On the morning of June 19th, the National Assembly passed Resolution No. 116/2020/QH14 on reducing corporate income tax payable for the year 2020. Whereby, Businesses with revenue under 200 billion VND will be 30% reduction in corporate income tax..
This policy applies to businesses with total revenue in 2020 not exceeding 200 billion VND, equivalent to the revenue criteria for identifying medium-sized enterprises in the agriculture, forestry, fisheries, and industry and construction sectors.https://www.expertis.vn
The following entities are eligible for tax reductions:
- The business was established in accordance with Vietnamese law.
- The organization was established under the Law on Cooperatives.
- The public service unit is established in accordance with Vietnamese law.
- Other organizations established under Vietnamese law that engage in the production and business of goods and services with income-generating activities.
At the same time, the National Assembly also removed the criterion regarding the number of employees contributing to social insurance to ensure fairness for businesses that employ a large workforce.
Thus, the National Assembly removed the criterion regarding the number of employees contributing to social insurance to ensure fairness for businesses employing a large workforce and added medium-sized enterprises as eligible for a 30% reduction in corporate income tax.
According to the Chairman of the Finance and Budget Committee, Nguyen Duc Hai, with the expansion of the tax reduction scheme mentioned above, the reduction in state budget revenue in 2020 will increase from 15.840 billion VND to approximately 23.000 billion VND compared to the plan submitted by the Government.
Before the National Assembly voted, many opinions suggested that, in addition to reducing corporate income tax, other solutions with a significant and direct impact were needed to help businesses recover production and operations.
Mr. Nguyen Duc Hai stated that, in order to support businesses, overcome difficulties, and promote production and business activities, and restart the economy in response to the Covid-19 pandemic, the Government has proactively developed and implemented many comprehensive solutions regarding fiscal policy, taxes, fees, land rent, etc. Among these, the package of solutions extending the deadline for tax and land rent payments is worth approximately 180.000 billion VND.
He stated that the government and various ministries and agencies will soon implement more solutions to support businesses in overcoming difficulties caused by Covid-19.
View the full text: Resolution No. 116/2020/QH14 (Vietnamese)
Updated September 25, 2020
Maximum revenue of VND 200 billion in 2020: 30% reduction in corporate income tax.
This is the content of Decree 114/2020/ND-CP guiding the implementation of Resolution 116/2020/QH14 on reducing corporate income tax payable for the year 2020 for enterprises, cooperatives, public service units and other organizations (collectively referred to as enterprises).
Accordingly, a 30% reduction in corporate income tax payable for the 2020 tax year will be applied to businesses with total revenue in 2020 not exceeding VND 200 billion.
The total revenue for 2020 used to determine eligibility for tax reduction is the total revenue of the enterprise during the 2020 corporate income tax period, including:
All sales revenue, processing fees, service fees, including subsidies, surcharges, and additional charges that the enterprise is entitled to according to regulations.
If a business anticipates total revenue for the 2020 corporate income tax period not exceeding VND 200 billion, it shall determine its quarterly provisional tax payment to be 70% of the corporate income tax payable for that quarter.
At the end of the 2020 corporate income tax period, if the total revenue of the enterprise in 2020 does not exceed VND 200 billion, the enterprise shall declare a reduction in corporate income tax for 2020 when settling corporate income tax according to regulations.
The corporate income tax reduction for the 2020 tax year is calculated on the entire income of the enterprise, including income specified in Clause 3, Article 18 of the Corporate Income Tax Law.
The corporate income tax period is determined according to the calendar year. If a business uses a fiscal year different from the calendar year, the corporate income tax period is determined according to the fiscal year.
Decree 114/2020/ND-CP came into effect on August 3, 2020, and applies to the corporate income tax period of 2020.
