CIRCULAR No. 79/1998/TT-BTC OF JUNE 12, 1998 GUIDING THE IMPLEMENTATION OF DECISION No.75/1998/QD-TTg OF APRIL 4, 1998 OF THE PRIME MINISTER PROVIDING FOR CODES OF TAX PAYERS

Pursuant to the Tax Law and the Tax Ordinance,

In execution of Decision No. 75/1998/QD-TTg of April 4, 1998 of the Prime Minister on the codes of tax payers, the Ministry of Finance hereunder guides the implementation of the registration for tax payment, the issue and use of the codes to determine the tax payers (tax codes for short):

I. OBJECTS OF ISSUE OF TAX CODES

The objects in the categories liable to tax registration in order to be issued tax codes comprise all organizations and individuals that are subject to tax payment as prescribed in the Tax Laws and the Tax Ordinance of Vietnam: the Law on Turnover Tax, the Law on Profit Tax (from 1999 to be called the Law on Value Added Tax, the Law on Corporate Income Tax), the Law on Special Consumption Tax, the Law on Import and Export Taxes, the Law on Agricultural Land Use Tax , the Ordinance on License Tax, the Ordinance on Resource Tax, the Levy on the Use of State Budget, the Ordinance on House and Land Tax, the Ordinance on Income Tax for High Income Persons, etc.

II. TAX CODES

Tax codes for tax payers are a series of numbers defined according to a unified principle to issue to each tax payer. The tax codes are divided into the two following categories:

1. Tax codes issued to tax payers that are enterprises, independent individuals and member enterprises: the structure of a tax code comprises ten numbers disposed as follows:

N1N2-N3N4N5N6N7N8N9-N10

In which :

The two first numbers N1N2 are the province code (place where the tax code is issued) according to the provisions of the Budget Law.

The seven following numbers N3N4N5N6N7N8N9 are serially numbered from 0.000.001 to 9.999.999 ascribed to each tax payer.

The next number N10 is the control number. The control number is calculated according to the set formula.

2. Tax codes issued to tax payers that are units attached to the Enterprise: the structure of the code comprises 13 numbers disposed as follows:

N1N2-N3N4N5N6N7N8N9-N10-N11N12N13

In which:

The numbers from N1 to N10 are the tax codes of the Controlling Enterprise of this Dependent Unit.

The numbers N11N12N13 are serially numbered from 001 to 999 ascribed to each Dependent Unit of the Enterprise.

The Member Enterprises in this Circular are construed to be enterprises with full legal status belonging to another enterprise and set up by decision of a competent State managing agency (Ministry, ministerial-level State managing Agency, People's Committees of the provinces and cities directly under the Central Government). Dependent Units of the enterprises are production and business units including shops, offices, non-business units of the enterprise which practise some businesses and are set up by decision of the enterprises but which do not have full legal status.

The enterprises which have Member Enterprises or Dependent Units are called in abbreviation Controlling Enterprises of these Member Enterprises and Dependent Units. The Dependent Units which set up their own dependent units shall not be considered Controlling Enterprises.

The number No at the end of the tax code is the code of the method of calculating the Value Added Tax to show whether the tax payer has to pay the Value Added Tax or not, and if it has, which method of calculating the Value Added Tax shall be applied. Though not a component of the tax code, it is always placed beside the tax code as an indispensable part of the code. This number has the four following values:

Value 0 corresponds with the tax payer that does not have to pay the Value Added Tax.

Value 1 corresponds with the method of tax deduction.

Value 2 corresponds with the method of direct calculation on the value added.

Value 3 corresponds with the method of determining the value added on the sale turnover.

Value 4 corresponds with the method of determining the level of taxable turnover.

Each tax payer shall be issued only a single tax code in the whole process of its operation from its founding till the end of its operation (for the tax code on the method of paying the Value Added Tax No it shall change when the tax payer is allowed to change the method of paying the Value Added Tax).

