Company income tax temporary payment for 3 quarters must not be less than 75% of the annual finalized tax amount

Corporate income tax is an annual direct tax of the business and is calculated based on the taxable income of the business.

Temporary payment is a quarterly company tax based on the production and business activities of the enterprise before the tax finalization is submitted.

From December 5, 2020, Decree 126/2020/ND-CP of the Government officially took effect. There is a new regulation on temporary payment of company income tax. Dispatch No. 5189/TCT-CS dated December 7, 2020 of the General Department of Taxation introduce new contents of Decree 126/2020/ND-CP details a number of articles of the Law on Tax Administration.

New regulations on company income tax temporary payment according to Decree 126/2020/ND-CP:

⭐ Modifying regulations on the obligation to quarterly temporary payment company income tax, whereby the total amount of company income tax temporarily paid for 3 quarters of the tax year must not be less than 75% of the company income tax payable according to the applicable year settlement starting from the assessment period of 2021.

⭐ In case the taxpayer is underpaid compared with the temporary payment company income tax amount in the first 3 quarters of the year, a late payment amount shall be paid based on the underpaid tax amount from the day after the last day (in the third quarter) of the company income tax payment deadline to the date of payment of the outstanding tax amount to the state budget (Point b, Clause 6, Article 6).

Previous regulations on company income tax temporary payment:

In Clause 6, Article 4 of Decree No. 91/2014/ND-CP and Article 17 of Circular 151/2014/TT-BTC stipulating that the total 4 times of temporary payment is 20% lower than the payable company income tax amount according to the finalization, the enterprise must pay late interest on the difference of 20% or more between the temporary payment amount and the finalization amount calculated from the day after the last day of the enterprise's fourth-quarter tax payment deadline to the actual date of payment compared with the final settlement tax amount.

💥 Conclusion: Based on this regulation, enterprises must pay the total company income tax temporary payment of the first three quarters of the year that must not be less than 75% of the annual company income tax finalization payable tax amount. If underpayment, the enterprise must pay late payment calculated on the underpaid tax amount from the day after the last day of the company income tax payment deadline for temporary payment in the third quarter to the date of outstanding tax payment.

If taxpayers carry out investment projects on infrastructure, houses for transfer, lease or purchase, and collect advances from customers according to the progress, they shall temporarily pay company income tax quarterly at the rate of 1% per proceeds

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