On 19 October 2021, the Standing Committee of the National Assembly ratified Resolution No. 406/NQ-UBTVQH15 ("Resolution No. 406") to provide solutions for supporting enterprises and individuals affected by the COVID-19 pandemic in the fiscal year 2021.
To implement Resolution No. 406/NQ-UBTVQH15, on 27 October 2021, the government issued Decree No. 92/2021/ND-CP ("Decree No. 92") guiding the implementation of Resolution No. 406.
Resolution No. 406 and Decision No. 92 take effect from 19 October 2021.
According to Resolution No. 406 and Decision No. 92, the following tax relief measures for the fiscal year 2021 are granted to enterprises and individuals:
- 30% corporate income tax (CIT) reduction for the tax year 2021
- Tax exemption for business households and business individuals
- 30% VAT reduction from 1 November 2021 to 31 December 2021
- Exemption of late payment interest
In more detail
1. 30% CIT reduction for the tax year 2021
According to Decree No. 92, taxpayers eligible for 30% CIT reduction include:
- Enterprises established in accordance with Vietnamese laws
- Organizations established under the Law on Cooperatives
- Nonbusiness units established in accordance with Vietnamese laws
- Other organizations that are established in accordance with Vietnamese laws and have production and business activities and generated incomes
CIT payable for the tax year 2021 of the eligible taxpayers above are reduced by 30% if the revenues of the taxpayer in the tax year 2021 do not exceed VND 200 billion and if the revenues in 2021 are less than revenues in 2019.
Enterprises that are newly established, consolidated, merged, divided and separated in the tax years of 2020 and 2021 are not subject to the condition of the revenue in 2021 less than the revenues in 2019.
Eligible revenues include revenues from sales of goods, toll manufacturing fees, provision of services, Business Cooperation Contracts, price subsidies, surcharges and extras that enterprises are entitled under CIT laws, except for sale reductions, financial incomes and other incomes.
Taxpayers will self-determine and pay the provisional CIT payment on a quarterly basis, taking into account the 30% CIT reduction under Resolution No. 406 and Decree No. 92. Upon the CIT finalization, taxpayers will finalize the provisional CIT paid during the year in accordance with Law on Tax administration.
2. Tax exemption for business households and business individuals
Business households and business individuals eligible for tax exemption are resident individuals who operate in every industry and have business activities in the district-level areas that are mentioned under the list of district-level areas affected by the COVID-19 pandemic, decided by the respective chairs of the provinces' People's Committees.
Business households and business individuals are exempted from personal income tax (PIT), value-added tax (VAT), special consumption tax (SCT), natural resource tax and environmental protection tax incurred from production and business activities during the third and fourth quarters of the year 2021.
Incomes and revenues derived from the provision of software products and software services, entertainment digital content products and services, video games, digital movies, digital photos, digital music and digital advertising are not eligible for the tax exemption.
If business households and business individuals have paid taxes in connection with production and business activities during the third and fourth quarters of the year 2021, the tax paid shall be offset against the tax liabilities of the upcoming tax periods and refund (if applicable).
3. 30% VAT reduction from 1 November 2021 to 31 December 2021
The following goods and services are eligible for 30% VAT reduction:
- Transportation services (including railway, waterway, air and road transport); accommodation services; catering services; travel agency, tour operation and auxiliary services related to tour promotion and organization
- Publishing products and services, cinema, production of television programs, recording and music publishing, works of art and composing services, arts and entertainment; library services, archives, museums and other cultural activities; sports, entertainment and recreation
A detailed list of the above goods and services is included under Appendix I of Decree No. 92. Software publishing, manufacturing and trading of goods and services through online business are not eligible for 30% VAT reduction.
Enterprises and organizations that are adopting the VAT credit method are entitled to the 30% reduction of the VAT rate applicable for those goods and services mentioned above.
4. Exemption on interests of the late payment
Interests of the late tax payment, land use fee and land rental raised in 2020 and 2021 of enterprises and organizations (including dependent units and business locations) are exempted provided that such entities had losses in the tax year 2020.
Taxpayers shall prepare an application form for requesting the exemption and submit it to local tax authorities. Late payment interest for 2020 and 2021 that have been paid shall not be eligible for exemption.