What are regulations on corporate income tax (CIT) reduction for enterprises affected by Covid-19 in Vietnam?
What are regulations on corporate income tax (CIT) reduction for enterprises affected by Covid-19 in Vietnam?
What are regulations on corporate income tax (CIT) reduction for enterprises affected by Covid-19 in Vietnam? - image from internet
Pursuant to Article 1 of the Decree 92/2021/ND-CP on elaboration of Resolution 406/NQ-UBTVQH15 in 2021 on provision of assistance for enterprises and people affected by Covid-19, the corporate income tax (CIT) reduction for enterprises affected by Covid-19 in Vietnam is as follows:
1. Eligibility
CIT reduction specified in this Article shall apply to CIT payers that are organizations that earn taxable income from manufacture and/or sell goods and/or services (hereinafter referred to as "enterprises") according to Article 1 of Resolution No. 406/NQ-UBTVQH15, including:
a) Enterprises that are established in accordance with Vietnam's law.
b) Organizations that are established in accordance with the Law on Cooperatives.
c) Public service providers that are established in accordance with Vietnam's law.
d) Other organizations that are established in accordance with Vietnam's law and earn income from business operation.
2. 30% reduction in CIT payable in 2021 shall apply to any enterprise specified in Clause 1 of this Article whose revenue in the tax period of 2021 does not exceed 200 billion VND and is smaller than the revenue earned in the tax period of 2019.
The revenue earned in the tax period of 2021 does not have to be smaller than the revenue earned in the tax period of 2019 in case the enterprise is newly established, undergoes consolidation, merger, full division or partial division in the tax period of 2020 and 2021.
a) A tax period shall be a calendar year. In case an enterprise's fiscal year is not a calendar year, the tax period shall be the fiscal year according to the Law on Corporate Income Tax and its guiding documents.
b) Revenue earned in a tax period shall include all revenues from sale of goods, processing, provision of services and business operation in the form of business cooperation contract, including subsidies and surcharges to which the enterprise is entitled according to the Law on Corporate Income Tax and its guiding documents, excluding revenue deductions, revenues from financial activities and other incomes.
- In case an enterprise is newly established or undergoes ownership transfer, consolidation, merger, full division, partial division, dissolution or bankruptcy during a tax period and has operated for less than 12 months in that tax period, the revenue of that tax period shall equal (=) actual revenue earned in the tax period divided by (:) the number of months of operation multiplied by (x) 12 months. The operating period in a month during which the enterprise is established, undergoes conversion, ownership transfer, consolidation, merger, full division, partial division, dissolution or bankruptcy during a month will be considered a full month.
In case the first tax period of a newly established enterprise is 2020 or the last tax period of an enterprise which undergoes ownership transfer, consolidation, merger, full division, partial division, dissolution or bankruptcy is 2022 and is shorter than 03 months, and the enterprise is permitted to combine this period with the tax period of 2021 into a single tax period, determination of revenue and CIT reduction shall only apply to 12 months of the tax period of 2021.
- In case an enterprise has dependent units or business locations, revenue earned in the tax year shall include revenue of the dependent units and business locations specified in on the consolidated annual financial statement.
3. Determination of CIT eligible for reduction
The enterprise's entire revenue shall be the basis for calculation of CIT eligible for reduction of the tax period of 2021, including the revenues specified in Clause 3 Article 18 of the Law on Corporate Income Tax. CIT eligible for reduction prescribed in this Decree shall be calculated according to the CIT payable in the tax period of 2021 minus (-) the CIT eligible for incentives according to the Law on Corporate Income Tax and its guiding documents.
4. Declaration of tax reduction
a) On the basis of revenue earned in the tax period of 2019 and estimated revenue earned in the tax period of 2021, the enterprise shall calculate the CIT eligible for reduction when paying provisional CIT quarterly. The enterprise shall determine the final CIT eligible for reduction on the declaration form enclosed with Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance elaborating some Articles of the Law on Tax Administration and the Government’s Decree No. 126/2020/ND-CP dated October 19, 2020, and on the form provided in Appendix II hereof.
b) When finalizing CIT of 2021, underpayment or overpayment of provisional tax shall be settled in accordance with tax administration laws.
c) In case a tax authority or competent authority, through inspection or audit, discovers that the enterprise is not eligible for tax reduction as prescribed in this Decree or the tax payable in 2021 is greater than the tax declared by the enterprise, the enterprise shall pay the arrears after reduction is applied according to this Decree (if any), incur administrative penalties and pay late payment interest in accordance with regulations of law on tax administration and handling of administrative violations.
In case the CIT is increased after the enterprise supplements the CIT declaration dossier of 2021 or according to the inspection or audit verdict issued by the tax authority or competent authority, the increase in CIT will be reduced by 30% according to this Decree if the enterprise still satisfies the conditions for tax reduction specified in Clause 2 of this Article.
In case the CIT is decreased after the enterprise supplements the CIT declaration dossier of 2021 or according to the inspection or audit verdict issued by the tax authority or competent authority, the CIT eligible for reduction shall also be reduced and the overpaid tax (if any) shall be settled in accordance with tax administration laws.
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