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Vietnam: Support for taxpayers affected by Covid-19

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published on 14 January 2022 | reading time approx. 3 minutes

 

On 27 October 2021, the Government issued Decree 92/2021/ND-CP guiding Resolution No. 406/NQ-UBTVQH15 regarding supports for taxpayers affected by Covid-19. The most relevant relief measures comprise a CIT reduction, tax exemption schemes and a late payment interest exemption.

 

    

30 percent CIT reduction for tax year 2021

A reduction of 30 percent on the payable CIT amount for tax year 2021 (after applying for a CIT incentive) will be granted to taxpayers with (i) a turnover not exceeding  VND 200 billion in tax year 2021 and (ii) a decrease in revenue in tax year 2021 compared to the revenue in tax year 2019. Criterion (ii) will not prevail if the taxpayer has just been established, engaged in consolidation, merger, partial division, or full division in the tax period of 2020 or 2021. The tax year entitled to CIT reduction is the calendar year or fiscal year.

 

The revenue considered for the assessment of tax reduction eligibility equals the total revenue (including dependent units – e.g. branches, business locations) earned in tax year 2021 excluding revenue deductions, financial income and other income.  If the enterprise has operated for less than 12 months in tax year 2021, the revenue considered  for the assessment of tax reduction eligibility will be the actual revenue divided by the number of actual operating months and multiplied by 12 months. If the tax year 2021 includes more than 12 months (e.g. newly established enterprises or dissolved enterprises), the revenue considered for the assessment of tax reduction eligibility and the revenue entitled to tax reduction will be the revenue of 12 months of tax year 2021 only.

 

Taxpayers will have to self-assess their eligibility to CIT reduction for provisional CIT, and finalize such amount in 2021 CIT finalization using the statutory tax reduction form. If there is any change to the eligibility following a future tax audit, penalties and late payment interest will be imposed on the taxpayers.

 

Tax exemption for business households and individuals

Business households and business individuals are tax residents who operate production and business activities in the district-level area of provinces, municipal cities or central-affiliated cities affected by the Covid-19 pandemic in 2021 (as per the list issued by the People's Committee of province or central-affiliated cities). These are subject to the exemption from Personal Income Tax ("PIT), Value Added Tax ("VAT"), special consumption tax, natural resource tax and environmental protection tax payable arising from production and business activities in the third and fourth quarter of tax year 2021.

 

The tax exemption does not apply to income from providing software products and services; digital information content products and services on entertainment, video games, digital movies, digital photos, digital music; digital advertising.

 

For cases subject to Notice on tax payment issued by tax authorities, the responsible tax authorities will issue the confirmation/decision on tax exemption. For cases not subject to Notice on tax payment issued by tax authorities, taxpayers or those who declare and pay taxes on their behalf will self-assess the exempted tax amount as per the statutory form.

 

VAT reduction for calendar year 2021

For taxpayers declaring VAT under both, credit and direct method, the following goods and services are subject to a 30 percent reduction of VAT in calendar year 2021 :

  • Transport services (railway transport, water transport, air transport, other road transport); lodging; food service; travel agencies services, tour operators and support services related to the promotion and organization of tours;
  • Publishing products and services; cinematographic services, television program production, sound recording and music publishing; artwork and creative, artistic, entertainment services; services of libraries, archives, museums and other cultural activities; sports, entertainment services (excluding publishing software and goods, services produced in the online form).

For taxpayers declaring VAT under credit method, on the invoices made for goods and services that are eligible for VAT reduction, the tax rate will be written as being multiplied by 70 percent on the invoices. The seller shall declare output VAT and the buyer shall declare deduction of input VAT according to the reduced VAT written on the VAT invoice.

 

For taxpayers declaring VAT under direct method, on the invoices made for goods and services that are eligible for VAT reduction, the seller will show the value of goods after VAT reduction at column Total amount ("Cộng tiền hàng hoá, dịch vụ") and put a note indicating the reduced amount thanks to the 30 percent VAT reduction according to Resolution No. 406/NQ-UBTVQH15.

 

In case a taxpayer sells multiple goods and services, separate VAT invoices shall be issued for goods and services that are eligible for VAT reduction. Taxpayers are required to declare the goods and services that are eligible for VAT reduction under the statutory form which is annexed to Decree 92/2021/ND-CP.

 

Late payment interest exemption

Enterprises and organizations (including dependent units and business locations) that incurred loss in the tax period 2020 are entitled to the exemption of late payment interest arising in 2020 and 2021 for tax debt, land use right fee and land rent.

 

Competent tax authorities shall determine the late payment interest incurred in 2020 and 2021 according to the tax administration database and issue late payment interest exemption decisions. Taxpayers are required to submit the statutory application form which is annexed to Decree 92/2021/ND-CP to the managing tax authority. The decision on exemption of late payment interest shall be sent to the taxpayer electronically and published on the website of tax authorities. If there is any change to the eligibility following a future tax audit, the tax authority shall issue a decision to revoke the decision on exemption of late payment interest.

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