Tax exemption and reduction for businesses and people due to the impact of the Covid-19 pandemic

✨ On November 19, 2021, Resolution No. 406/NQ-UBTVQH15 of the National Assembly Standing Committee promulgated a number of solutions to support businesses and people affected by Covid-19.TASCO Tax agent would like to inform customers of the content of regulations on value-added tax reduction during the period of the Covid-19 epidemic, which is developing very complicatedly, significantly affecting the business results of the businesses as well as employees in the article below!

1.  Reducing corporate income tax

💢 Applicable objects:

• The reduction of corporate income tax specified in this Article applies to taxpayers who are organizations engaged in production and business activities of goods and services with taxable income as prescribed in Article 1 Resolution No. 406/NQ-UBTVQH15, including:

a) The enterprise is established in accordance with the law of Vietnam.

b) Organizations established under the Law on Cooperatives.

c) Non-business units established in accordance with Vietnamese law.

d) Other organizations established in accordance with the law of Vietnam have production and business activities with income.

💢 Reduction rate:

• A reduction of 30% in the payable corporate income tax amount of 2021 will be given to a taxpayer regulated by the Law on Corporate Income Tax that has a turnover of not greater than VND 200 billion in 2021 and a decrease in revenue in 2021 compared to the revenue in 2019
• The criterion that the revenue in the tax period 2021 is reduced compared to the revenue in the tax period 2019 is not applied to the case of newly established enterprises, consolidation, merger, division, or separation in the tax period of 2020 and year 2021.

💢 Amount of corporate income tax to be reduced:

• The reduced corporate income tax amount of the tax period 2021 is calculated on the entire income of the enterprise, including the incomes specified in Clause 3, Article 18 of the Law on Corporate Income Tax, the company income tax amount entitled to the reduction specified in this Decree are calculated on the payable corporate income tax amount of the tax period of 2021, after deducting the corporate income tax amount that the enterprise is enjoying incentives according to regulations of the Law on Corporate Income Tax and its guiding documents.

2. Tax exemption for business households and individuals:

⭐Applicable objects:

• Business household, business individual means a resident individual who operates in all professions and forms of tax declaration and payment and has production and business activities in the districts, towns, and cities (hereinafter referred to as a district-level area) affected by the Covid-19 epidemic in 2021.

⭐ Exemption of payable tax:

a) Business households and individuals specified in Clause 1 of this Article are exempt from paying personal income tax, value-added tax, special consumption tax, natural resources tax, and environmental protection tax generated from production and business activities of the months in the third and fourth quarters of 2021.

The tax exemption specified in this Clause does not apply to incomes and revenues from providing software products and services; digital information content products and services on entertainment, video games, digital movies, digital photos, digital music; digital advertising.

b) Cases that have paid tax amounts payable from production and business activities of the months in the third and fourth quarters of 2021 then the tax authority will offset the overpaid tax amount with debts or other arising amounts of the following periods and handle overpaid refund (if any) in accordance with the law on tax administration.

⭐ Determining the exempted tax amount:

a) For cases where the tax authority must issue a notice of payment: the tax authority shall base itself on the payable tax amount of the months in the third and fourth quarter of 2021 on the notice of payment to determine the exempted tax amount of the household, individual business.

b) For cases where the tax authority is not required to issue a notice of payment: taxpayers (including organizations and individuals withholding, declaring, and paying on behalf of business households and individuals; business households use single/volume invoices) based on the payable tax amount according to the tax declaration to determine the exempted tax amount of business households and individuals from production and business activities of the months in the third and fourth quarters in 2021. If you are eligible to declare tax by payment period or declare tax by year (for property tax, private house construction, declaration of each other), the exempted tax amount is the same as the payable tax amount that actual revenue generated in the months in the third and fourth quarter of 2021. In the case of goods and service provision contracts of business households and individuals, the actual revenue generated by business households cannot be determined the actual revenue generated in the months in the third and fourth quarters of 2021 shall be determined according to the average monthly revenue according to the contract value.

In case a contract for the provision of goods and services is signed by a business household or individual in a month, the duration of the contract shall be counted as full months.

3. Reduced VAT

✅ From November 1, 2021, to the end of December 31, 2021, many goods and services will be reduced VAT following Resolution 406/NQ-UBTVQH15.

• Transport services (rail transport, water transport, air transport, other road transport); Lodging; Food Service; Services of travel agencies, Tour operators, and support services, related to the promotion and organization of tours;
• Publishing products and services; film services, television program production, sound recording and music publishing; artwork and creative, artistic, entertainment services; Services of libraries, archives, museums, and other cultural activities; sports, and entertainment services.
• Goods and services eligible for tax reduction specified at Points a and b of this Clause shall comply with Appendix 1 of the List of goods and services eligible for value-added tax reduction promulgated together with this Decree. The goods and services specified at Point b of this Clause do not include publishing software and goods and services produced and sold in the online form.
• In case the goods and services specified in this Clause are not subject to value-added tax under the Law on Value Added Tax, the provisions of the Law on Value Added Tax shall apply.

✅ VAT reduction rate

• Enterprises and organizations that calculate value-added tax by the deduction method are entitled to a 30% reduction in the value-added tax rate applicable to goods and services specified in Clause 1 of this Article.
• Enterprises and organizations that calculate value-added tax according to the percentage method on revenue are entitled to a 30% reduction of the percentage rate to calculate value-added tax on goods and services specified in Clause 1 of this Article

4. Exemption from late payment

• Grant exemption of late payment interest incurred in 2020 and 2021 on debts of taxes, land use levies, and land rents to enterprises and organizations (including affiliated entities, places of business) that incur losses in 2020

🔗 Determine the amount of late payment exempted:

• The directly supervisory tax authority of the taxpayer or the tax authority responsible for the management of the collection of land use levy, lend rents based on the management data, determine the late payment amount that incurs in 2020, 2021 of the payer to promulgate decisions

Note: In case the taxpayer paid late payment before the effective date of Resolution No. 406/NQ-UBTVQH15, no adjustment is required.

• Recently, on October 27, 2021, the Government also issued Decree No. 92/2021/ND-CP detailing the implementation of Resolution 406/NQ-UBTVQH15 of the National Assembly Standing Committee promulgating a number of solutions measures to support businesses and people affected by the Covid-19 pandemic.

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✨ The information above are some tax support policies applied to organizations, businesses, and individuals, if you have any questions about the above content, please contact the hotline. 0975.48.08.68 (Zalo) or you can register for a free consultation here!

✨ Wish you success in business!

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