The Government of Vietnam has just promulgated Decree 92/2021/ND-CP detailing implementation Resolution 406/NQ-UBTVQH15 on a number of solutions to support businesses and people affected by the COVID-19 epidemic. In particular, detailed instructions on CIT reduction (CIT) are as follows:
Article table of contents
Detailed instructions for businesses to receive EIT reduction in 2021 (Artwork)
The Subjects of application
The reduction of enterprise income tax (EIT) applies to EIT taxpayers who are organizations engaged in the production and business activities of goods and services with taxable income (hereinafter referred to as enterprises) as prescribed in Article 1 of Resolution 406/ NQ-UBTVQH15 of Vietnam, including:
- The enterprise is established in accordance with the law of Vietnam.
- The organization was established under the Law on Cooperatives of Vietnam
- Non-business units established in accordance with Vietnamese law.
- Other organizations established in accordance with the law of Vietnam having production and business activities with income.
A 30% reduction in the payable EIT amount of the 2021 EIT period for the above enterprises whose revenue in the tax period 2021 is not more than VND 200 billion and the revenue in the tax period 2021 is lower than the revenue in the tax period of 2021 compared to tax period 2019. In which:
- The EIT calculation period is determined according to the calendar year, in case the enterprise applies a fiscal year different from the calendar year, the EIT calculation period is determined according to the applicable fiscal year specified in the Law on Enterprise Income Tax and other instruction.
- Turnover in the EIT period includes all sales, processing, service provision and business activities in the form of business cooperation contracts, including price subsidies, surcharges, and excess surcharges that enterprises are entitled to in accordance with the provisions of the Law on Enterprise Income Tax and its guiding documents, excluding deductions from revenue, revenue from financial activities and other incomes.
Note:
- In case the enterprise is newly established, the enterprise transforms its form of enterprise, transforms its form of ownership, consolidates, merges, divides, separates, dissolves, goes bankrupt in the EIT period, it has not operated for 12 months: The turnover of that tax period is determined by the actual revenue in the tax period divided (:) by the number of months the enterprise actually operates in production and business in the tax period multiplied (x) by 12 months.
- In case the enterprise is newly established, the enterprise transforms its form of enterprise, transforms its form of ownership, merges, merges, divides, separates, dissolves or goes bankrupt within a month, the operating time shall be fully calculated by month.
- If the tax period for the first year for a newly established enterprise is 2020 or the tax period for the last year for an enterprise that converts its form of enterprise, transforms its ownership form, consolidates or merges, division, separation, dissolution, bankruptcy is 2022 but the time is shorter than 03 months and the enterprise is added to the tax period of 2021 to form a EIT period, the determination of revenue and tax amount is reduced applicable only for 12 months of the tax year 2021.
- In case an enterprise has a dependent unit and a business location, the revenue in the CIT period includes the revenue of the dependent unit and the business location shown in the annual consolidated financial statements.
How to determine the amount of enterprise income tax reduction?
- The reduced EIT amount of the tax period 2021 is calculated on the entire income of the enterprise, including the incomes specified in Clause 3, Article 18 of tthe Law on Enterprise Income Tax of Vietnam
- The reduced EIT amount specified in Decree 92/2021 is calculated on the payable EIT amount of the tax period of 2021, after deducting the EIT amount that the enterprise is enjoying incentives under the provisions of the Law on Enterprise Income Tax and guiding documents.
Declare tax reduction
- Based on the revenue in the 2019 tax period and the expected revenue in the 2021 tax period, the enterprise shall determine the tax amount to be reduced when temporarily paying quarterly EIT.
Enterprises determine the officially reduced EIT amount to declare according to the declaration form issued together with Circular 80/2021/TT-BTC and on the EIT Appendix to be reduced in Appendix II issued together with Decree 92 2021 of Vietnam
- When making the EIT finalization in 2021, the handling of underpaid or overpaid tax of the quarterly temporarily paid tax amount compared to the payable tax amount according to the annual finalization shall comply with the provisions of the law on tax administration.
Some note:
- Through inspection, examination, audit, tax authorities, competent agencies discover that enterprises are not eligible for tax reduction as prescribed in Decree 92/2021 or the payable tax amount of the tax period of the year of 2021 is larger than the declared tax amount, the enterprise must pay the full amount of tax that is insufficient compared with the payable amount after it has been reduced according to the provisions of this Decree (if any), and imposed a sanction for administrative violations against regulations on tax. Moreover, Tax shall be calculated on the amount of tax that is insufficient and late payment interest shall be calculated according to the provisions of the law on tax administration and the law on handling of administrative violations.
- In case the enterprise additionally declares the EIT declaration of the tax period of 2021 or according to the decision, conclusion and notification of inspection, examination and audit results of the tax authority, the agency competent to do so increases the payable EIT amount, the additional tax amount will be reduced by 30% according to the provisions of Decree 92/2021 if the enterprise still meets the conditions for tax reduction.
- In case the enterprise additionally declares the EIT declaration of the tax period of 2021 or according to the decision, conclusion and notification of inspection, examination and audit results of the tax authority, the agency competent to do so If the amount of EIT payable is reduced, the EIT amount shall be reduced according to the provisions of Decree 92/2021 and the overpaid tax amount (if any) shall be handled according to the provisions of the law on tax administration.
Decree 92/2021/ND-CP of Vietnam takes effect from October 19, 2021.
Bao Ngoc
