Completing draft decree on implementing tax exemption and reduction package worth more than VND21 trillion

The Ministry of Finance has submitted to the Government to submit to the National Assembly Standing Committee to approve a resolution issuing a number of solutions to support businesses and people affected by the Covid-19 pandemic. Photo: H.D

According to the Ministry of Finance, since the Covid-19 pandemic had a negative impact on the domestic socio-economy, the ministry has closely followed actual developments, studied international experiences, based on the current legal system to promptly submit to the competent authorities for promulgating and deploying many solutions on taxes, fees, charges and land rent to support businesses and people.

Accordingly, in 2020, the Government has provided many support solutions such as extension of deadlines for payment of taxes and land rent; exemption and reduction of taxes, fees, charges and land rental with a total value of about VND129 trillion (in which the extension amount is about VND97.5 trillion; the amount of exemption and reduction is more than VND31.5 trillion ).

During the last period of 2021, the Government continued to extend the deadline for paying taxes, land rent as well as exempt and reduce taxes, fees and charges and rental with an estimated amount VND118 trillion.

According to the Ministry of Finance, the above support solutions on taxes, fees, charges and land rent are assessed as timely, they have positive impacts and are highly appreciated by the business community and people, solving difficulties, stabilizing production and business activities and maintaining growth in 2020 as well as the performance achieved in the first six months of 2021.

However, the developments of the Covid-19 pandemic seriously affected the activities of businesses and people, especially small and medium-sized enterprises, households, and individual businesses in industries such as tourism, transportation, accommodation and dining, movie screening, sports and entertainment, journalism, television.

The Ministry of Finance has submitted to the Government to submit to the National Assembly Standing Committee to approve a resolution promulgating a number of solutions to support businesses and people affected by the Covid-19 pandemic. This support package is worth up to VND21.3 trillion. The resolution is currently being reviewed to be signed and promulgated.

The ministry has completed a draft Decree guiding the implementation of the National Assembly Standing Committee’s resolution. The Decree ensures the principle of simplicity, transparency, ease of understanding, easy implementation and practicality, creating maximum convenience for businesses and people, and encouraging businesses and people to resume production and business as soon as possible. At the same time, it is suitable to the actual situation and conditions of the state budget and fulfills the obligations of taxpayers.

According to the provisions of the draft Decree, a 30% reduction in the payable corporate income tax amount of 2021 will be applied in the case of corporate income taxpayers regulated by the Law on Corporate Income Tax, whose total revenue in 2021 is not more than VND200 billion and the total revenue in 2021 is reduced compared to the total revenue in 2019.

The draft Decree clearly states that the criterion of the total revenue in 2021 decreased compared to the total revenue in 2019 is not applicable to the case of newly established taxpayers, taxpayers who change the type of business, change the form of ownership, consolidation, merger, division, separation, dissolution, bankruptcy in the 2021 tax term.

The draft decree clearly stipulates about this issue and supplements regulations on the determination of total revenue in 2019 for newly established enterprises, enterprises changing their business types and their ownership, enterprises implementing consolidation, merger, division, separation in the 2019 Corporate Income Tax term and enterprises that have operated less than 12 months as a basis for comparison with total revenue in 2021.

The draft decree also clearly stipulates tax exemption for business households and individuals. Accordingly, it will implement the following: exemption of personal income tax, value added tax and other payable taxes arising from business activities of the months in the third and fourth quarters of 2021 for business households, individual businesses in all industries, locations, types and methods of tax declaration and payment.

According to the provisions of the current tax laws, business households and individuals, depending on their production and business activities, must pay the corresponding taxes such as personal income tax, value added tax, special consumption tax, natural resource tax, and environmental protection tax. In addition, to facilitate the implementation for both taxpayers and tax authorities, competent agencies also need to clearly guide the implementation order and procedures.

Therefore, the draft decree clearly stipulates the exemption of payable taxes arising from production and business activities of the months in the third and fourth quarters of 2021 for business households, individual businesses. The process and procedures are enclosed with the forms, specifically regulated in the draft Decree as follows: the subjects of application including business households, individual businesses who are resident individuals operating in all industries, locations, forms of tax declaration and payment, except for individuals earning income from digital information content products and services.

Notably, value-added tax reduction is implemented from January 1 to the end of December 31, 2021 for businesses and organizations working in following economic sectors: transportation; accommodation service; food service; activities of travel agents, tour business; publications, cinema, etc. Enterprises and organizations paying value-added tax by the deduction method are entitled to a 30% reduction in the value-added tax rate applicable to goods and services in this business sector specified in this Clause. Enterprises and organizations paying 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.

As for the exemption of late payment interest, late payment interest from tax and land rent arising in 2020 and 2021 will be exempt for enterprises and organizations that incur losses in 2020. This provision does not apply to cases where late payment interest has been paid.

In order to create convenience for taxpayers, based on the Law on Tax Administration and guiding documents, the draft Decree specifically stipulates the subjects eligible for exemption, the authority to determine the exempted late payment amount, and the competence to assess late payment interest. In addition, the draft Decree also stipulates the order and procedures, the documents for exemption from late payment interest and the sending of the decision on exemption of late payment interest to taxpayers.