Corporate income tax reduction up to 30% in 2021 due to Covid-19

The Ministry of Finance said that since the first time the COVID-19 epidemic broke out in Vietnam, which had a negative impact on the domestic socio-economic situation, the Ministry of Finance had closely monitored the actual developments and promptly submitted the report to the Ministry of Finance. Competent authorities promulgate and implement many solutions on taxes, fees, charges and land rent to support businesses and people affected by the COVID-19 epidemic.

1. Proposing solutions to support businesses and people

In 2020, many support solutions have been implemented, such as extending tax payment time and land rent; exemption and reduction of taxes, fees, charges and land rental fee with total value of about 129,000 billion VND (of which the number of extensions is about 97,500 billion VND; the number of exemption and reduction is more than 31,500 billion VND).

Over past months of 2021, the authorities continued to extend the deadline for paying taxes and land rents as well as exempt and reduce taxes, fees and charges with an estimated amount of about 118,000 billion VND. .

However, the COVID-19 epidemic continues to evolve complicatedly and to seriously affect the activities of businesses and people, especially small and medium-sized enterprises, household business, individual business and many industries such as tourism, transportation, accommodation and dining, movie screenings, sports and entertainment, newspapers, television, etc. If there are solutions to support production and business activities suitable to the actual situation, the Ministry of Finance has developed and submitted to the Government to submit to the National Assembly Standing Committee a Resolution for promulgating a number of solutions to support enterprises and people affected by the COVID-19 epidemic. In Clause 2, Article 3 of this Resolution, "The Government guides the implementation of this Resolution".

In order to be suitable for practice, and at the same time specify the contents assigned by the National Assembly Standing Committee to detail and guide the implementation in the Resolution, the Government's Decree promulgation details detailed regulations. and guiding the implementation of the Resolution are necessary to ensure uniformity in the legal system, create favorable conditions for taxpayers, contribute to encouraging production and business, and support businesses and people to overcome difficulties. by disease.

2. Guidance to enterprises for 30% corporate income tax reduction

Regarding subjects applied, the draft proposal applies to corporate income taxpayers who are organizations engaged in production and business activities of goods and services with taxable income (collectively referred to as enterprises) including: Enterprise established in accordance with the law of Vietnam; organizations established under the Law on Cooperatives; non-business units established in accordance with Vietnamese law; other organizations established in accordance with the provisions of Vietnamese law with income-generating production and business activities.

Regarding the corporate income tax reduction, a 30% reduction of payable corporate income tax in tax period of 2021 for the case that the above-mentioned enterprises have total annual revenue scale in 2021 not larger than 200 billion VND and total revenue in 2021 is lower than total revenue in 2019.

The criterion that the total revenue in 2021 is reduced compared to the total revenue in 2019 is NOT applied in the case as follows: newly established taxpayers, taxpayers changing business types, ownership transformation, consolidation, mergers and acquisitions, division, separation, dissolution, bankruptcy in the tax period 2020 and 2021.

In case the enterprise is newly established, the enterprise transforms its type of enterprise, transforms its form of ownership, consolidates, merges, divides, separates, dissolves, gone bankrupt in the corporate income tax period of 2021. If the operation is less than 12 months, the total revenue in 2021 is determined by the total actual revenue in the corporate income tax period of 2021 divided (:) by the number of months the enterprise actually conducts production and business activities in the period of corporate income tax in 2021 multiply (x) by 12 months. In case the enterprise is newly established, the enterprise transforms its form of enterprise, transforms the form of ownership, consolidates, merges, divides, separates, dissolves, goes bankrupt within a month, the operation period shall be counted in full months.

Regarding how to determine the amount of corporate income tax to be reduced, the draft Decree clearly states: The reduced corporate income tax 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 the Law on Corporate Income Tax.

The deducted corporate income tax specified in this Decree is calculated on the payable corporate income tax amount of tax period of 2021, after deducting the corporate income tax amount that the enterprise has paid, they are enjoying incentives under the provisions of the Law on Corporate Income Tax and its guiding documents.

Regarding tax reduction declaration, based on total revenue in 2019 and expected total revenue in 2021, taxpayers themselves determine the amount of tax to be deducted when temporarily paying corporate income tax on a quarterly basis.

Through inspection, examination and audit, the competent authority finds that the taxpayer is not eligible for tax reduction under this Decree, or the payable tax amount of the corporate income tax period of 2021 is larger than the declared corporate tax amount, the taxpayer must pay the full amount of the missing tax and be fined for tax law violations calculated on the insufficient tax amount compared to the payable amount after it has been deducted according to the provisions of Clause 1 of this Article. This Decree (if any) and late interest payment shall be calculated according to the provisions of the law on tax administration and the law on handling of administrative violations.