You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 16, 2020

Vietnam Offers Deferred Tax and Land Rental Payments in COVID-19 Epidemic

Subscribe to Updates

On April 8, 2020, the Government of Vietnam issued Decree No. 41/2020/ND-CP, which took effect on the same day, on deferral of payment of taxes and land rental (“Decree 41”). This is considered a relief measure for taxpayers amid the COVID-19 epidemic.

Decree 41 provides for extension of the deadline for tax payment for a number of taxpayers, including companies in many sectors, small and extra-small enterprises, and credit institutions providing supporting services for clients affected by the COVID-19 epidemic.

In detail, taxpayers in the following businesses are eligible for this incentive:

  1. Agriculture; forestry; aquaculture;
  2. Food production and processing; textiles; garment production; manufacture of leather and leather products; wood treatment and manufacture of products from wood, bamboo, rattan (except furniture); manufacture of products from straw and plaiting materials; manufacture of paper products; manufacture of rubber and plastic products; manufacture of products from other non-metallic minerals; metal production; mechanical working; metal treating and coating; manufacture of electronic products, computers, and optical products; manufacture of cars and other motor vehicles; manufacture of beds, wardrobes, desks, and chairs;
  3. Construction;
  4. Transport and warehousing; accommodation and dining services; education and training; healthcare and social assistance; real estate trading;
  5. Employment services; travel agencies, tourism services and auxiliary tourism services;
  6. Composing, arts, and entertainment; library, archive, and museum operations and other artistic activities; sports and amusement; cinemas; and
  7. Manufacture of prioritized ancillary industrial products or key mechanical products.

Additionally, enterprises that qualify as small or extra-small enterprises are also eligible for this incentive, including foreign-invested companies. In the trading and service area, small enterprises are defined as those with an annual average number of employees participating in social insurance not exceeding 50 people and having annual revenue not exceeding VND 100 billion (approx. USD 4,254,000) or total capital not exceeding VND 50 billion (approx. USD 2,127,000). Extra-small enterprises are those with an annual average number of employees participating in social insurance not exceeding 10 people and having annual revenue not exceeding VND 10 billion (approx. USD 425,400) or total capital not exceeding VND 3 billion (approx. USD 127,000).

The deferral is applicable to payments of value-added tax (except for value-added tax paid at the import stage), corporate income tax, personal income tax for households and individuals doing business, and land rental.

Regarding value-added tax (VAT), the deadline for payment of the VAT due for March, April, May and June of 2020 (for those filing VAT returns monthly) and for Quarters 1 and 2 of 2020 (for those filing VAT returns quarterly) is extended for five months. For instance, the VAT payment for March is now due on 20 September 2020 and the deadline for VAT of Quarter 1 of 2020 is 30 September 2020.

For corporate income tax (CIT), the amount of CIT as finalized in the 2019 annual statement and CIT declared in the first and second quarters of 2020 will be deferred for five months. If a taxpayer has already paid the CIT of 2019, it may offset the paid CIT against other unpaid taxes.

Regarding land rental, for land users that leased their land directly from the state with annual rental payments, the deadline for payment of the first installment of 2020 is extended to 31 October 2020. It is worth noting that this deferred payment policy does not seem to apply to land which is leased from developers of industrial or economic or processing zones (including state-owned developers). Decree 41 does not specifically mention this form of land lease while referring to the deferred payments to the local tax offices (which are applicable to cases where land is leased directly from the local authorities).

Taxpayers that wish to enjoy this incentive are required to submit a prescribed request form of deferral (as enclosed with Decree 41) together with their periodical tax returns.

If you have any questions or concerns, please reach out to us at [email protected] for our further assistance.

