Are household businesses in provinces affected by Storm No. 3 eligible for tax exemption or reduction in Vietnam?

Are household businesses in provinces affected by Storm No. 3 eligible for tax exemption or reduction in Vietnam?

Based on Section 2 Official Dispatch 4062/2024/TCT-CS, there are regulations regarding tax, fee, and charge exemption, reduction, and extension for household businesses affected by natural disasters, specifically:

(1) On tax reduction:

- Article 5 of the Personal Income Tax Law 2007 stipulates the reduction of personal income tax:

Taxpayers facing difficulties due to natural disasters, fire, accidents, serious illness affecting their tax payment ability are considered for tax reduction equivalent to the level of damage but not exceeding the payable tax amount.

- Article 9 of the Special Consumption Tax Law 2008 stipulates the reduction of special consumption tax:

Taxpayers producing goods subject to special consumption tax facing difficulties due to natural disasters, unexpected accidents are eligible for tax reduction.

The reduction amount is determined based on actual losses caused by natural disasters, unexpected accidents but does not exceed 30% of the payable tax amount for the year of damage and does not surpass the value of damaged assets after compensation (if any).

- Article 9, clause 1 of the Resource Tax Law 2009 stipulates the exemption and reduction of resource tax:

Taxpayers suffering from natural disasters, fires, unexpected accidents causing losses to resources declared and paid tax on are considered for tax exemption or reduction for the lost resources; if tax has been paid, it will be refunded or deducted from the resource tax payable in the next period.

- Articles 80, 81, 82 of the Tax Administration Law 2019 stipulate the dossiers for tax exemption and reduction;

Articles 52, 53, 54, 55 of Circular 80/2021/TT-BTC by the Ministry of Finance regulate procedures for tax exemption, reduction documents; procedures for tax reduction documents;

Based on the above regulations, in case household businesses or individuals encounter difficulties due to natural disasters, they are eligible for reductions in personal income tax, special consumption tax, resource tax as follows:

- The personal income tax reduction corresponds to the level of damage but does not exceed the payable tax amount;

- The special consumption tax reduction is determined based on actual losses due to natural disasters, unexpected accidents but is not more than 30% of the payable tax amount for the year of damage and does not surpass the value of damaged assets after compensation (if any).

- The resource tax reduction corresponds to the lost resources; if tax has been paid, it will be refunded or deducted from the resource tax payable in the next period.

household businesses or individuals submit tax reduction dossiers as stipulated in Articles 53, 54, 55 Circular 80/2021/TT-BTC to the directly managing tax authority. Within 30 days (or 40 days if on-site verification is needed) from the date of receiving complete dossiers, the tax administration issues a decision on tax exemption or reduction or notifies in writing the reason for not being eligible for tax reduction.

(2) On tax payment extension

- Articles 62, clauses 1 and 2 of the Tax Administration Law 2019 stipulate tax deferral as follows:

tax deferral are considered upon the request of taxpayers in one of the following cases:

+ Sustaining material damage, directly affecting production and business due to force majeure circumstances as stipulated in clause 27 Article 3 of this Law;

+ Having to cease operations due to relocation of production, business establishments upon request of competent authorities affecting production and business results.

Taxpayers entitled to tax deferral may have the extension of payment for part or the whole tax amount.

- Articles 3, 4, 5 of Decree 64/2024/ND-CP by the Government of Vietnam extend the timeline for paying value-added tax, corporate income tax, personal income tax, and land rent in 2024.

- Based on the above regulations, production, business activities of household businesses, individuals in the economic sectors and fields specified at clause 1, clause 2, and clause 3 Point 3 Decree 64/2024/ND-CP by the Government of Vietnam are eligible for extension of value-added tax (VAT), personal income tax (PIT) payment no later than December 30, 2024.

- household businesses, individuals only need to submit a request for extension no later than September 30, 2024, to be eligible for tax payment extension. The tax authority will not impose late payment penalties on extended tax, land rent during the extension period (including cases where the taxpayer submits an extension request to the tax authority after tax declaration submission and instances where competent authorities during inspection determine an increased payable amount for extended tax periods). If the tax authority has imposed late payment interest (if any) on tax dossiers eligible for extension as stipulated in this Decree, the tax authority will adjust and not charge late payment interest.

- For household businesses suffering material damage, directly affecting production and business due to natural disasters (floods), a tax payment extension of up to 2 years from the tax payment deadline is granted. Taxpayers will not be fined or subject to late payment interest calculated on overdue tax amounts during the extension period.

- The dossier for tax payment extension is done according to point a, clause 2 Article 24 Circular 80/2021/TT-BTC mentioned above. The tax amount granted extension is the tax debt calculated until the time of encountering natural disasters, calamities, epidemics, fires, unexpected accidents but does not exceed the material damage value after deducting reimbursed or insured amounts as per regulations (if any).

- In cases where dossiers are legal, complete, and in accordance with sample regulations, the tax authority shall notify the taxpayer in writing about tax payment extension within 10 working days from the receipt of complete dossiers; if the dossier is not complete according to regulations, a notification in writing shall be sent to the taxpayer within 3 working days from the receipt of the dossier.

Are household businesses in provinces affected by Storm No. 3 eligible for tax exemption or reduction in Vietnam? (Image from Internet)

What are the time limits and return of results for tax exemption or reduction in Vietnam?

According to Article 64 Decree 80/2021/TT-BTC, the deadlines and result returns for tax exemption, reduction dossiers are as follows:

(1) Deadline for resolving tax exemption and reduction

Within 30 days from the receipt of complete dossiers, the tax agency receiving the dossier issues a decision on tax exemption, reduction; notifies the taxpayer in writing the reason for not being eligible; informs whether the taxpayer is eligible or not under a tax treaty or other international agreement.

