Lecture taxation chapter 2 license fees

TAXATION Chapter 2 License Fees References • Law on fees and charges No 97/2015/QH13 issued by National Assembly on 25 November 2015, effective from January 01, 2017 • Decree 139/2016/ND CP dated 04 O[.]

TAXATION Chapter 2: License Fees

• Law on fees and charges No.97/2015/QH13 issued by National Assembly on 25 November 2015, effective from January 01, 2017.

• Decree 139/2016/ND-CP dated 04 October 2016 on regulations for license fees, effective from January

01, 2017.

• Circular 302/2016/TT-BTC dated 15 November 2016

on guidelines for license fees, effective from January

01, 2017.

Learning Objectives

• LO 2-1: Explain concept, characteristics and role of license

fees.

• LO 2-2: Identify payers and exemption from license fees.

• LO 2-3: Define bases and rates of license fees.

• LO 2-4: Grasp declaration and payment of license fees.

Concept and Characteristics of License Fees

• Business license tax (converted to license fee from 2017) is a direct tax and usually quotas which are levied on the business license of enterprises and households.

• License fee is collected annually.

• Simplicity:

➢License fee is a specific amount.

➢Declare only one time at establishment.

LO 2-1: Explain concept, characteristics and role of license fees.

Role of License Fees

• Help the state control over the whole of business entities at their establishment or at the beginning of the year.

• Mobilize contributions of business entities from the beginning of the year in order to meet the state’s needs of expenditures while taxes have not generated revenue.

• Support actively for business registration.

• License fee payers are organizations and individuals engaging in production and trade of goods/services, except for exemption cases, including:

1 Enterprises which are established under the

regulations of law.

5 Other organizations which have their

trade/production activities.

2 Organizations which are established under

the Law on Cooperatives.

6 Branches, the representative offices of

organizations specified in 1, 2, 3, 4 and 5 (if any).

3 Public service providers which are

established under the regulations of law.

7 Individuals, groups of individuals and

households that have their trade/production activities.

4 Business organizations of the political

organizations, the social – political

organizations, the occupational – social

organizations and people's armed units.

LO 2-2: Identify payers and exemption from license fees.

Exemption from Licensing Fee

1 Individuals, groups of individuals and households engaging in

business with annual revenues of less than or equal to VND 100 million

The annual revenue is the total assessable revenue with regard to personal income tax in accordance with regulations of law on personal income tax

2 Individuals, groups of individual and households engaging in

irregular business or business without fixed location

3 Individuals, groups of individual and households producing salt

4 Organizations, individuals, groups of individual and households

doing the aquaculture, fisheries and fishing logistic services

Exemption from Licensing Fees (cont.)

5 Commune cultural post offices and press agencies (printed, radio,

television and online newspapers)

6 Branches, representative offices and business locations of the

cooperatives that have direct technical service activities in service of agriculture

7 Communal people’s credit fund; cooperatives specialized in service

business for agricultural production; branches, representative offices and business locations of cooperatives and private enterprises carrying on their business in the mountainous areas

License Fee Bases

▪ License fee bases of organizations :

➢ the charter capital written in the certificate of business registration; or in the certificate of enterprise registration; or in the charter of the cooperatives;

➢ the investment capital written in the certificate of investment registration or decision on investment policies (where there is no charter capital)

➢ If the economic organizations change their capital, the ground for determining the rate of licensing fees is their capital of the year preceding the year of calculation of licensing fees

➢ In case the capital is in foreign currency, it shall be converted into VND

applying the buying rate of banks or credit institutions where the payers open their accounts at the time they make payment to the state budget

LO 2-3: Define bases and rates of license fees.

License Fee Bases (cont.)

▪ License fee bases of individuals, groups of individuals and households :

➢ total assessable revenues with regard to personal income tax in accordance with regulations of law on personal income tax.

the year of calculation of licensing fees.

revenue used to determine the amount of license fees shall be

income tax.