Regulations on agricultural land use tax exemption and deduction. Amending and supplementing a number of provisions on special excise tax

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2 TAX POLICIES Page Regulations on agricultural land use tax exemption and deduction Regulations on the use, collection of land use levy and surface water rent in Economic zone, Hi-tech Park Amending and supplementing a number of provisions on special excise tax Private tax rulings OTHERS 05 Amending and supplementing a number of articles on derivative securities and derivatives exchanges. 05 Amending and supplementing a number of articles on management of construction projects 06 Guidance on financial mechanism for Asset Management Company of Vietnamese credit institutions 06 Amending and supplementing a number of Articles on establishment, management and operation of asset management companies of Vietnamese credit institutions.

3 TAX POLICIES 1. Regulations on agricultural land use tax exemption and deduction under Government's Decree No. 21/2017/NĐ-CP dated 24 February The Decree supplement, amend a number of articles of Decree No. 20/2011/NĐ-CP on the implementation of Resolution No. 55/2010/QH12 of the National Assembly, in which subjects are entitle to agricultural land use tax exemption such as household, individual who have been stably contracted land by Agriculture company and forestry company for agriculture production, abolishing regulations on subjects who are entitle to agricultural land use tax deduction; supplement regulations on agricultural land quotas allocated, transferred agricultural land quotas, land lease which is part of agricultural land fund and tax deduction and exemption period. Besides, the Decree provides guidance on tax declaration, tax adjustments on the use of agricultural land for individuals who subject to agricultural land use tax and shall be entitled to agricultural land use tax exemption from 2017 to The Decree takes effect from 24 February Regulations on the use, collection of land use levy and surface water rent in Economic zone, Hi-tech Park under the Government's Decree No. 35/2017/NĐ-CP dated 03 April The Decree takes effect from 20 June 2017, in which the determination of land use levy, surface water rent in Economic zone and Hi-tech Park regarding the payment of land use levy annually is not conducted by auction method (unit price = percentage x fixed price, in which the percentage from 0.5% to 3% is stipulated by the provincial People's Committee), the land use levy is paid by lump-sum method for the entire period (in which, the unit price is fixed price corresponding to land use period and shall be adjusted according to different methods specified in the Decree), the land use levy with surface water rent (the rent amount is not less than 50% of the land without surface water). The Decree also regulates cases for exemption and reduction of land use levy, surface water rent in Economic zone and Hi-tech Park regarding the construction of employees' houses, projects in business lines eligible for investment incentives or special investment incentives or in disadvantaged areas or extremely disadvantaged areas. The Decree also abolishes 01

4 regulations in provision 4, Article 19; provision 2, Article 20 under Decree No. 46/2014 and removes the phrase Economic zone and Hi-tech Park in provision 6, Article 3 under Decree No. 135/ Amending and supplementing a number of provisions on special excise tax under Circular No. 20/2017/TT-BTC dated 06 March 2017 by Ministry of Finance. The Circular takes effect from 20 April 2017, amending and supplementing provision 2, Article 8 of Circular No. 195/2015/TT-BTC by the Ministry of Finance as follows: Payers of SET on goods subject to SET at import may deduct SET paid at importation from SET payable on goods sold domestically include gasoline (exclude gasoline as previously) Regarding special excise tax which is not entitled to deduct: The taxpayer may include SET that remains after deduction in expenses when calculating corporate income tax (the taxpayer may include special excise tax that remains after deduction because of a force majeure event in expenses when calculating corporate income tax as previously). 4. Private tax rulings Official Letter No. 639/TCT-PIT dated 28 March 2017 on PIT policy for profit after corporate income tax of One-member Company Limited owned by an individual shall be exempted from personal income tax from 01 January Official Letter No. 658 / TCT-CS dated 28 February 2017 on the license fee: If the representative office of an enterprise has income from manufacturing of goods and services, the license fee shall be applied as prescribed. Official Letter No. 716 / TCT-KK dated 03 March 2017 on VAT policy: If a Company's Branch is dependent entity, not involved in direct sales, not generate revenue, not perform accounting entries, the Company shall declare tax at the head office and pay VAT 02