III. DECLARATION FOR TAX REGISTRATION

1. Form for tax registration: The tax office has the duty to issue the declaration for tax registration suited to each category of tax payer. In the immediate future, to prepare for the application of the Law on Value Added Tax and the Law on Corporate Income Tax, the Ministry of Finance has issued four forms of declaration for tax registration: form No. 1-DK-TCT, color pale blue used for production and business organizations in goods and service provision (not including dependent units); form No. 2-DK-TCT, color pale pink used for dependent units of production and business organizations in goods and service provision; form No. 3-DK-TCT, color pale yellow used for individuals producing or dealing in goods and service provision; and form No. 4-DK-TCT, color grass-green used for foreign contractors and subcontractors who register to pay tax directly to the Vietnam tax office. For other tax payers concrete guidance shall be forthcoming.

The four above forms of declaration for tax registration shall replace the following forms of declaration for tax registration:

- The declaration for tax registration issued attached to Circular No. 73A-TC/TCT of the Ministry of Finance on August 30, 1993 guiding the implementation of Decree No. 55-CP of the Government on August 28, 1993 providing detailed guidance for the implementation of the Turnover Tax Law and the Law amending and supplementing a number of articles of the Turnover Tax Law.

- The declaration for registration of the special consumption tax issued attached to Circular No. 74A-TC/TCT of the Ministry of Finance on August 31, 1993 guiding the implementation of Decree No. 56-CP of the Government on August 28, 1993 providing details for the implementation of the Law on Special Consumption Tax and the Law amending and supplementing a number of articles of the Law on Special Consumption Tax.

- The declaration of the activities in exploiting natural resources issued together with Circular No. 7 TC/TCT of the Ministry of Finance on February 7, 1991 providing detailed guidance for implementing the Ordinance of the State Council and Decree No. 6-HDBT of the Council of Ministers on January 7, 1991 on the resource tax.

- The declaration for registration of tax payment on the exploitation of forest products issued attached to Circular No. 69-TC/TCT of the Ministry of Finance on November 27, 1991 guiding the conversion of the regime of collection for forest tending to the system of resource tax collection for the exploitation of products of natural forest resources.

- The declaration for registration of the activities in exploiting natural resources and the declaration for registration of production and business activities issued attached to Circular No. 51-TC/TCT of the Ministry of Finance on July 3, 1993 guiding the implementation of the regulations on tax applicable to the foreign invested enterprises and the foreign sides that cooperate in business on the basis of contracts according to the Law on Foreign Investment in Vietnam.

- The declaration for tax registration and the application for direct tax payment issued together with Circular No. 37 TC/TCT of the Ministry of Finance on May 10, 1995 guiding the regime of tax applicable to foreign economic organizations and individuals doing business in Vietnam outside the forms of investment under the Law on Foreign Investment in Vietnam.

2. Declaration for tax registration:

2.1. General stipulations:

- The tax payers in the category eligible for the issue of tax code stipulated in Part I of this Circular must make a declaration for tax registration as provided for in the Tax Laws and the Tax Ordinance with the direct managing tax agency (the Tax Department or Tax Service) in order to be issued the certificate of tax registration and the tax code.

- The tax payers shall have to make accurate and full declaration of the targets set in the declaration for tax registration under the guidance of the tax agency. The tax payers shall make a declaration for tax registration and submit it to the direct tax managing agency. The production and business organizations dealing in goods and services must send a notarized copy of the decision on founding and the business license together with the declaration for tax registration. The tax payers that do not yet have the business licenses but which have begun their production and business operations must still conduct the procedures of tax registration with the tax agency. After they have got the business license, they shall have to make a supplementary declaration on this information with the tax agency. A single tax payer must absolutely not make many declarations on tax registration in order to be issued different tax codes.

- After he is issued the tax code, if the tax payer undertakes new production and business activities or open more places of business in another district or province (not setting up branches or dependent units), he must register for tax payment with the tax agency where he moves to as prescribed by the Tax Laws and the Tax Ordinance. This tax declaration aims to register for tax payment and notify the tax code to the tax agency of the locality where he moves to. This is not to register tax to propose that he be issued another tax code (the tax payer has to write by himself the tax code he has been issued on these declarations for tax registration).

