- Vietnam issued Decision 406 to additional assist companies and people affected by the pandemic together with a 30 p.c company earnings tax minimize.
- The discount will apply to all companies with income of lower than US$8.8 million (VND 200 billion) in 2021.
- The federal government issued Decree 92 guiding the implementation of Decision 406; companies ought to examine the Decree rigorously to acquire the assist measures.
Much like final yr, the federal government issued Decision 406/NQ-UBTVQH14 (Decision 406) on October 19 on a number of measures to assist companies and people affected by the pandemic together with a 30 p.c company earnings tax minimize.
The tax discount is based on the precept of self-assessment. Companies are anticipated to evaluation their precise enterprise circumstances and self-assess their eligibility for such tax breaks.
- The CIT discount applies to companies which have income of lower than VND 200 billion (US$8.8 million) in 2021;
- Income for 2021 is lower than 2019;
- The CIT minimize applies to all companies which are concerned within the manufacturing and commerce of products in addition to providers in accordance with Vietnamese regulation;
- The CIT discount will apply to the whole income of the enterprise together with incomes similar to capital switch, actual property switch, and providers topic to particular consumption tax; and
- The 30 p.c CIT discount will apply to the enterprise’ CIT payable for the 2021 fiscal yr minus the CIT incentives eligible for enterprises as per the Regulation on Company Earnings Tax.
Which means that most small and medium enterprises (SMEs) can be eligible for such tax breaks whatever the variety of workers and the precise monetary loss because of the pandemic.
Nevertheless, you will need to be aware that this doesn’t apply to companies which are newly created, merged, consolidated, or break up in the course of the 2020 and 2021 tax interval.
Private earnings tax exemptions and value-added tax for enterprise households and people
The decision additionally outlines private earnings tax (PIT) and value-added tax (VAT) exemptions in Q3 and This autumn of 2021 for people and family companies affected by the pandemic. This exemption doesn’t apply to providers like digital leisure, digital video games, digital motion pictures, and digital commercial
A 30 p.c VAT discount will apply from November 1 to December 31, 2021, to the next items and providers:
- Transportation providers (railway, airways, highway, and so forth.);
- Catering and providers associated to tourism,
- Publication merchandise;
- Cinematographic providers;
- Tv manufacturing;
- Museums; and
- Sports activities and leisure providers.
The federal government has additionally allowed an exemption of late cost curiosity in 2020 and 2021 associated to tax debt, land use, and lent hire for companies as a consequence of losses in 2020.
Companies welcome discount however need fast implementation
The tax reductions have been welcomed by companies and can notably assist small and medium-sized companies (SMEs) which have been considerably affected by the fourth wave of the pandemic.
Analysts say that the Decision expands to extra beneficiaries with the time for tax discount longer. Decrease taxes may also translate to decrease enter prices, lowering manufacturing prices, and bettering provide chains. Companies now need a fast implementation of the Decision with less complicated and relaxed circumstances to progressively resume operations.
Decree 92 issued on steerage on implementing Decision 406
As talked about earlier, the federal government issued Decree No 92/2021/ND-CP (Decree 92) on implementing Decision 406. Decree 92 follows up on Decision 405 and consists of particulars on implementation and the way companies can receive the tax incentives.
Primarily, Decree 92 talked about 4 teams which are eligible for the CIT discount. That is talked about in Decision 406 as written earlier, however with some specifics, which embrace:
- Companies established as per Vietnamese laws;
- Companies established as per the Regulation on Cooperatives;
- Public service items established as per Vietnam’s legal guidelines; and
- Different companies established as per Vietnam’s legal guidelines and generate earnings as per their enterprise actions.
PIT and VAT exemptions
Enterprise households and people from all industries and sectors that pay tax and have been affected by COVID-19 in Q3 and This autumn are eligible for PIT and VAT discount. As well as, Decree 92 additionally mentions extra exemptions from particular consumption tax (SCT), pure useful resource tax, and environmental safety tax.
The native individuals committees can be liable for defining the geographic areas of locations affected by the pandemic and subsequently eligibility.
For late cost curiosity on tax money owed, land rental and use charges, tax authorities will decide the late cost curiosity in 2020 and 2021 and subject the exemption, nonetheless, companies are required to make use of a type to request the waiver from the tax authorities who will reply inside 15 days.
Late cost curiosity additionally applies to any extra taxes incurred throughout a tax audit.
Decree 92 is efficient from October 19.
Word: This text was first printed in October 2020 and has been up to date to incorporate the newest developments.
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