CIRCULAR

AMENDING AND SUPPLEMENTING CIRCULAR NO.62/2009/TT-BTC OF 27/03/2009, CIRCULAR NO.02/2010/TT-BTC DATED 11/01/2010 AND CIRCULAR NO.12/2011/TT-BTC DATED 26/01/2011

Pursuant to the Law on Personal Income Tax No.04/2007/QH12, dated November 21, 2007;

Pursuant to the Decree No.100/2008/ND-CP, dated September 8, 2008 of the Government, on detailing some Articles of the Law on Personal Income Tax;

Pursuant to the Decree No.118/2008/ND-CP, dated November 27, 2008 of the Government, on functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance guides the amendment of Circular No.62/2009/TT-BTC dated March 27, 2009, Circular No.02/2010/TT-BTC dated November 01, 2010 and Circular No.12/2011/TT- BTC dated January 26, 2011 as follows:

Article 1. To amend Article 5 of Circular 62/2009/TT-BTC dated March 27, 2009 on guiding the amendments and supplements of Circular No.84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance as follows:

Organizations and individuals that pay commissions to goods sale agents; salaries, wages, other remuneration or other sums of money to individuals performing services with total value of payment from VND 1.000.000 /time or more, shall withhold the amount of personal income tax before paying incomes to the individuals under the following guidance:

- Applying the withholding rate at the proportion of 10%/ incomes paid to the individuals having tax code and 20% for individuals without a tax code, except for cases for which the Ministry of Finance has given a written guidance on specific temporary withholding rates (for commissions of the insurance or lottery agents).

Organizations which signed labor contracts, service contracts with individuals shall be responsible for notifying the individuals on the above mentioned discount rate for them to conduct procedures for issuing tax code.

The tax offices shall grant immediately tax codes within 5 working days after receiving complete dossier of application for the tax code.

- In case individuals have only incomes which are subject to tax withholding (including insurance or lottery agents) at the above mentioned rate but their total estimated taxable incomes after the family circumstance-based reductions are still not high enough to be taxed (for example, an individual earns an annual income of less than VND 48 million per year, if single, or less than VND 67.2 million per year, if having one dependant reduced for full 12 months, or less than VND 86.4 million if having two dependants reduced for full 12 months,…), the individuals shall make written commitments (upon the form No.23/BCK-TNCN issued together with this Circular) and send them to income payers for use as a temporary basis for not withheld for paying personal income tax. Based on commitments of income receivers, income payers shall not withhold the tax. At the end of the year, the income payers shall still supply lists of these income receivers to the tax offices. The individuals who made written commitments shall take responsibility for their commitments. Any frauds in their commitments shall be handled under the Law on Tax Administration.

- For organizations and individuals that employ laborers under seasonal labor contracts of a term of between over 3 months and under 12 months, the above mentioned tax withholding rate will not be applied but temporary tax withholding will be made on monthly incomes according to the Partially Progressive Tariff.

Article 2. To amend Article 5 of Circular No. 02/2010/TT-BTC dated January 11, 2010 of the Ministry of Finance as follows:

Article 5. To supplement the following Point 3.5.3 to Point 3.5. Section II. Part B:

"3.5.3. The determination of personal income tax for individuals transferring land use rights, houses, apartments which have been granted land use right certificates; ownership certificate of house, apartment is as follows:

a. The transfer price is the actual price stated in the transfer contract. In case the transfer contract is not stated the transfer price or the transfer price stated in the transfer contract lower than the land price table, price for registration fee calculation prescribed by the People's Committees of provinces and centrally-run cities (collectively referred to as the provincial-level People's Committee) at the time of transfer, the transfer price is determined by the land price table, price for registration fee calculation regulated by the provincial-level People's Committee.

b. The cost price, including purchase price and the related costs (costs related to granting land use rights, house ownership certificate; expenses for land improvement, the expenses for construction and other related costs) that declaring taxpayers must have invoices, valid documents for their justification.

c. The tax rate is 25% on transfer income (transfer price - cost price).

For the cost price (purchase price and the related costs) that the individuals do not have sufficient invoices and valid documents for proving, then the 2% tax rate by the actual transfer price stated in the transfer contract shall be applied; In case the transfer contract is not stated the transfer price or the transfer price stated lower than the land price table, price for registration fee calculation prescribed by the provincial-level People's Committee, the transfer price is determined by the land price table, price for registration fee calculation regulated by the provincial-level People's Committee.

Article 3. To amend Article 2 of Circular No.12/2011/TT-BTC dated January 26, 2011 of the Ministry of Finance as follows:

1. For the land plot purchase contracts, the contributed capital contracts for the right of buying land plot, houses, apartments that are signed before the effective date of Decree No.71/2010/ND-CP dated June 23, 2010 of the Government, detailing and guiding the implementation of the Housing Law, now the individuals are permitted to transfer by the investors, the transfer shall be declared and paid 25% personal income tax on income.

In case the transfer price stated in the transfer contract or stated in the personal income tax declaration is lower than the land price, price for registration fee calculation prescribed by the provincial-level People's Committee at the time of transfer, or without invoice or valid documents for proving the transfer price, cost price, the tax offices shall define the transfer price and calculate 2% on defined transfer price. The definition of transfer price is based on the land price table, price for registration fee calculation regulated by the provincial-level People's Committee.

2. For the transfer of housing purchase contracts formed in the future, the individuals declare and pay tax at the rate of 25% per income. In case the transfer price stated in the transfer contract or in the tax declaration form is lower than the land price table, price for registration fee calculation prescribed by the provincial-level People's Committees at the time of transfer; and without invoice or valid documents for proving the transfer price, cost price, the tax offices shall calculate 2% per the land price, price for registration fee calculation regulated by the provincial-level People's Committee.

Article 4. Implementation organization:

1. This Circular takes effect from the date of September 19, 2011. All guidance on personal income tax contrary to the guidance in this Circular shall be annulled.

2. During the implementation process, if any problems arise, organizations and individuals shall reflect to the Ministry of Finance (General Tax Department) for in time handling./.