- In case of changes in the information already declared for tax registration, the tax payer has to make a new declaration with the tax agency about these changes. He shall write down these changes in the blocs of corresponding targets in the form of declaration for tax registration and leave blank the blocs of targets where no change of information is recorded. At the same time he shall write by himself the tax code issued to him in the tax code bloc (in the past time this part was to be filled by the tax agency).

- The tax payer who operates in different areas and does not set up branches or dependent units or shops (such as construction units...) shall declare his tax registration to propose the granting of the only tax code at the tax agency where its main office is located. After being issued the tax code, the tax payer shall still have to declare his tax registration with the tax agency where his production and business activities are taking place. In these declarations for tax registration, the tax payer has to write himself his tax code in the tax code bloc (to be filled by the tax office). When he moves his business place from one province to another, the tax payer also has to declare his tax registration and declare his tax code already issued to him to the tax agency where he shall move to.

2.2. Some concrete stipulations:

- Organizations engaged in the production or business of goods and services shall declare their tax registration at form No. 1-DK-TCT.

When it declares its tax registration, the controlling enterprise shall have to declare the full list of the member enterprises and dependent units (including directly dependent units and the units founded by these directly dependent units) in the lists attached to the main declaration.

Example: Company A has dependent branches set up by the company namely X, Y, Z. Branch X set up by itself units X1 and X2. Branch Y sets up by itself shops Y1, Y2 and Y3. Unit X1 organizes by itself shops X1.1, and X1.2. These branches and shops are all tax payers being managed by the tax agency. So when declaring its tax registration, Company A has to fully list the directly and indirectly dependent units namely X, Y, Z, X1, X2, Y1, Y2, Y3, X1.1, X1.2 in the list of the dependent units.

- A production or business organization that has contracts with foreign contractors and subcontractors must make the declaration in the "List of Contractors" attached to the declaration on tax registration.

- Production and business organizations which have representative offices, transaction offices and non-business units without business function and without having to pay tax shall have to declare the list of these units in the List of representative offices and transaction offices and dependent non- business units attached to the declaration. For the representative offices and transaction offices or non-business units which are practising some businesses and have to pay tax , the controlling enterprise must declare these units in the List of dependent units for the tax office to issue the tax code.

- A member enterprise or independent unit which the competent authority has decided to convert into a dependent unit, or a dependent unit into a member enterprise or an independent unit shall all have to make other declarations of tax registration so that the tax office shall issue to them new tax codes. The new declaration of tax registration must be attached to a notarized copy of the decision on conversion and the original certificate of the old tax registration.

- Corporations which have dependent units along the service line from the province to the commune and which have more than 1,000 dependent units (such as the Post and Telecommunications Corporation, the Vietnam Bank for Agriculture and Rural Development) shall declare their tax registrations and Corporations using form No. 1-DK-TCT to declare their tax registration and the companies or dependent business units at provincial level in the "List of member units". At the same time they shall declare the list of the dependent units set up by the Corporation itself in the "List of dependent units". The provincial-level dependent units shall use the form No. 1-DK-TCT to make declarations of tax registration and they have to declare fully the names of the lower dependent units located in the province in the "List of dependent units". The dependent units shall use form No. 2-DK-TCT to declare their tax registration with the local tax agency.

- Income generating and taxable non-business units (regular and irregular payment of tax) shall have to register their tax with the tax agency in order to be issued tax codes.

- State agencies comprising the Ministries, branches, local People's Committees and other organizations which are collecting various kinds of costs and fees shall declare their tax registrations with the tax agency according to form No. 1-DK-TCT (only the targets 1, 2, 3, 4, 8, 13, 21, 24 have to be declared) in order to be issued the tax code.

- The establishments which apply the mechanism of contracting to the business collectives and individuals according to the method of self-accountableness for the result of business must fully declare the contracting collectives and individuals as grassroot dependent units (using form No. 1-DK-TCT). The contracting collectives and individuals must declare their tax registrations (using form No. 2-DK-TCT) and notify the tax code already issued through the main establishment to the tax agency directly managing the tax collection.

