Vietnam grants 30% tax cut, payment deferral for flood-hit businesses

Vietnam will grant up to a 30% reduction in special consumption tax and allow two-year payment deferrals for businesses and household enterprises severely affected by recent floods and storms, according to new government guidance.

Businesses and household enterprises in Vietnam affected by floods and storms will receive a 30% reduction in special consumption tax and may defer tax payments for up to two years.

The General Department of Taxation under the Ministry of Finance has issued guidance to local authorities on tax reductions, payment deferrals and land rent relief for businesses, households and individual entrepreneurs impacted by typhoons Bualoi and Matmo.

Enterprises will be fully exempt from non-agricultural land use tax if both land and buildings suffer damage exceeding 50% of their taxable value. In cases of losses between 20% and 50%, they will receive a 50% tax reduction.

Firms engaged in agricultural production or aquaculture are also exempt from annual land rental fees if losses reach 40% or more, and will receive proportional reductions for smaller damages. Businesses forced to suspend operations due to flooding are entitled to a 50% reduction in land rent during the suspension period. In addition, they can defer tax payments for up to two years.

For the special consumption tax, affected businesses, households, and individuals will receive a reduction of up to 30% of their payable amount this year, provided that the reduction does not exceed the post-compensation value of losses.

Those impacted may also qualify for resource tax exemptions or reductions. Households and individuals can apply for reimbursement in the next tax period if payments were already made.

Households and individual businesses are granted extensions for value-added tax (VAT) and personal income tax payments until December 31. In severe cases, the extension may be prolonged for up to two years from the original due date.

No penalties or late-payment interest will be imposed during the extension period. Applicants must submit tax reduction requests to their local tax authorities, which will review and issue a decision or explanation within 30 to 40 days.

Within just one month, Vietnam was struck by three major storms, including Ragasa (No. 9) on September 25, Bualoi (No. 10) on September 29, and Matmo (No. 11) on October 6. The storms were intense and unpredictable, causing severe damage across northern and north-central provinces.

Deputy Minister of Agriculture and Rural Development Nguyen Hoang Hiep reported that since the beginning of the year, Vietnam has faced 20 types of natural disasters. As of October 9, disasters had left 238 people dead or missing, 367 injured, damaged or unroofed 258,000 houses, and inundated over 500,000 hectares of rice and crops. Total losses were estimated at more than VND33.5 trillion (US$1.37 billion).

The disaster following Typhoon Matmo has been described as one of the most severe in recent years, bringing overlapping floods and widespread landslides that devastated lives, assets, and essential infrastructure. Many businesses in the northern province of Thai Nguyen, one of the four hardest-hit localities, reported damages worth billions of dong.

As of the morning of October 10, Typhoon Matmo had left 18 people dead or missing and inundated more than 225,000 homes.

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