Vietnam: Determination of labor criterion and revenue criterion of medium and small-sized enterprises that are eligible for extension of EIT payment time limit

According to Vietnam’s current regulations, the State shall prolong duration of enterprise income tax payment for 06 months applying to payable enterprise income tax amounts of quarter I and prolong duration of enterprise income tax payment for 03 months applying to payable enterprise income tax amounts of quarter II and quarter III of 2013 for the following subjects: medium and small-sized enterprises, intensive-labor enterprises (more than 300 laborers) in production or processing fields and enterprises of housing (sale, lease, lease-purchase) investment – business.

According to Article 1 of Circular No. 16/2013/TT-BTC of the Ministry of Finance of Vietnam, medium and small-sized enterprises, including branches, affiliated units but independence accounting, cooperatives (employing less than 200 laborers working full-time during year and attaining year revenue not exceeding 20 billion dong) are eligible for an extension of enterprise income tax payment time limit. These enterprises must fully meet criteria on labor and revenue, which are defined as follows:

Firstly, way to define labor criterion:

- The year average labor quantity (excluding laborers working full-time of branches, affiliated units but independence accounting) as the basis for defining of medium and small-sized enterprises shall be the average total laborers regularly used by enterprises in 2012 which is less than 200 laborers, excluding laborers with short-term contract less than 3 months.

- The average labor quantity used regularly in year is defined as guides in Circular No. 40/2009/TT-BLDTBXH of the Ministry of Labor, War Invalids and Social Affairs guiding way to calculate labor quantity used regularly as prescribed in the Government’s Decree No. 108/2006/ND-CP detailing and guiding implementation of a number of articles of the Law on investment.

For enterprises newly established as from January 01, 2013, the total laborers, excluding laborers with short-term contracts less than 3 months shall be the average labor quantity used regularly calculated from the establishment day to March 31, 2013 (if established in quarter I of 2013), to June 30, 2013 (if established in quarter II of 2013), to September 30, 2013 (if established in quarter III of 2013) and less than 200 laborers.

Secondly, way to define revenue criterion:

Enterprises with revenue to calculate 2012 enterprise income tax not exceeding 20 billion dong are defined on the basis of item "turnover from goods and service sale" of number code [01] in the Annex on result of business production activity of taxation period of 2012 (enclosed with declaration of EIT finalization No. 03/TNDN of 2012) – form No. 03-1A/TNDN (promulgated together with the Circular No. 28/2011/TT-BTC of the Ministry of Finance).

In case an enterprise newly established in 2012, of which business production activity in 2012 is not sufficient 12 months, the revenue criterion in 2012 shall be defined to not exceed 1.66 billion dong multiplied (x) with quantity of months operating business production in the year.

For an enterprise newly established in 2013, revenue defined on the basis of item "turnover arisen in taxation period" of number code [21] in the declaration of temporarily calculating EIT – Form No. 01A/TNDN or form No. 01B/TNDN (promulgated together with the Circular No. 28/2011/TT-BTC of the Ministry of Finance). If an enterprise was established in quarter I of 2013, revenue shall be defined in the declaration of quarter I of 2013 not exceeding 1.66 billion dong multiplied (x) with quantity of months of business production activity in quarter, established in quarter II of 2013, revenue shall be defined in the declaration of quarter II of 2013 not exceeding 1.66 billion dong multiplied (x) with quantity of months of business production activity in quarter, established in quarter III of 2013, revenue shall be defined in the declaration of quarter III of 2013 not exceeding 1.66 billion dong multiplied (x) with quantity of months of business production activity in quarter.

Thirdly, in case an enterprise being a company organized under model of mother company - subsidiary company and these companies meeting labor criterion (using less than 200 laborers working full-time) and have revenue of 2012 not exceeding 20 billion dong and not do business in fields not permitted to prolong tax payment time limit, such enterprise shall be subject to be entitled to prolong EIT payment time limit.

Notably, do not apply to prolong EIT payment time limit to the following subjects:

- Enterprises operating in fields of: Finance; banking; insurance; securities; lottery; games with prizes; business in goods or services subject to excise tax.

In case a medium and small-sized enterprise does not do business in fields of finance, banking, if in taxation period it has other income from financial business activity such as: Interest from deposit, interest from loaning, enterprise shall be prolonged tax payment time limit for its mentioned-above income amounts.

- Economic organizations are non-business units.

View more details at Circular No. 16/2013/TT-BTC of the Ministry of Finance of Vietnam, effective from March 25, 2013.

Thu Ba

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