- Production and business individuals and households shall use form No. 3-DK-TCT to declare their tax registration with the local tax agency.

- Business households practising consignment trade shall declare their tax registration in order to be issued the tax code at the place of their permanent residence (using form No. 3-DK-TCT). When operating in other localities they must write down the tax code already issued in the tax payment certificates.

3. Certificate of tax registration: the tax agency shall have to issue the certificate that the tax payer has submitted the declaration on tax registration and notify the tax code to the tax payer according to the set form "Certificate of tax registration".

IV. ISSUE OF TAX CODE

The tax agency has the responsibility to issue the tax code and send the certificate of tax code to the tax payer within 15 days from the date it receives the full and accurate declaration of tax registration as prescribed. On receiving the declaration for tax registration of the tax payer, the tax agency shall check the information on the declaration and contact the tax payer to correct the mistakes (if any).

The provincial tax agency shall have to issue the tax code to the tax payers operating in the territory of the province. The tax agency must assure the principle of issuing only a single tax code to a tax payer, even if this tax payer has moved its place of business or renamed its enterprise...

When there is the decision to dissolve or terminate the operation of a business establishment, the tax code already issued is no longer valid and shall not be re-used for supply to another tax payer. If after its dissolution a decision is issued to re-establish it, the business establishment shall have to conduct the tax registration in order to be issued another tax code.

Individuals (households) engaged in production and business of goods and services and that make declarations according to form No. 3-DKT-TCT shall be issued the only tax code once by the tax agency and shall use this tax code throughout their life. The tax agency shall not issue another tax code to an individual that already has a tax code even when this individual resumes his business operation after he has stopped or suspended his business for a period. When it resumes business, the individual or business household shall have to declare his tax payment registration with the tax agency and enter his former tax code into the tax register.

The tax agency at the place of direct management of the enterprise with dependent units shall issue the tax code to this enterprise and at the same time issue tax code to each dependent unit in the "List of dependent units" of the enterprise, even if the dependent units are based in other provinces. When it is notified of the tax codes of the dependent units by the tax agency the enterprise shall have to notify immediately the dependent units of the tax codes of these units. When declaring their tax registration with the tax agency directly managing the collection of tax according to form No. 2-DK-TCT, the dependent units shall have to write down by themselves (not by the tax agency) their tax codes already notified by the controlling enterprise in the bloc Tax code.

Example: in the above example, Company A based in Hanoi, Branch X and Units X1, X2, X1.1, X1.2 based in Haiphong, Branch Y and the shops Y1, Y2, Y3 based in Ho Chi Minh City, Branch Z based in Dong Nai. Thus, the Hanoi Tax Department shall have to issue tax codes to Company A and issue tax codes to all its dependent units X, Y, Z, X1, X2, Y1, Y2, Y3, X1.1, X1.2. Then the Hanoi Tax Department shall send certificates of tax codes to Company A and the list of tax codes of the dependent units. Company A shall have to notify all the dependent units in Hai Phong, Ho Chi Minh City and Dong Nai of the tax code of each dependent unit. Upon receiving their tax codes, the dependent units shall conduct the procedures of declaring their tax registration with the tax agency where it is based and write down by itself its tax code in the bloc of tax code on the tax register.

In the drive of tax registration in 1998, the dependent units may declare their tax registration with the local tax agencies before receiving the notification on their tax codes from the controlling enterprise. In the declaration of tax registration, the section for the registration of the tax code shall be left blank and shall be filled up by the tax agency later.

V. USE OF TAX CODE

The system of tax code shall be used uniformly throughout the country as from the 1st of January 1999. The tax payers, tax agencies and related agencies shall have to use the tax codes according to the following prescriptions:

1. With regard to tax payers:

Tax payers must write clearly their tax codes in all transaction papers, economic contracts, receipts, vouchers of purchase and sale of goods, services, books of accounts, tax declarations, and tax payment certificates. For the papers and books and vouchers without the section for recording tax code, the tax payer must write down by himself his tax code on the upper corner on the right of the papers, books and vouchers. The units eligible to use self- printed vouchers must print their tax codes beforehand in the corner on the right of each voucher.

