The Standing Committee of the National Assembly issued Resolution No. 406/NQ-UBTVQH14 on October 19, 2021, on a number of solutions to support businesses and people affected by the COVID-19 pandemic.
1. Tax exemption/reduction levels
Resolution 406/NQ-UBTVQH14 dated October 19, 2021, on solutions to support businesses and people affected by the COVID-19 pandemic, includes the following notable provisions:
1.1. A 30% reduction in corporate income tax payable for the year 2021 will be granted to businesses that meet the following conditions:
- Revenue in 2021 did not exceed 200 billion VND. AND Revenue in 2021 decreased compared to revenue in 2019.
- The criterion of lower revenue in 2021 compared to 2019 does not apply to taxpayers who are newly established, merged, acquired, split, or separated during the tax periods of 2020 and 2021.
1.2. Exemption from personal income tax and value-added tax for household and individual businesses:
Personal income tax, value-added tax, and other taxes payable arising from production and business activities in the third and fourth quarters of 2021 are exempted for households and individuals engaged in production and business activities in districts affected by the COVID-19 pandemic in 2021, as decided by the Chairman of the People's Committee of the province or centrally-governed city.
Tax exemptions do not apply to income and revenue from the provision of software products and services; digital content products and services related to entertainment, video games, digital films, digital photos, digital music; and digital advertising.
1.3. Reduction of Value Added Tax from November 1, 2021 to December 31, 2021:
Value-added tax (VAT) will be reduced from November 1, 2021 to December 31, 2021 for transportation services (rail transport, water transport, air transport, and other road transport); accommodation services; food and beverage services; services of travel agencies, tour operators, and supporting services related to the promotion and organization of tours.
Publishing products and services; film services, television program production, music recording and publishing; works of art and creative services, art, entertainment; library, archive, museum and other cultural activities services; sports, recreation and entertainment services are also subject to a reduction in value-added tax from November 1, 2021 to December 31, 2021. Goods and services in this group do not include publishing software and goods and services produced or traded online.
1.4. Waive late payment penalties incurred in 2020 and 2021:
The provision waiving late payment penalties incurred in 2020 and 2021 for tax, land use fee, and land lease debts applies to businesses and organizations (including subsidiaries and business locations) that incurred losses in 2020. This provision does not apply to cases where late payment penalties have already been paid.
Resolution 406/NQ-UBTVQH14 takes effect from the date of signing.
2. How to apply for exemptions/reductions
The implementation is carried out in accordance with the following decree:
Decree 92/2021/ND-CP provides guidance on Resolution 406/NQ-UBTVQH15 regarding tax exemptions and reductions.
Decree detailing the implementation of Resolution No. 406/NQ-UBTVQH15 dated October 19, 2021, on tax exemptions and reductions for businesses affected by Covid-19.
2.1. How to determine the amount of corporate income tax reduction
The corporate income tax reduction for the 2021 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 reduction stipulated in this Decree is calculated on the corporate income tax payable for the 2021 tax year, after deducting the corporate income tax that the enterprise is currently entitled to under preferential treatment as prescribed by the Corporate Income Tax Law and its implementing regulations.
2.2. How to determine the 30% VAT reduction in November - December 2021
Decree 92/2021/ND-CP provides guidance on Resolution 406/NQ-UBTVQH15 regarding tax exemptions and reductions.
Decree detailing the implementation of Resolution No. 406/NQ-UBTVQH15 dated October 19, 2021, on tax exemptions and reductions for businesses affected by Covid-19.
- For businesses that calculate VAT using the deduction method, when issuing VAT invoices for goods and services eligible for VAT reduction, the VAT rate line should state "the VAT rate as prescribed". (5% or 10%) x 70%"; value-added tax; total amount payable by the buyer. Based on the value-added tax invoice, businesses and organizations producing and trading goods and services declare output value-added tax, while businesses and organizations purchasing goods and services declare input value-added tax deductions based on the reduced tax amount recorded on the value-added tax invoice."
- For businesses calculating value-added tax (VAT) using the percentage-based method on revenue, when issuing sales invoices for goods and services eligible for VAT reduction, the "Total Amount" column should record the full amount of goods and services before the reduction. The "Total Amount of Goods and Services" line should show the amount after the 30% reduction based on revenue, and include a note: "Reduced… (amount) corresponding to 30% of the VAT calculation rate according to Resolution No. 406/NQ-UBTVQH15".
In cases where a business or organization deals in multiple goods and services, when issuing invoices, the business or organization shall issue separate invoices for the goods and services eligible for value-added tax reduction.
In cases where a business or organization has issued an invoice and declared the VAT at a rate or percentage that has not been reduced, the seller and buyer must prepare a written record or agreement clearly stating the error. Simultaneously, the seller must issue an adjusted invoice to correct the error and provide it to the buyer. Based on the adjusted invoice, the seller declares the adjusted output tax, and the buyer declares the adjusted input tax (if any).
3. Instructions on how to write invoices with VAT reductions.
Example 1:
Company A, a business that calculates VAT using the deduction method, provides transportation services to Company B under a contract signed between the two parties, with a taxable price of VND 20.000.000. Transportation services are subject to a 10% VAT rate and are eligible for a 30% reduction in the VAT rate from November 1, 2021 to December 31, 2021. On November 15, 2021, when Company A provided transportation services to Company B, Company A recorded the following information on the VAT invoice issued to Company B:
In the "Goods and Services" column, write: "Transportation services"
The listed selling price is: 20.000.000 VND
The VAT rate is stated as: “10% x 70%”
The VAT amount is recorded as: "1.400.000 VND"
Total payment amount: “21.400.000 VND”.
Based on the VAT invoice, Company A declares output VAT, and Company B declares VAT deduction based on the reduced tax amount recorded on the invoice, which is VND 1.400.000.
Example 2:
Organization X, which calculates VAT using the percentage-based method on revenue, provided accommodation services to customer Y for two days in November 2021 at a listed room rate of VND 1.500.000 per day. According to Clause 2, Article 13 of Circular No. 219/2013/TT-BTC dated December 31, 2021, issued by the Ministry of Finance, accommodation services are subject to a 5% VAT rate on revenue. During the period of VAT reduction under Resolution No. 406/NQ-UBTVQH15 of the Standing Committee of the National Assembly, Organization X calculated the reduced VAT amount and issued a sales invoice to customer Y as follows:
In the "Goods and Services" column, write: "Accommodation Services"
In the "Total Amount" column, it reads: "3.000.000 VND" (1.500.000 VND x 2)
Calculate the VAT reduction amount: 3.000.000 x 5% x 30% = 45.000 VND
In the line "Total amount for goods and services" (the amount the buyer must pay to the seller), the amount recorded after a 30% reduction in revenue is "2.955.000 VND", with the note: "reduced by 45.000 VND, corresponding to 30% of the revenue percentage according to Resolution No. 406/NQ-UBTVQH15".
