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​ 

November 27, 2024
In Thailand, a business rehabilitation plan in court-supervised rehabilitation proceedings is a crucial element of the business rehabilitation process that outlines how a debtor’s assets will be managed. It also provides guidance for resolving a debtor’s business challenges so that the business can survive and continue to generate returns, increasing the likelihood that its creditors will be repaid. Key Plan Components The Bankruptcy Act B.E. 2483 sets forth the following components to be covered in a rehabilitation plan: The reasons for rehabilitation; Details about the debtor’s assets, liabilities, and other binding obligations at the time the court-ordered rehabilitation; Principles and methods of the rehabilitation; Redemption of collateral when there are secured creditors and guarantor liabilities; Ways to resolve problems arising from a temporary lack of liquidity during plan implementation; Action to be taken when a claim or debt is assigned; Name, qualifications, and letter of consent of the plan administrator, as well as information on compensation; Appointment and release of the plan administrator; Period in which the plan will be implemented (maximum of five years); and Refusal of the debtor’s assets or refusal of contractual rights if the debtor’s assets or contractual rights have obligations that exceed the benefits they yield. Considering the diverse nature and challenges of each debtor’s business, the details listed here are only general guidelines for what should be included in a rehabilitation plan. The planner has the flexibility to create a plan with different details or guidelines than those outlined above to best suit the nature and challenges of the debtor’s business. The planner can also omit some of the mentioned requirements if they are not relevant to the debtor’s business. Concerns of Relevance Court approval of the rehabilitation plan. Once the plan is approved by a meeting of the creditors, it is necessary
Read More
November 11, 2024
The Vietnamese government has demonstrated a strong commitment to building a digital government, digital economy, and digital society through its recently issued national strategy on digital infrastructure. Under Decision No. 1132/QD-TTg dated October 19, 2024, on “Digital Infrastructure Strategy to 2025 with Orientation to 2030,” the government will create supportive conditions for both domestic and international businesses to invest in digital infrastructure with cybersecurity as a priority. Recognized as vital to the economy, this digital infrastructure will consist of four main components: (i) telecommunications and internet infrastructure, (ii) data infrastructure, (iii) physical-digital infrastructure, and (iv) digital utility infrastructure, including digital technology as a service. Key goals for 2025 include universal fiber optic access for households, 100% 5G coverage across all provinces and cities, deployment of at least two new international undersea fiber optic cables, establishment of AI data centers, development of green-standard data centers, and platforms for IoT, AI, big data, blockchain, and cybersecurity. By 2030, goals include fiber access with speeds of at least 1 Gbps, 5G coverage for 99% of the population, readiness for 6G trials, six additional international undersea fiber optic cables, development of a hyperscale data center, and positioning Vietnam as a digital hub. To achieve these goals, the government has outlined some core tasks, creating significant opportunities for both foreign and domestic investors: Developing telecommunications and internet infrastructure for widespread fiber optic and 5G access, while preparing for emerging technologies like 6G, Open RAN, satellite, and IpV6. Telecommunication enterprises will jointly invest in and share the use of international fiber optic cable routes to ensure efficient capacity utilization and optimize investment capital. Attracting foreign and domestic investment to establish hyperscale data centers and cloud computing services that meet global standards. Creating physical-digital infrastructure by integrating technology across key sectors such as transportation, energy, healthcare,
Read More
October 15, 2024
The Contract Committee of Thailand’s Office of the Consumer Protection Board (OCPB) has issued the Notification Prescribing the Business of Selling Condominium Units Through Reservations as a Contract-Controlled Business B.E. 2567 (2024). The notification was published in the Government Gazette on October 3, 2024, and is expected to come into effect 120 days after the publication date (i.e., January 31, 2025). This notification aims to prevent condominium project business operators/developers from exploiting consumers. Under the notification, the business of selling condominium units through reservations refers to a business in which a consumer enters into a reservation contract with a business operator to reserve a condominium unit in a condominium building, by paying a reservation fee (or other benefit similar to a reservation fee) that is not a security deposit or down payment, and committing the consumer to enter into a subsequent sales contract to buy the unit. This also extends to the sale of condominium units reserved through electronic channels. The reservation contract must be written in Thai and must include material terms and conditions as specified in the prescribed reservation contract form attached to the Notification (“Standard Reservation Contract”). In addition, the reservation contract must not contain any of the following terms and conditions: Exemption or limitation of the business operator’s liability arising from its breach of contract. The business operator’s right to change the contract or various conditions imposing an additional burden on the consumer, exceeding what was agreed upon at the time the contract was made. The business operator’s right to terminate the contract with the consumer without written notice, or without the material breach of contract by the consumer. The business operator’s right to confiscate all or part of the payment unless the consumer is in breach of the contract. The business operator’s right to
Read More
September 18, 2024
Following the endorsement of the report on the study of opening entertainment complexes by Thailand’s House of Representatives and Cabinet in early 2024, the draft Entertainment Complex Bill, B.E. … (the “Entertainment Complex Bill”) finally became open for public hearing and is now under the consideration of the Ministry of Finance. The Entertainment Complex Bill aims to liberalize and facilitate the establishment of entertainment complexes that include casinos, allowing participation from domestic and foreign investors alike. Key Takeaways Under the Entertainment Complex Bill, an “entertainment complex” is a venue that operates at least four types of entertainment businesses alongside a casino. These may include five-star hotels, restaurants and bars, game centers, and department stores, among others. Based on the information publicly available as of the date of this publication, the Entertainment Complex Bill and its prospective subordinate legislation should encompass the following key requirements. Licensing requirements: Business operators seeking to operate an entertainment complex business must first obtain a license. To qualify, applicants must: (1) be a company incorporated in Thailand and (2) have a minimum paid-up capital of THB 10 billion. This license will operate as a “super license” covering not only casino activities but also other operations within the complex, such as hotels, restaurants, bars, and game centers, which, under normal circumstances, may require separate licenses or permits. The license will be valid for 30 years and may be renewed for an additional 10-year term upon expiration. The license fees may depend on the location of the entertainment complex. Minimum investment requirements: Based on the preparatory works by the drafting committee, entertainment complex business licenses may be classified into four different categories based on the size of the investment: small, medium, large, and extra-large. At this stage, licenses for the extra-large category, requiring an investment of THB
Read More