in articles 10 and 11 of this Law shall, depen ding on the seriousness of the breach, be subject to a warning or a fine of up to five hundred thousand (500,000) dong; (b) Any organization which or individual who makes false declarations or evades payment of tax shall in addition to making full payment of the turnover tax stipulated in this Law, be fined an amount of up to three times the amount of the tax evaded:

-for the first offense: once

-for the second offense: twice

-for the third offense: three times.

If the first offense is very serious it may be the subject of a fine of twice or three times the tax evaded;

(c) Any organization which, or individual who, makes late payment of the tax due or of a fine imposed as a penalty shall, in addition to paying the tax or fine as stipulated by this Law, pay, in respect of each day of late payment a fine of one fifth of one per cent (0.2%) of the amount of tax paid late;

(d) Any organization which, or individual who, delays payment of tax or a fine shall be dealt with as follows:

The amount of the tax or fine payable shall be transferred as a priority by the bank concerned from the credit balance of a bank account of the organization or individual to the State Revenue;

-Its goods and chattels shall be impounded as security for the full payment of the tax or fine payable; and

-Its assets shall be withheld in accordance with the stipulations of the law as security for the full payment of the outstanding tax or fine.

2. Any individual who evades paying a large amount of tax or who has been previously subjected to administrative penalty due to a failure to comply with any of sub-clauses (a), (b), (c) or (d) of clause 1 of this article and who again commits either of those offenses or a serious crime shall be subject to criminal prosecution in accordance with the stipulations of article 169 of the Criminal Code.

Article 20

The power to deal with the breaches mentioned in clause 1 of article 19 of this Law is as follows:

1. for the breaches referred to in sub-clause (a):

(a) The head of the local tax office has power to impose a fine of up to fifty thousand (50,000) dong.

(b) The head of the district or equivalent level tax office has power to impose a fine of up to two hundred thousand (200,000) dong.

(c) The tax office of a province or equivalent level has power to impose a fine of up to five hundred thousand (500,000) dong.

2. for the breaches mentioned in sub-clause (b):

(a) The head of a district or equivalent level tax office has power to impose a fine equal to the amount of the evaded tax.

(b) The head of a provincial or equivalent level tax office has power to impose a fine three times the amount of the evaded tax.

3. The head of the tax office directly responsible for business establishment may impose the penalty stipulated in articles 19(1)(c) and (d) of this Law for delay in making a tax payment .

Article 21

Any individual who obstructs or incites others to obstruct, the implementation of this Law on Turnover Tax or the investigation and dealing with any breaches of this Law shall, depending on the seriousness of the offense, be subject to administrative pena lty or prosecution for criminal responsibility in accordance with the provisions of the law.

Article 22

Any tax officer or individual who takes advantage of his position to appropriate or embezzle turnover tax shall repay to the State all moneys appropriated and embezzled and, depending on the seriousness of the offense, be subject to administrative penalty or prosecution for criminal responsibility in accordance with the provisions of the law.

Any tax officer or individual who takes advantage of his position and ability to protect those who breach the provisions of this Law on Turnover Tax, who behaves in a manner which is contrary to the provisions this Law, or who is irresponsible in its impl ementation shall, depending on the seriousness of the offense, be subject to administrative penalty or prosecution for criminal responsibility in accordance with the provisions of the law.

Any tax officer who is irresponsible or intentionally deals with a case in an unlawful manner which results in damage being suffered by the taxpayer or other person shall pay compensation to the person affected.

Article 23

The Government shall make rules for the reward of:

1. Tax offices which, and tax officers who, satisfactorily carry out their assigned duties.

2. Persons who discover breaches of this Law on Turnover Tax.

CHAPTER VI Complaints and Time Limits

Article 24

Organizations and individuals may lodge complaints in respect of incorrect application of this Law on Turnover Tax.

A complaint shall be lodged at the tax office which issued the notice to pay tax or the relevant decision, within thirty (30) days from the date of receipt of the notice or the decision.

Pending resolution of the complaint the complainant shall pay in full and in time the amount of tax payable or fines imposed.

The office which received the complaint shall consider and resolve it within fifteen (15) days from the date of receipt. In more complicated cases, the period may be extended up to thirty (30) days from the date of receipt.

Article 25

In the event that the complainant disagrees with the decision of the office which deals with the complaint, or the time limited for its resolution expires without it being resolved, the complainant may petition the office immediately superior to that at w hich the complaint was first lodged.

Article 26

The tax office shall refund any amount wrongly collected and pay compensation, if any, within fifteen (15) days from the date on which the superior office's decision on the complaint is received.

Article 27

In the event that a fraudulent statement, tax evasion or mistake in relation to taxation is discovered within three years of its occurring, the tax office shall have the power and responsibility to collect or repay the tax, as the case may be.

CHAPTER VII Organization of Implementation

Article 28

The Government shall be responsible for the organization of tax collection throughout Vietnam.

Article 29

The Ministry of finance shall be responsible for the organization of the collection of special sales tax throughout Vietnam, and for the resolution within its power of all complaints and petitions.

Article 30

The chairmen of the people's committees at all levels shall in their respective localities supervise the implementation and examination of, and compliance with, this Law on Turnover Tax.

CHAPTER VIII final Provisions

Article 31

In the event that a market price fluctuates more than twenty (20) per cent, the Government may, in accordance with current prices, adjust all money amounts previously referred to in this Law.

Article 32

This Law on Turnover Tax shall be of full force and effect as of 1 October 1990.

All previous provisions inconsistent with this Law are hereby repealed.

This Law was approved by Legislature VIII of the National Assembly of the Socialist Republic of Vietnam at its 7th Session, on 30 June 1990.

President of the National Assembly

LE QUANG DAO

Provisions of amending law not included above.

Article 3

The Government shall amend and add to all promulgated provisions detailing implementation of the Law on Turnover Tax in order to be consistent with this law.

Article 4

This Law shall be at full force and effect as of 1 September 1993. This Law was approved by Legislation IX of the National Assembly of the Socialist Republic of Vietnam at its Third Session on 5 July 1993.

for The National Assembly Chairman

NONG DUC MANH