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Extension of deadlines for VAT and corporate income tax payments according to Decree 41/ND-CP

On April 8, 2020, the Government issued... Decree 41/2020/ND-CP stipulates the extension of deadlines for paying value-added tax, corporate income tax, personal income tax, and land rent.

Accordingly, the deadline for paying VAT is extended by 5 months for the tax due in March, April, May, and June, or for the first and second quarters of 2020; and by 5 months for the corporate income tax finalized for 2019, and the corporate income tax provisionally payable for the first and second quarters of 2020.

Subject of application

Decree 41/2020/ND-CP stipulates its application to 5 groups of subjects, including:

First group

Businesses, organizations, households, and individuals engaged in production activities in the following economic sectors: 

  • Agriculture, forestry, and fisheries.
  • Food production and processing; textiles; garment manufacturing; leather and related products manufacturing; wood processing and manufacturing of wood, bamboo, and rattan products (excluding beds, wardrobes, tables, and chairs); manufacturing of straw and woven materials; paper and paper product manufacturing; rubber and plastic product manufacturing; manufacturing of other non-metallic mineral products; metal manufacturing; mechanical processing; metal treatment and coating; manufacturing of electronic products, computers, and optical products; manufacturing of automobiles and other motor vehicles; manufacturing of beds, wardrobes, tables, and chairs.
  • This group includes businesses, organizations, households, and individuals engaged in construction production.

Second group

Businesses, organizations, households, and individuals operating in the following economic sectors:

  • Transportation and warehousing; accommodation and food services;
  • Education and training;
  • Health and social assistance activities;
  • Real estate business activities.
  • Labor and employment services;
  • Activities of travel agencies, tour operators, and related support services concerning the promotion and organization of tours.
  • Creative, artistic, and entertainment activities;
  • Activities of libraries, archives, museums, and other cultural activities;
  • Sports and recreational activities; film screenings.

The list of economic sectors mentioned in paragraphs 1 and 2 of this Article is determined according to Decision 27_2018_QD_TTg promulgating the System of Economic Sectors of Vietnam

The third group

Businesses, organizations, households, and individuals engaged in the production of priority-development supporting industrial products and key mechanical products.

Group four

Small and micro enterprises are defined according to the provisions of Law No. 04/2017/QH14 on Supporting Small and Medium-Sized Enterprises and Government Decree No. 39/2018/ND-CP detailing a number of articles of the Law on Supporting Small and Medium-Sized Enterprises.

Group five

Credit institutions and branches of foreign banks shall implement solutions to support customers, including businesses, organizations, and individuals affected by the Covid-19 pandemic, in accordance with the regulations of the State Bank of Vietnam. The State Bank of Vietnam is responsible for publishing the list of credit institutions and branches of foreign banks participating in supporting customers so that tax authorities can extend the deadline for paying taxes and land rent as stipulated in this Decree.

According to the Government Decree No. 39/2018/ND-CP provides detailed regulations on a number of articles of the Law on Support for Small and Medium-Sized Enterprises.As stipulated in Article 6, Criteria for Identifying Small and Medium-Sized Enterprises, small and medium-sized enterprises are classified by size, including: micro-enterprises, small enterprises, medium-sized enterprises.

The detailed classification method is as follows:

Micro-enterprises in the agriculture, forestry, fisheries, and industrial and construction sectors are those with an average annual number of employees participating in social insurance not exceeding 10 people. , and Total revenue for the year must not exceed 3 billion VND. or Total capital must not exceed 3 billion VND. Micro-enterprises in the trade and service sectors must have an average annual number of employees participating in social insurance not exceeding 10 people. , and Total revenue for the year must not exceed 10 billion VND. or The total capital should not exceed 3 billion VND.
Small businesses in the agriculture, forestry, fisheries, and industrial and construction sectors have an average annual number of employees participating in social insurance not exceeding 100 people. , and Total revenue for the year must not exceed 50 billion VND. or Total capital not exceeding 20 billion VND, but not a micro-enterprise as defined in Clause 1 of this Article. Small enterprises in the trade and service sectors with an average annual number of employees participating in social insurance not exceeding 50 people. , and Total revenue for the year must not exceed 100 billion VND. or Total capital must not exceed 50 billion VND, but it must not be a micro-enterprise as defined in Clause 1 of this Article.
Medium-sized enterprises in the fields of agriculture, forestry, fisheries, and industry and construction are defined as those with an average annual number of employees participating in social insurance not exceeding 200 people and total annual revenue not exceeding VND 200 billion or total capital not exceeding VND 100 billion, but are not small or micro-enterprises as defined in Clauses 1 and 2 of this Article. Medium-sized enterprises in the fields of trade and services are defined as those with an average annual number of employees participating in social insurance not exceeding 100 people and total annual revenue not exceeding VND 300 billion or total capital not exceeding VND 100 billion, but are not micro or small enterprises as defined in Clauses 1 and 2 of this Article.
The business sector of small and medium-sized enterprises (SMEs) is determined based on the regulations of the law on the economic sector classification system and the regulations of specialized laws. If an enterprise operates in multiple sectors, it is determined based on the sector with the highest revenue. If the sector with the highest revenue cannot be determined, the SME is determined based on the sector employing the most workers.
1. The number of employees participating in social insurance is the total number of employees managed, employed, and paid by the enterprise who participate in social insurance according to the law on social insurance. 2. The average number of employees participating in social insurance per year is calculated by dividing the total number of employees participating in social insurance for the year by the number of months in the year and is determined based on the social insurance payment documents submitted by the enterprise to the social insurance agency for the immediately preceding year. If the enterprise has been operating for less than one year, the average number of employees participating in social insurance is calculated by dividing the total number of employees participating in social insurance for all months of operation by the number of months of operation.
Total capital is determined in the balance sheet shown in the financial statements of the immediately preceding year that the enterprise submitted to the tax authorities. If the enterprise has been operating for less than one year, the total capital is determined in the enterprise's balance sheet at the end of the quarter immediately preceding the time the enterprise applies for the support.
Total revenue for the year is the sum of the revenue from the sale of goods and provision of services by the enterprise, as determined from the financial statements of the immediately preceding year that the enterprise submitted to the tax authorities. If the enterprise has been operating for less than one year, or for more than one year but has not yet generated revenue, the enterprise shall determine its classification as a small and medium-sized enterprise based on the total capital criteria stipulated in Article 9 of this Decree.
1. Small and medium-sized enterprises (SMEs) shall use the form prescribed in the Appendix attached to this Decree to self-determine and declare their size as a micro-enterprise, small enterprise, or medium-sized enterprise and submit it to the agency or organization supporting SMEs. SMEs shall be legally responsible for the accuracy of their declaration. 2. If an enterprise discovers that its declared size is inaccurate, it shall make adjustments and re-declare. This re-declaration must be completed before the enterprise receives any support. 3. If an enterprise intentionally makes a false declaration about its size to receive support, it shall be held legally responsible and shall reimburse all funds and related costs that it has received as support.

Extension of value-added tax (excluding value-added tax on imports)

The deadline for paying value-added tax (VAT) for the tax periods of March, April, May, and June 2020 (for monthly VAT declarations) and the first and second quarters of 2020 (for quarterly VAT declarations) of the aforementioned businesses and organizations is extended. The extension period is 5 months, starting from the end of the VAT payment deadline, as stipulated by tax administration laws.

In cases where a taxpayer submits an amended tax return for an extended tax period, resulting in an increase in the value-added tax payable, to the tax authority before the extended tax payment deadline expires, the extended tax amount includes the additional tax payable due to the amended return.

Businesses and organizations eligible for an extension to file monthly and quarterly value-added tax returns according to current law are not yet required to pay the value-added tax payable as stated on the filed returns.

Specifically, the deadline for paying value-added tax for the month and quarter has been extended as follows:

  • The deadline for paying value-added tax for the tax period of August 2020 is December 20, 2020 at the latest.
  • The deadline for paying value-added tax for the tax period of August 2020 is December 20, 2020 at the latest.
  • The deadline for paying value-added tax for the tax period of August 2020 is December 20, 2020 at the latest.
  • The deadline for paying value-added tax for the tax period of August 2020 is December 20, 2020 at the latest.
  • The deadline for paying value-added tax for the first quarter of 2020 is September 30, 2020.
  • The deadline for paying value-added tax for the second quarter of 2020 is December 30, 2020.

Extension of the deadline for filing corporate income tax returns.

