Official Letter 418/TCT-DNNCN 2025 on Tax Policy.

MINISTRY OF FINANCE GENERAL DEPARTMENT OF TAXATION ______________ No: 418/TCT-DNNCN Regarding tax policy

SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ______________________ Hanoi, January 23, 2025

 

 

To: The Tax Department of Dak Nong Province.

In response to Official Letter No. 2079/CTDNO-NVDTPC dated July 22, 2024, from the Tax Department of Dak Nong Province regarding tax policies for administrative violation fines for State agencies and the process of personal income tax refund, the General Department of Taxation provides the following opinion:

1. On Administrative Violation Fines for State Agencies

• According to Point b, Clause 1, Article 5 of the Law on Administrative Violation Handling:
  “b) Organizations are fined for administrative violations caused by their own actions;”

• According to Clause 6, Article 3 of Decree No. 118/2021/ND-CP of the Government dated December 23, 2021, providing detailed regulations and measures to enforce the Law on Administrative Violation Handling:
  “Article 3. Subjects subject to administrative violation fines
  6.... State agencies that perform violations related to state management tasks are not fined according to the law on administrative violation handling, but are dealt with according to relevant laws.”

Based on the above legal regulations, organizations are fined for administrative violations caused by their actions, except for cases where a State agency performs violations related to state management tasks. In such cases, they are not fined under the law on administrative violations but are handled according to relevant laws.

The Dak Nong Tax Department is requested to base its decision on actual conditions and specific regulations regarding the tasks and powers of the Industrial Park Management Board of Dak Nong Province to clarify whether the Board is a state management agency and whether it is assigned state management tasks regarding fees and charges. This will help decide whether the provisions of Clause 6, Article 3 of Decree No. 118/2021/ND-CP should apply.

2. On Personal Income Tax Policy for Individuals Signing Contracts as Insurance Agency Managers with Insurance Companies

Regarding this matter, the General Department of Taxation is currently consulting with various departments and units within the Ministry of Finance.

3. On Personal Income Tax Policy for Cases of Companies Signing Service Contracts (e.g., Sales Agent Contracts, Collaboration Contracts, Service Contracts with Telecommunications Companies, Goods Delivery Service Contracts)

According to Clause 1, Article 13 of the Labor Code No. 45/2019/QH14 dated November 20, 2019, by the National Assembly, regarding Labor Contracts;

According to Article 3 of the Labor Code No. 45/2019/QH14 dated November 20, 2019, by the National Assembly, explaining about workers and employers;

According to Article 513 of the Civil Code No. 91/2015/QH13 dated November 24, 2015, by the National Assembly, regarding Service Contracts;

According to Clause 1, Article 6 of the Commercial Law No. 36/2005/QH11 dated June 14, 2005, regarding Merchants;

According to Article 79 of Decree No. 01/2021/ND-CP dated January 4, 2021, by the Government, regarding Business Registration and Business Households;

According to Points a and c, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013, by the Ministry of Finance regarding income from wages and salaries, and Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC dated August 15, 2013, by the Ministry of Finance regarding tax withholding;

According to Article 2 of Circular No. 40/2021/TT-BTC dated June 1, 2021, by the Ministry of Finance regarding the subjects applying the Circular.

Based on these regulations, the general principles for determining personal income tax are as follows:

• In cases where a company signs a service contract (e.g., sales agency, collaboration, or service provision contracts with telecommunications companies or goods delivery services) with an individual who does not register a business as required, the income of the individual is considered as income from wages and salaries as per Point c, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC, and the company is responsible for withholding tax and declaring tax as guided in Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC.

• In cases where a company signs a service contract (e.g., sales agency, collaboration, or service provision contracts with telecommunications companies or goods delivery services) with an individual who meets the merchant criteria: an individual operating independently and regularly with a registered business as a household business in the same industry as the service contract, the income of the individual is considered as income from business operations as per Article 2 of Circular No. 40/2021/TT-BTC.

The Tax Department is requested to base on the nature of the signed contract between the individual and the organization to guide the taxpayer in determining whether the income is taxable as business income or wages and salaries, in order to calculate, declare, and pay taxes as per regulations.

The General Department of Taxation responds for the Tax Department of Dak Nong Province to acknowledge.

Recipients: As above; Deputy General Director Mai Son (for reporting); Department of PC, CS, KK (General Department); DNL Department (General Department); General Department’s website; Archival: VT, DNNCN.

On behalf of the General Director Head of the Department of Small and Medium Enterprises, Household Businesses & Individual Enterprises, Industry Nguyen Thi Lan Anh

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