Decree 91/2022/ND-CP: Provisional CIT payment of 04 quarters in Vietnam are not less than 80% of the annual amount

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On October 30, 2022, the Government of Vietnam issued Decree 91/2022/ND-CP amending Decree 126/2020/ND-CP detailing several articles of the Law on Tax Administration.

Decree 91 amended the provisions of Clause 6, Article 8 of Decree 126/2020/ND-CP. To be specific:

- Taxpayers must self-determine the residual post-tax profits after setting aside funds to make provisional quarterly payments no later than the 30th of the quarter following the quarter in which the payment obligation arises, and they may deduct the residual post-tax profits after setting aside funds that have been provisionally paid from the amount to be paid according to the annual settlement.

- The total residual post-tax profits after setting aside funds provisionally paid for 4 quarters must not be less than 80% of the residual post-tax profits after setting aside funds according to the annual settlement. In cases where taxpayers pay less than the required provisional payment for 4 quarters, they must pay late payment interest calculated on the amount of the shortfall from the day following the last payment date of the residual post-tax profits after setting aside funds for Q4 to the day preceding the payment date of the shortfall amount into the state budget.

- For the residual post-tax profits after setting aside funds to be increased when making additional declarations due to adjustment in enterprise classification results as announced by the owner, from the day following the last payment date of the residual post-tax profits after setting aside funds according to the annual settlement until the deadline for announcing the enterprise classification results by the owner as per the competent authority’s regulations, the enterprise is not required to pay late payment interest.

- Representatives of the capital of the enterprises in which the state holds 100% of the charter capital contributing to joint-stock companies or limited liability companies with at least two members are responsible for voting to distribute dividends and profits when conditions in accordance with the Enterprise Law are met, and simultaneously urging, and ensuring that joint-stock companies and limited liability companies with at least two members pay the dividends and profits allotted to the state's capital contribution portion to the enterprise in which the state holds 100% of the charter capital.

(Currently, the total residual post-tax profits after setting aside funds provisionally paid for the first 3 quarters of the taxable year must not be less than 75% of the residual post-tax profits after setting aside funds according to the annual settlement.)

In addition, corporate income tax for foreign transport firms is to be provisionally paid quarterly and settled annually. The total corporate income tax provisionally paid for the 4 quarters must not be less than 75% of the corporate income tax payable according to the annual settlement.

In cases where taxpayers pay less than the required corporate income tax for 4 quarters, they must pay late payment interest calculated on the amount of the shortfall from the day following the last payment date of corporate income tax for Q4 to the day preceding the payment date of the shortfall amount into the state budget.

(Currently, the total corporate income tax provisionally paid for the first 3 quarters of the taxable year must not be less than 75% of the corporate income tax payable according to the annual settlement.)

Note:

- As of the effective date of Decree 91, taxpayers having provisional tax payments for the first 3 quarters of the 2021 taxable year not less than 75% of the annual settlement amount are not subject to the 4-quarter provisional payment rate stipulated in Clauses 3, 4, 5 of Article 1 of Decree 91.

- As of the effective date of Decree 91, taxpayers having provisional tax payments for the first 3 quarters of the 2021 taxable year less than 75% of the annual settlement amount may apply the 4-quarter provisional payment rate stipulated in Clauses 3, 4, 5 of Article 1 of Decree 91 without increasing the late payment interest.

In cases where a competent authority has conducted inspections or audits and has calculated late payment interest as per point b, point c, point g, Clause 6, Article 8 of Decree 126/2020/ND-CP, and when applying the 4-quarter provisional payment rate stipulated in Clauses 3, 4, Article 1 of Decree 91 results in reduced late payment interest, taxpayers can request to adjust and reduce the late payment interest by submitting a written request in Form 01/GTCN attached to Decree 91 to the tax authority managing the specific outstanding payment (either the directly managing tax authority or the tax authority granting corporate income tax incentives).

After adjusting and reducing the excess late payment, any overpaid amount shall be handled in accordance with Article 60 and Chapter VIII of the Law on Tax Administration No. 38/2019/QH14 and the guiding documents.

More details can be found in Decree 91/2022/ND-CP which comes into effect from the date of signing.

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