Our May 2020 publication of Domicile’s Tax and Accounting Updates looks at a Draft Resolution to decrease 2020 Corporate Income Taxes for SMEs, along with reductions of other taxes and statutory fees and further support for businesses impacted by COVID-19. The Draft Resolution also looks at entry (immigration) requirements for foreign employees. We also look at a Resolution on allowances for individuals / employees subject to reduction or loss of income due to the COVID-19 pandemic, along and our regular review of recent Official Letters released by Tax Authorities.
DRAFT RESOLUTION TO DECREASE 2020 CORPORATE INCOME TAX FOR SMEs, REDUCE OTHER TAXES AND STATUTORY FEES, AND SUPPORT FOR BUSINESSES IMPACTED BY COVID-19
The Government recently released a Draft Resolution implementing solutions to deal with difficulties for production and business in response to the COVID-19 pandemic, which cover proposed regulations on decreasing a number of taxes and statutory fees for affected enterprises.
In Order to Reduce Production and Business Costs and relax difficulties for enterprises, the Government undertook:
1. The Ministry of Finance was assigned to seek and report feedback to the Government and submit to both the Standing Committee of the National Assembly and the National Assembly in April 2020 regarding:
i. Adjusting (increasing) the personal deduction and dependent deductions for Personal Income Tax (“PIT”), to increase take-home salaries of employees;
ii. Reducing Corporate Income Tax (“CIT”) by 50% for small and medium enterprises for the 2020 tax year;
iii. Exempting or reducing the VAT rate by 50% for goods and services suffering difficulty, and for goods and raw materials used in production, to reduce input costs of enterprises;
iv. Temporarily reducing and exempting CIT and PIT for household businesses for the 2020 tax year;
v. Considering VAT refunds in 2020 for sectors heavily impacted by COVID-19 (e.g. aviation and tourism)
vi. Researching and reporting to the Government to extend the payment deadline by 1 year for 2019 deferred CIT, VAT, PIT and land rental fees (the current deferral period stipulated in Decree 41/2020/ND-CP is 5 months); and
vii. Reviewing and reporting to the Government on the payment deferral for a portion of export taxes for 5 months (until the end of Quarter 2, 2020) to encourage exports from enterprises.
2. The State Bank of Vietnam was assigned to co-ordinate with Ministries, central and local agencies, banks and credit institutions to:
i. Exempt and reduce interest rates, costs for new loans and existing loans of businesses by 2%, especially for loans issued prior to the COVID-19 outbreak; and
ii. Provide loans with preferential interest rates for:
– Medium and large-sized enterprises suffering heavy losses due to COVID-19 (turnover in Quarter 1 and Quarter 2 of 2020 having decreased by more than 50%, and the number of employees subject to social insurance being over 100 employees), with loan terms from 6-9 months through commercial banks; and
– Small and micro-enterprises with loan terms of 3-6 months through the Social Policy Bank and the Small and Medium Enterprise Development Fund.
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