For the remaining corporate income tax payable according to the final settlement for the 2019 tax period and the provisional corporate income tax payments for the first and second quarters of the 2020 tax period for businesses falling under the above-mentioned categories, the extension period is 5 months, starting from the end of the deadline for paying corporate income tax as stipulated by tax management laws.

In cases where businesses or organizations have already paid the remaining corporate income tax due for the year 2019 to the state budget, they may adjust the amount of corporate income tax already paid to cover the remaining amount due for other types of taxes.

Regarding personal income tax

This extension only applies to personal income tax for household businesses and individual business owners. It does not apply to personal income tax that businesses are required to pay on behalf of their employees.

Regarding land lease fees

The deadline for paying land rent for the first installment of 2020 is extended for businesses, organizations, households, and individuals falling under the aforementioned regulations who are directly leasing land from the State under decisions and contracts of competent State agencies in the form of annual land rent payments. The extension period is 5 months from May 31, 2020.

Taxpayers eligible for the extension only need to submit a Request for Extension of Tax and Land Rent Payment (electronic or other method) to the directly managing tax authority once for all periods of the taxes and land rents being extended, at the same time as submitting monthly (or quarterly) tax returns as prescribed by tax management law.

If the request for extension of tax and land rent payment is not submitted at the same time as the monthly (or quarterly) tax return, the deadline for submission is July 30, 2020. The tax authorities will still grant the extension for tax and land rent payments for the periods that were extended before the submission of the request for extension.

In cases where a taxpayer leases land from the state in multiple locations, the tax authority directly managing the taxpayer is responsible for forwarding copies of the Request for Extension of Tax and Land Rent Payment to the tax authority where the leased land is located.

Taxpayers are responsible for determining and ensuring that their requests for extensions are made to the correct eligible entities as stipulated in this decree. If a taxpayer submits a Request for Extension of Tax and Land Rent Payment to the tax authority... No tax payment extensions will be granted after July 30, 2020., land rent as stipulated in this decree.

During the tax payment extension period, based on the Request for Extension of Tax and Land Rent Payment, the tax authority will not charge late payment penalties on the extended tax and land rent amounts (including cases where the Request for Extension is submitted to the tax authority after the monthly (or quarterly) tax return has been filed no later than July 30, 2020).

The remaining corporate income tax payable according to the final tax return for the 2019 tax year, which is extended, does not include the quarterly provisional corporate income tax payments as stipulated in Clause 6, Article 4 of Government Decree No. 91/2014/ND-CP dated October 1, 2014, and Article 17 of Circular No. 151/2014/TT-BTC dated October 10, 2014, of the Ministry of Finance. Accordingly, the remaining corporate income tax payable according to the final tax return for the 2019 tax year shall not exceed 20% of the total annual tax payable according to the final tax return.
In cases where a business's corporate income tax period is based on a fiscal year that does not coincide with the calendar year: the tax payment deadline will be extended to match the business's corporate income tax period.
In the case where taxpayers submit supplementary corporate income tax final settlement documents for 2019 in accordance with the Law on Tax Administration, increasing the amount of corporate income tax payable, and send them to the tax authority before the extended tax payment deadline expires: The amount of tax to be extended is determined according to the principle in note (1) mentioned above, in which the amount of tax payable for the whole year according to the final settlement is based on the supplementary declaration documents.
In the case of an audit or inspection of the 2019 corporate income tax settlement and the issuance of a conclusion before the deadline for tax payment, the total amount of tax to be extended is determined according to the principle in note (1) above, in which the amount of tax payable for the whole year according to the settlement is based on the results of the audit or inspection. The extension period is 05 months, starting from the end of the deadline for submitting the corporate income tax settlement documents for the 2019 tax period.
The entities eligible for tax and land rent payment extensions are granted an extension for the VAT payable, including VAT payable at the head office and VAT payable in the locality where the business conducts temporary construction activities outside the province or inter-provincial construction projects.
The State Treasury has not yet deducted VAT (during the extension period) on payments for the volume of construction works and project components funded by the state budget, and payments from the state budget for construction works of ODA-funded projects subject to VAT, in cases where the contractor is eligible for an extension of VAT payment.

Official document 5977_BTC-TCT provides additional guidance on 06 points regarding the extension of deadlines for corporate income tax and value-added tax payments.

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