Issue of October 2021 – Adoption of Tax relief measures

Dear Valued Clients,

Facing nagative impacts of Covid-19 epidemic across the country, most enterprises and business households and individuals face a series of financial difficulties. Having this understood thoroughly, the National Assembly Standing Committee has recently passed a resolution on a package of exemption and reduction of corporate income tax and value added tax for these subjects. The following article will update the basic provisions of Resolution No. 406/NQ-UBTVQH15 dated October 19, 2021.

On 19^th October 2021, the National Assembly Standing Committee issued Resolution 406/NQ-UBTVQH15 (“Resolution 406”) on a number of solutions to assist businesses and people affected by the COVID-19 pandemic.

According to the Resolution 406, enterprises and business households/individuals are entitled to tax support policies as follows:

Corporate income tax (“CIT”)

Enterprises which has revenue of not exceeding VND200 billion in 2021 and a decrease in the revenue in 2021 compared to 2019, will be eligible for a 30% reduction in tax payable in 2021.

For enterprises that are newly established, consolidated, merged, divided or split in the tax periods of 2020 and 2021, the criteria in respect of the decrease of revenue in 2021 compared to 2019 shall not be applied.

Value added tax (“VAT”)

A 30% reduction on the VAT rate (for credit method) or on the percentage of VAT calculation percentage (for direct method) will apply from 1^st November 2021 to 31^th December 2021 to the following industries:

1.  Transportation services (railway, waterway, aviation, road);

2.  Accommodation and catering services;

3.  Travel agency, tour business and related support services to promote and organize tours;

4.  Publishing products and services;

5.  Film services, television programs production, recording and music publishing;

6.  Creative, arts and entertainment;

7.  Library, storage, museum services and other cultural activities;

8.  Sport, entertainment and recreation services.

The above VAT reduction does not apply to publishing of software and goods and services in online platform.

Tax exemption to business households/individuals

Business households and individuals carrying out business activities in district areas affected by the COVID-19 pandemic in 2021 will be exempt from personal income tax, value added tax and other payable taxes arising from the production and business activities in the third and fourth quarters of 2021. The subjects eligible for tax exemption will be decided by the Chairman of the relevant city/provincial People’s Committees.

The above tax exemption does not apply to incomes or revenues earned from providing software products and services, digital information content products and services of entertainment, video games, digital movies, pictures, music and advertising.

Exemption of late payment interest

Resolution 406 also stipulates that there will be an exemption from late payment interest arising in 2020 and 2021 on outstanding tax, land use fees and land rental for enterprises, organization (including dependent units and/or business places) that incurred losses in 2020. No refund will be applied in case the late payment interest has already been paid.

Kind regards,

ENT Law LLC

The full version of this Legal Update can be found here.