Vietnam: In which cases is it considered an extension of tax payment? How long can the tax payment deadline be extended?
In which cases is it considered an extension of tax payment in Vietnam?
Pursuant to Clauses 1, 2 and 4, Article 62 of the Law on Tax Administration of Vietnam 2019, the following cases are considered for extension of tax payment:
The extension of tax payment is considered on the basis of the taxpayer's request in one of the following cases:
- A taxpayer may apply for tax deferral in one of the following cases:
+ The taxpayer’s business suffers damage due to a force majeure events specified in Clause 27 Article 3 of this Law;
+ The taxpayer has to relocate the business location as requested by a competent authority and such relocation affects the business performance.
- A taxpayer eligible for tax deferral mentioned in Clause 1 of this Article may have part or all of the tax deferred.
At the same time, a taxpayer eligible for tax deferral mentioned in Clause 1 of this Article may have part or all of the tax deferred.
On the other hand, the taxpayer will not incur fines and late payment interest on the outstanding tax during the deferral period
Vietnam: In which cases is it considered an extension of tax payment? How long can the tax payment deadline be extended?
How long can the tax payment deadline be extended in Vietnam?
The time limit for extension of tax payment according to Clause 3, Article 62 of the Law on Tax Administration of Vietnam 2019 is as follows:
Article 62. Tax deferral
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3. Tax may be deferred:
a) For up to 02 years in the cases specified in Point a Clause 1 of this Article;
b) For up to 01 year in the cases specified in Point b Clause 1 of this Article.
Thus, the tax payment deadline can be extended according to the following time frame:
- No more than 02 years from the expiration of the tax payment deadline in case of material damage, directly affecting production and business due to force majeure cases.
- No more than 01 year from the expiration of the tax payment period in case of having to stop operation due to the relocation of production and business establishments at the request of competent agencies, affecting production and business results.
How does the determination of the amount to be extended for tax payment be regulated in Vietnam?
Pursuant to Clause 3, Article 24 of Circular 80/2021/TT-BTC stipulates the determination of the amount to be extended for tax payment as follows:
Article 24. Procedures and application for tax deferral
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3. Determination of deferred amount
a) In case of a natural disaster, epidemic, conflagration or accident mentioned in Point a Clause 27 Article 3 of the Law on Tax Administration of Vietnam, the deferred amount is the tax debt that has accumulated by the date of occurrence of the natural disaster, epidemic, conflagration or and must not exceed the physical damage minus compensation and insurance payout (if any).
b) In case of other force majeure events mentioned in Clause 1 Article 3 of Decree No. 126/2020/ND-CP, the deferred amount shall be the tax debt that has accumulated by the date of the occurrence of such event and must not exceed the physical damage minus compensation and insurance payout (if any).
c) In case of relocation specified in Point b Clause 1 Article 62 of the Law on Tax Administration of Vietnam, the deferred amount shall be the tax debt that has accumulated by the day on which business operation is suspended for relocation but must not exceed the relocation costs and damage caused by the relocation minus compensation and insurance payout as per regulations. Relocation costs do not include the costs of construction of the new business establishment. In case a competent authority discovers that the relocation does not happen, the taxpayer shall pay the deferred amount and late payment interest on the deferred amount.
Accordingly, the determination of the amount to be extended for tax payment is based on each specific situation, as follows:
- In case of a natural disaster, epidemic, conflagration or accident mentioned in Point a Clause 27 Article 3 of the Law on Tax Administration of Vietnam, the deferred amount is the tax debt that has accumulated by the date of occurrence of the natural disaster, epidemic, conflagration or and must not exceed the physical damage minus compensation and insurance payout (if any).
- In case of other force majeure events mentioned in Clause 1 Article 3 of Decree No. 126/2020/ND-CP, the deferred amount shall be the tax debt that has accumulated by the date of the occurrence of such event and must not exceed the physical damage minus compensation and insurance payout (if any).
- In case of relocation specified in Point b Clause 1 Article 62 of the Law on Tax Administration of Vietnam, the deferred amount shall be the tax debt that has accumulated by the day on which business operation is suspended for relocation but must not exceed the relocation costs and damage caused by the relocation minus compensation and insurance payout as per regulations. Relocation costs do not include the costs of construction of the new business establishment. In case a competent authority discovers that the relocation does not happen, the taxpayer shall pay the deferred amount and late payment interest on the deferred amount.
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