It is undeniable that the Covid-19 epidemic has launched a devastating blow to the financial health of many individuals and organizations in recent months. Being aware of many challenges that people are dealing with due to the continuous complicated situation of Covid-19, the Government has issued Decree No. 92/2021/ND-CP dated 27 October 202. This Decree provides guidance on tax exemption and reduction for businesses to promptly remove difficulties and restart the economy.

Corporate income tax (“CIT”) reduction

Entitlement: 30% reduction of the payable CIT of tax year 2021.

Eligible entities: Enterprises have (i) revenue not exceeding VND 200 billion and (ii) revenue in the tax year 2021 lower than revenue in the tax year 2019 (excluding revenue deductions, revenues from financial activities and other incomes).

However, condition (ii) above is not required if the enterprise is newly established, undergoes consolidation, merger, full division or partial division in the tax year of 2020 and 2021

CIT to be reducted: Calculated on the payable CIT of the tax year 2021 after deducting the CIT eligible for incentives as per regulated.

Procedure: Based on the revenue in tax year 2019 and the expected revenue in tax year 2021, enterprises shall calculate the CIT reduction themselves when paying quarterly CIT.

At the time of making CIT finalization for 2021, the overpaid or underpaid amount of CIT paid quarterly in comparision with the actual payable tax based on the annual tax finalization shall be handled following the law on tax.

Value-added tax (“VAT”) reduction

Entitlement: 30% reduction of VAT from 01 November 2021 to the end of 31 December 2021

Eligible entities: VAT reduction applies to several goods and services, including transport services, accommodation services, food and drink services; information and communication;
administrative and auxiliary services; art and recreation services, etc as listed in Appendix 1 of Decree 92/2021/ND-CP.

Procedure: Enterprises shall declare goods and services eligible for VAT reduction by using the form of Appendix on value-added tax Reduction under Resolution No. 406/NQ-UBTVQH15 together with the Declaration of value-added tax.

For VAT deduction method: When issuing a VAT invoice for the provision of goods and services, the enterprise shall write “the prescribed tax rate (5% or 10%) x 70%” at VAT rate line; VAT amount and the total amount to be paid by the buyer. The seller shall declare output VAT and the buyer shall declare deduction of input VAT according to the reduced VAT written on the VAT invoice.

For VAT direct method: When issuing a sale invoice for the provision of goods and services, the seller will write the full amount of goods and services before the reduction in the “Amount” column and write the after-reduction amount in the “Total amount” line. The seller will also concurrently note “reduced (amount) equivalent to 30% of the rate to calculate VAT according to Resolution 406/NQ-UBTVQH15” on the invoice.

Exemption of late payment interest of tax arising in 2020 and 2021

Eligible entities: Enterprises (including their dependent units, business locations) incur losses in the tax period 2020.

Exempted late payment interest determination: Tax authority, based on tax administration data, determine the amount of late payment interest arising in 2020 and 2021 to issue a decision on exemption of late payment interest.

Procedure:  The enterprise shall submit a written request for exemption from late payment of tax to the supervisory tax authority in which the loss incurred in tax year 2020 is clearly stated. Within 15 working days from the receipt of the taxpayer’s request, the tax authority shall issue the Notice of rejection or the Decision on exemption of late payment interest.