5 to the Tax authority where the production facility is located at the rate of 2% (for goods subject to 10% VAT) or 1% (for goods subject to 5% VAT) on sales price excluding VAT of the produced products or similar products. If the tax amount is not incurred at the head office, the Company shall not pay tax to the locality where the production facility is located. Official Letter No. 731 / TCT-DNL on 06 March 2017 on withholding tax for money transfer services: Bank charges outside Vietnam applied for the transfer of money from banks in Vietnam are considered as income from services provided outside the territory of Vietnam, therefore such income is not subject to withholding tax. Official Letter No. 834/TCT-DNL dated 14 March 2017 on tax policy for gifts, donation of goods from welfare fund: The Company uses goods made by the Company or purchases from other sources in order to sell and use as a gift, donation to employees in the special events from welfare funds, the Company shall entitle to VAT deduction and shall issue invoices, declare and pay VAT in the case which is similar to the case of goods sold to customers. If the Company uses part of the welfare funds to buy goods from outside to give to employees in the special events which is not served for the production purpose, then such Company is not entitle to input VAT deductible and shall not issue invoices, the amount spent shall not be charged to expense when determining taxable income. Official Letter No. 882/TCT-DNL dated 14 March 2017 on tax policy on retrieving preactivated SIM: When telecommunication enterprises activate SIM cards of which the subscriber information is not registered (called pre-activated SIM) or top up into accounts of pre-activated SIM is against 03

6 the Law on Telecommunications. When retrieving pre-activated SIM, the enterprise shall not be entitle to VAT deduction when determining taxable income if conditions on sales return have not been satisfied. Expenses relating to retrieving pre-activated SIM are not deducted when determining taxable income. Official Letter No. 912/TCT-CS dated 16 March 2017 on special excise tax policy: Regarding the imported petrol prior to the date 01 July 2016 but sell out from 01 July 2016, the wholesale enterprises importing petrol to trade in domestic shall declare and calculate special excise tax as prescribed. The enterprise shall be entitle to SET deductible at the import stage when determining SET payable in the domestic, the deducted value correspond to SET on imported petrol sold out and the maximum rate is based on the SET on the petrol sold out in domestic. Official Letter No. 974/TCT-CS dated 20 March 2017 on land rental policy: For area used for building operation center including investor's office, consultant's office, warehouse, laboratory, electricity system and water supply and drainage system are exempted from land rental. For the area used for construction of collective kitchen and the employee's house which is not under the auxiliary works shall not exempt for land rental. Official Letter No. 992/TCT-CS dated 20 March 2017 on tax policy: If enterprise generates incomes from agro-processing and satisfies conditions under Decree No. 12/2015/NĐ-CP and Circular No. 96/2015/TT-BTC, from 2015 such incomes shall be entitle to CIT preferential rate. Income from the purchase of agricultural products (rice, corn, beans, etc.) and not from the agro-processing products such income shall not be entitled to tax incentives. Simultaneously, the enterprise enjoys the tax incentives because of meeting conditions on processing agricultural products, fishery products and other conditions (except for conditions on processing of agricultural products, fisheries); the enterprise shall select the most favorable conditions. 04

7 OTHERS 1. Amending and supplementing a number of articles on derivative securities and derivatives exchanges under Circular No. 23/2017/TT-BTC dated 16 March 2017 by Ministry of Finance. The Circular takes effect from 01 May 2017, in which General transaction account refers to a transaction account of an investor where a long or short position of a futures contract is opened and maintained until a clearing member requests deduction to be made. The investor may open an general transaction account when the fund management company is allowed (to open one account held in the name of the domestic entrusting investor and one account held in the name of the foreign entrusting investor) and a securities enterprise established in overseas countries (is allowed to open one account to act on behalf of the foreign investor). The Circular also regulates payment for long or short positions, value of payment for a long or short position is determined on a daily basis and regulates the payment method and compensation rate when the clearing member does not have enough money to make such payment. 2. Amending and supplementing a number of articles on management of construction projects under the Government's Decree No. 42/2017/NĐ-CP dated 05 April The Decree takes effect from 01 June 2017, the investor shall use its legal status and qualified affiliated units to directly manage construction projects with less than VND 15 billion in total investment (total investment value is less than VND 05 billion with the participation of Community or VND 02 billion with the participation of the Commune People's Committee as previously) Besides, the Decree also regulates the conditions for granting Certificate of eligibility for construction inspection including number of people who have licenses for construction inspection practice and have professional competence that conform to the certificate. 05

8 3. Guidance on financial mechanism for Asset Management Company of Vietnamese credit institutions under Circular No. 01/2017/TT-BTC dated 05 January 2017 by the Ministry of Finance. 4. Amending and supplementing a number of Articles on establishment, management and operation of asset management companies of Vietnamese credit institutions under Circular No. 04/2017/TT-BTC dated 16 January 2017 by the Ministry of Finance. 06

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