Vietnam: Regulations guiding the implementation of corporate income tax reduction in 2020

The case of CIT reduction is specified in the Draft Decree elaborating the implementation of the Resolution of the National Assembly of Vietnam on reduction in corporate income tax payable in 2020 by enterprises, cooperatives, public service providers and other organizations as follows: CIT payable in the fiscal year 2020 by an enterprise whose total revenue in 2020 does not exceed 200 billion VND shall be reduced by 30%.

In which:

- The total revenue is 2020 that is the basis for determination of eligibility for CIT reduction prescribed in this clause is the total revenue of an enterprise in the fiscal year 2020, including total revenue from selling goods and providing services in 2020 of the enterprise. For enterprises that are established, enterprises that undergo conversion, ownership transfer, consolidation, merger, division, dissolution, bankruptcy in the fiscal year 2020 and have operated for less than 12 months, the total revenue in 2020 will be the total revenue earned in the fiscal year 2020 divided by (:) the number of months of actual business operation multiplied by (x) 12. The month in which the enterprise is established or undergoes conversion, ownership transfer, consolidation, merger, division, dissolution, bankruptcy will also be included in the months of actual business operation.

- Enterprises shall determine their own average monthly revenue. In case the average monthly revenue does not exceed VND 16.67 billion, the enterprise shall temporarily calculate quarterly the tax amount that the enterprise must pay according to regulations, then temporarily pay the quarterly corporate income tax amount after reducing the provisional tax amount by 30%.

- At the end of the fiscal year 2020, if the enterprise’s total revenue in 2020 does not exceed 200 billion VND, it will declare the CIT reduction of 2020 when making the annual CIT return as per regulations.

- In case a new enterprise is established in the last 3 months of 2019 and has registered to determine the tax period of the first year to the tax period of 2020 including the newly established months in 2019, the corporate income used as a basis for determining the amount of corporate income tax to be reduced according to the provisions of this Clause does not include income arising in 2019.

- In case a new enterprise is established in the last 3 months of 2020 and registers to determine the first year's tax period as 2021 including the newly established months in 2020, the corporate income used as a basis for determining the amount of corporate income tax to be reduced according to the provisions of this Clause is only calculated on the income arising in 2020.

- When finalizing corporate income tax, in case the temporarily reduced tax amount of each quarter is higher than the actual reduced amount, the enterprise must declare and pay additional tax arrears and late payment interest according to regulations; in case the temporarily calculated tax reduction for each quarter is lower than the actual reduction, the tax authority will handle the overpaid tax amount according to the provisions of law on tax administration.

Note: The corporate income tax period is determined according to the calendar year or fiscal year specified in the Corporate Income Tax Law and current guiding documents.

View more details at the Draft Decree elaborating the implementation of the Resolution of the National Assembly of Vietnam on reduction in corporate income tax payable in 2020 by enterprises, cooperatives, public service providers and other organizations.

Long Binh

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