Related Professionals

Practices

Corporate/M&A

Real Estate

Tax

Location

RELATED INSIGHTS​ 

August 26, 2024
On July 19, 2024, Cambodia’s Ministry of Land Management, Urban Planning, and Construction (MLMUPC) issued Prakas No. 050 on the Formalities and Procedure for Registration of Private Units in Co-owned Buildings Constructed before December 19, 1997. This new regulation aims to address the lack of clear guidelines for registering units in co-owned buildings constructed prior to 1997 and ensure protection of legal ownership rights for private owners of co-owned buildings constructed before December 19, 1997. Background Cambodia’s real estate market, including co-owned buildings and condominiums, has been experiencing rapid growth. As more individuals acquire separate units in co-owned buildings, the demand for proper registration of each unit has increased. While existing mechanisms like Sub-Decree No. 46 on Systematic Land Registration and Sub-Decree No. 48 on Sporadic Land Registration provide frameworks for registering immovable properties, they do not specifically address the registration procedure for co-owned buildings constructed before 1997. Definition of Co-owned Building A co-owned building contains “private units” exclusively owned by individual co-owners and “common areas” used by all co-owners. This includes various categories such as villas, semi-villas, attached houses, condominiums, and other types of houses with common structures. Application Documents The new prakas introduces a more straightforward documentation process for registering private units in buildings constructed before December 19, 1997, compared to previous regulations (specifically, Sub-Decree No. 126 on the Management and Use of Co-Owned Buildings). The required application documents now include: One copy of application form in Khmer Two copies of certified identification documents for each co-owner Two copies of certified documents of property ownership (if any) Notably, certain documents, such as the internal regulations and detailed architectural plan of the co-owned building, are not required. These more lenient requirements encourage more owners to register their private units, as it makes it easier to secure certificates and
Read More
August 20, 2024
Following the enactment of the Tax Administration Law (TAL), Myanmar’s Ministry of Planning and Finance has issued Notification No. 44/2024, which outlines directives and procedures for addressing violations of tax law provisions. These procedures, which came into force on June 13, 2024, primarily focus on three key areas: tax evasion, impeding tax administration, and failure to preserve secrecy. The notification primarily aims to address tax evasion, impeding tax administration, and failure to preserve secrecy, classifying these offenses as either subject to arrest without warrant or not. Notably, tax evasion is classified as an offense subject to arrest without warrant, while impeding tax administration and failure to preserve secrecy are not. The notification also prescribed the forms for notifying taxpayers before taking any action. Tax Evasion Tax evasion refers to a taxpayer who willfully evades the assessment, payment, or collection of tax. Penalties for such offenses include fines of MMK 250,000 (approx. USD 120) or 100% of the evaded tax (whichever is greater), imprisonment for up to seven years, or both. The enforcement process for tax evasion requires the chief officer of the township revenue department or an officer in charge (the tax authority) to assess the relevant documents and information provided by the taxpayer. If a taxpayer is found to be evading tax, the tax authority must send a notice in the prescribed form for verification within 15 days. Taxpayers may apply for a one-time extension of 15 days to submit requested documents and make disclosures. If the taxpayer cannot fulfill the requirements as instructed, the tax authority will seek approval from the director general of the Internal Revenue Department (IRD) for criminal proceedings as cognizable offences. Impeding Tax Administration and Failure to Preserve Secrecy Impeding tax administration refers to obstruction or attempted obstruction of taxation staff or officers
Read More
August 12, 2024
With the growing prominence of ESG (Environmental, Social, and Governance) factors, businesses in Vietnam are increasingly recognizing their importance in driving global demand, societal impact, and economic value. A comprehensive acknowledgment of ESG-related legal requirements is critical for investors and companies operating in Vietnam to meet stakeholder expectations and ensure compliance. Our guide provides a basic overview of the rapidly evolving ESG landscape in Vietnam, covering a range of key issues for companies doing business in the country: What is ESG, and what does the ESG legal framework look like in Vietnam? Who needs to follow ESG regulations in Vietnam? What are the benefits of ESG compliance? How can enterprises enhance ESG best practices in Vietnam? Please click on the link below to view the full article.
Read More
August 5, 2024
Thailand has continued to face economic challenges since the COVID-19 pandemic, and some businesses have struggled to survive. One of most important measures that indebted businesses in Thailand can take is to file a business rehabilitation petition with the Bankruptcy Court. The Bankruptcy Act B.E. 2483 (1940) provides “automatic stay” measures to protect the debtors that have entered the business rehabilitation process, and during this time creditors have duties and rights under the Bankruptcy Act as well. Once Thailand’s Bankruptcy Court accepts a rehabilitation petition and issues an order for rehabilitation, the debtor is under this automatic stay protection against actions from the creditor to seek debt repayments, and the creditors are only allowed to pursue their debt repayments by submitting a debt repayment application to the official receiver within one month of publication of the plan preparer’s appointment in the Government Gazette. These are general conditions specified in the Bankruptcy Act. However, there are several practical precautions that are not specified in the Bankruptcy Act but that creditors should take during rehabilitation. Below are several steps creditors need to consider taking at various stages of the rehabilitation process. 1. Appointing a local Thai representative to act on behalf of the creditor in the rehabilitation The rehabilitation process requires much more than just submitting the debt repayment application within the fixed one-month period and then waiting for the result. It also involves contacting, meeting, and discussing with the official receiver, plan preparer, other creditors, or debtor representative to investigate or settle any arguments on the debt. Moreover, the language used in all the processes and documents is usually Thai. In practice, creditors—especially foreign creditors—should authorize a Thai attorney or representative through a valid power of attorney (POA) to represent them during all the rehabilitation proceedings. This includes the investigative
Read More