If an on-site verification is necessary to justify the resolution of the tax exemption, reduction dossier, within 40 days from the receipt of complete dossiers, the tax agency issues a decision on tax exemption, reduction; notifies the taxpayer in writing the reason for not being granted the exemption, reduction; informs whether the taxpayer is eligible or not under a tax treaty or other international agreement.

Specifically, if the tax agency receives the tax exemption, reduction dossier together with the tax declaration dossier under a single-window mechanism, within 5 working days from the receipt of legal, complete, sample-compliant tax exemption, reduction dossier transferred by the single-window receiving agency, the tax agency determines the tax exemption, reduction amount or notifies the taxpayer in writing the reason for not being exempted, reduced.

(2) Return of tax exemption and reduction dossier resolution results

- If the tax agency directly receives the taxpayer's tax exemption, reduction dossier:

+ Issues a tax exemption, reduction Decision according to form No. 03/MGTH attached to appendix 1 of this Circular for cases eligible for tax exemption or reduction (excluding cases specified at point a.3 clause 2 of this Article);

+ Issues a Notification of non-exemption, non-reduction according to form No. 04/MGTH attached to appendix 1 of this Circular and states the reason for cases not eligible for exemption or reduction (excluding cases stipulated at point a.3 clause 2 of this Article);

+ Issues a Notification according to form No. 03-1/MGTH attached to appendix 1 of this Circular on whether the taxpayer is eligible or not under a tax treaty and other international agreements;

In the case of missing information requiring explanation, document supplementation during the tax exemption, reduction dossier resolution, the tax agency sends an Explanation and Supplement Notification according to form No. 01/TB-BSTT-NNT attached to Decree 126/2020/ND-CP to request additional information, documentation from the taxpayer.

- If the tax agency receives the exemption, reduction dossier together with the tax declaration under the single-window mechanism:

+ The tax agency determines the tax exemption, reduction amount and records it in the Tax Payment Notice attached with appendix 2 Decree 126/2020/ND-CP for cases eligible for exemption, reduction.

+ Issues a Notification of non-exemption, non-reduction according to form No. 04/MGTH attached to appendix 2 of this Circular and states the reason for non-eligible cases for exemption or reduction. In the process of resolving the exemption, reduction dossier, if additional information explanation is required, the tax agency sends an Explanation and Supplement Notification (according to form No. 01/TB-BSTT-NNT attached to Decree 126/2020/ND-CP) to the single-window receiving agency to request the taxpayer for additional information, documentation.

- In cases of exemption stipulated at point a clause 2 Article 79 Tax Administration Law 2019: The tax agency issues a Decision on the household and individual list eligible for exemption according to form No. 05/MGTH attached to appendix 1 of this Circular.

What are the procedures, processes, and dossiers for tax deferral in Vietnam?

According to Article 24 Decree 80/2021/TT-BTC, the procedures, processes, and dossiers for tax deferral are regulated as follows:

(1) Procedures, processes, and dossiers for tax deferral

- Taxpayers prepare and send dossiers requesting tax deferral to the directly managing tax authority or the tax authority managing state budget revenue.

- If the request for extension dossier is incomplete or has evidence of misreporting the material loss amount indicated by the taxpayer or other errors, the tax authority must notify in writing within 3 working days from the receipt of the dossier according to form No. 01/TB-BSTT-NNT attached to Decree 126/2020/ND-CP requesting the taxpayer to explain or supplement the dossier.

If the request for extension dossier is complete, within 10 working days from the receipt of the dossier, the tax authority issues a Notification of disapproval for tax payment extension (form No. 03/GHAN attached to appendix 1 of this Circular) for non-eligible cases for tax deferral or a Decision for tax payment extension (form No. 02/GHAN attached to appendix 1 of this Circular) for eligible cases for tax payment extension.(2) Tax Payment Extension Dossier

- In the case of natural disasters, catastrophes, epidemics, fires, unexpected accidents as stipulated in point a, clause 27 Article 3 of the 2019 Law on Tax Administration, the dossier includes:

+ A written request for tax payment extension by the taxpayer according to form 01/GHAN issued with appendix 1 of this Circular;

+ Documentation confirming the time and place of the natural disaster, catastrophe, epidemic, fire, or unexpected accident from the competent authority (original or copy certified by the taxpayer);

+ A document determining the material value of damage created by the taxpayer or the legal representative of the taxpayer, who is responsible for the accuracy of the data;

+ A document (original or copy certified by the taxpayer) stipulating the responsibility of the organization or individual required to compensate for damage (if any);

+ Documents (original or copy certified by the taxpayer) related to compensation for damage (if any).

- In the case of other force majeure situations according to the provisions of clause 1 Article 3 of Decree 126/2020/ND-CP, the dossier includes:

+ A written request for tax payment extension by the taxpayer according to form 01/GHAN issued with appendix I of this Circular;

+ A document determining the material value of damage created by the taxpayer or the legal representative of the taxpayer, who is responsible for the accuracy of the data;

+ Documentation confirming the time and place of the force majeure event from the competent authority; documentation proving that the taxpayer had to suspend business due to war, riots, or strikes where the taxpayer had to stop production (original or copy certified by the taxpayer);

+ Documentation proving the encounter with risks not due to subjective cause or responsibility of the taxpayer and that the taxpayer lacks the financial capability to pay the state budget in cases of damage due to risks not from the taxpayer's subjective causes or responsibilities (original or copy certified by the taxpayer);

+ Documents (original or copy certified by the taxpayer) related to compensation for damage by the insurance agency (if any).