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Vietnamese government issued decree providing tax relief to businesses due to COVID-19.

On 8 April 2020, the Vietnam Government issued Decree 41/2020/ND-CP deferring certain payments for value added tax (“VAT”), corporate income tax (“CIT”), personal income tax (“PIT”) and government land rent for selected taxpayers, to support businesses in Vietnam impacted by COVID-19.

Implementation and eligible beneficiaries of the Decree covers the following:

1. Deferral of CIT Payments

Eligible companies can defer their 2019 final CIT payment (which was in fact due at the end of March 2020) for five months, and will also be able to defer their first two quarters CIT provisional payments in 2020 for five months from their existing due dates.

Where companies have already made their 2019 final tax payment, they can request an offset of this amount against other taxes due – allowing them to defer this payment although it has been remitted already. To make an adjustment request, companies will need to use Form C1-11/NS from Circular 84/2016/TT-BTC issued by the Ministry of Finance.

2. Deferral of VAT Payments

Eligible taxpayers can defer VAT payments, so that the first two quarter payments can be deferred for five months (for quarterly payers), and March, April, May and June 2020 payments can also be deferred for five months for (monthly payers). Note that lodgements are still required to be performed on time, and the exemption excludes VAT for imports.

3. Household Businesses & Individuals – VAT and PIT Deferrals

The annual VAT and PIT payments due for 2020 for household businesses and individuals can be deferred until 31 December 2020.

4. Land Rental Deferrals

Taxpayers with direct land lease contracts from the State can defer 2020 annual land rental payments for five months, from 31 May 2020.

5. Applicable Taxpayers

i) Those involved in production activities covering:

  1. agricultural, forestry and fisheries sectors
  2. production and processing of food, textile & garments, and footwear
  3. production of wooden, metal, paper, plastic and rubber products
  4. production of electronic products, computers and optical products
  5. automobile manufacturing
  6. construction sector

ii) Those operating in service sectors covering:

  1. transport sector and associated supporting activities
  2. accommodation and catering services
  3. travel agents, tour businesses and support services related to tour promotion and organisation
  4. training and education
  5. medical and social assistance activities
  6. real estate businesses
  7. artists, recreational activities, sport activities, museums and cinemas
  8. labour and employment services

iii) Taxpayers engaged in the production of industrial products supporting the development of Vietnam and other key mechanical products (following previous guidelines released by the government on supporting industry development, and mechanical engineering development)

iv) Small and micro enterprises defined by regulations of the law on supporting SMEs. The definitions include:

  • Enterprises in the fields of agriculture, forestry, fisheries, construction and industrial sectors with no more than 100 staff, and turnover no more than VND50 billion or total capital not more than VND20 billion
  • Enterprises in the fields of commerce and services with no more than 50 staff, and turnover no more than VND100 billion or total capital not more than VND50 billion

v) Credit institutions and foreign bank branches, for those affected by the COVID-19 epidemic, as prescribed by the State Bank of Vietnam

6. Implementation & Access to Deferrals

Taxpayers wishing to take advantage of the tax deferrals in this Decree using the form attached to this Decree, and which needs to be submitted no later than 30 July 2020. Submission can be made electronically or in paper form.

The Decree took effect on 8 April 2020 when issued.