Each tax payer shall use only a single tax code of its own for all his production and business activities taking place in different areas in the country. When moving his place of production and business (including moving to another province) or change the name of his business establishment, he still has to use the tax code issued by the tax agency earlier.

When he terminates his production, business or service activities, the tax payer must immediately notify in writing along with sending the decisions on ending its activities (such as decision of dissolution, merger, bankruptcy...) to the tax agency directly managing the tax collection. The tax agency has to inform the tax payer and the related agencies of the annulment of the tax code.

2. With regard to the tax agency

The tax agency shall have to use the tax code of the tax payer to manage it, monitor the data on his tax payment and record his tax code on all transaction papers involving this tax payer such as tax payment notice, fine notice, payment order, the decisions on administrative sanctions on tax, the report of inspection on tax... The tax indicator forms must be remade to amend the section for the tax agency or the tax payer recording the tax code such as purchase and sale receipts, the forms of tax declaration, tax registration, tax book, tax accountancy report...

The tax agency has to manage the whole system of tax codes of the tax payers and update the tax codes into the tax information system.

The tax agency has to coordinate with the related Ministries and branches to organize the accessing of the tax codes into the existing information system of the Ministries and the branches with managerial function related to the tax payers.

3. With regard to the Ministries, State management branches and related agencies

The Customs Office shall have to use the tax codes of tax payers in the monitoring of data on the payment of export tax, import tax, value added tax by tax payers operating in export and import of goods and in service activities. The forms of declaration of export and import, vouchers of tax collection and payment related to the tax payers in use in the management of collections by the Customs Office must be supplemented with a section for the tax payer or the Customs Office recording the tax codes.

The Treasury Office has to update the tax code of each tax payer in the management of the tax revenue paid to the Treasury and undertake professional activities related to tax work such as: tax reimbursement, transfer of part of the deposit account of the tax payer to the account of the State Budget when receiving the tax collection order...To step by step conduct information exchange on the tax already paid by each tax payer between the Treasury Office and the tax agency of the same level.

The Ministries, State management branches and other specialized agencies shall have to supplement the section for recording the tax codes of the tax payers under their jurisdiction in the forms of declaration and vouchers related to the tax payers in the system of their data information system and step by step conduct the unified exchange of information among the Ministries and related branches.

VI. HANDLING OF VIOLATIONS

The tax payer who does not declare tax registration in order to be issued tax code, who deliberately makes declaration to be issued more than one tax code or who does not write down his/her tax code on transaction papers, economic contracts, receipts, vouchers of purchases and sales of goods, services, books of accounts, tax declarations, and tax payment vouchers shall be fined according to the regulations on sanctions against administrative violations in the domain of tax.

Any of the above vouchers and books which does not record the tax code of the tax payer shall be considered invalid during tax or finance inspections.

Tax payers who misuse tax codes to conduct business without paying tax or commit tax fraud shall be fined under the regulations on sanctions against tax evasion and fraud in the Tax Laws.

The handling of violations on tax registration and the use of tax code shall conform with the procedures and order prescribed in the legal documents on handling of violations on tax.

VII. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect on May 25, 1998.

The General Tax Administration shall have to organize the implementation of the tax registration, the issue and use of tax codes. In 1998, work shall be concentrated on tax registration and the issue of tax codes to the tax payers operating in production, business and service provision in order to prepare conditions for the implementation of the Law on Value Added Tax and the Law on Corporate Income Tax. The other tax payers such as those using agricultural land, real estate, income tax for high income persons... shall receive concrete guidance and organize the implemen-tation thereof in the subsequent years.

The General Customs Office and the State Treasury shall have to integrate the use of tax codes into the system of tax revenue management.

Should any question arise in the process of implementation, the units and agencies should report in time to the Ministry of Finance for study and supplementary guidance.

For the Minister of Finance

Vice Minister

NGUYEN THI KIM NGAN