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 7, 2023
Foreign investment in Vietnam continues to be encouraging. The latest figures reported by the Foreign Investment Agency for 2023 note that nearly USD 5.45 billion in newly registered capital, adjusted and contributed capital for purchasing shares, and capital contributions from foreign investors was recorded from January 1 to March 20, with realized capital from foreign investment projects estimated to exceed USD 4.3 billion. These statistics highlight the increasing attractiveness of Vietnam as an investment destination and reflect its robust economic growth. Sectors such as technology, media and telecommunications are expected to experience increased deal-making due to rapid digitalization. The automotive and industrial manufacturing sectors are likely to see divestments related to sustainability. Since 2015, Vietnam has implemented various measures to strengthen its legal framework and enhance the efficiency of market governance. This has resulted in improved government management in taxation, investment, competition and e-commerce. Tax loopholes on indirect transfers have been closed, stronger rules on investment and competition are leveling the playing field, and clear frameworks for e-commerce have been established. Key Legal Issues Business activities are categorized according to the Vietnam Standard Industrial Classification. These classifications determine the necessary licenses, permits and regulations for operating businesses, as well as guidelines for foreign investors looking to invest in specific sectors. Foreign investment restrictions, which are based on business activities, include limitations on foreign ownership, and conditions imposed on foreign investors such as shareholding or operations requirements. These restrictions are governed by both international treaties that Vietnam has signed and domestic laws. Some examples of foreign investment restrictions include the following: Foreign investors can only own up to 99.99% of the capital of an advertising business; Foreign-invested enterprises may only purchase buildings for their own use and cannot sublease them to others; Foreign owners of 100% foreign-owned banks must have
Read More
August 7, 2023
M&A transactions for private and public limited companies in Thailand can be achieved in many ways, including acquiring shares from existing shareholders of a limited company, subscribing to new shares issued by a limited company, an amalgamation of limited companies, acquiring all or part of the assets or business of a limited company, and a merger of private limited companies. The Civil and Commercial Code is the key legislation governing private limited companies, while public limited companies are mainly governed by the Public Limited Company Act of 1992, as amended, unless listed on the Stock Exchange of Thailand (SET), in which case the Securities and Exchange Act of 1992, the Securities and Exchange Commission (SEC) Rules, the Capital Market Supervisory Board (CMSB) Rules, and the SET Rules also apply. The legal framework for most M&A transactions concerning Thai limited companies is also provided in both the code and the Public Limited Company Act. New Type of Combination On 7 February 2023, the Act Amending the Civil and Commercial Code came into effect, introducing a new merger scheme as another approach to business combination for private limited companies. A merger under the amended Civil and Commercial Code is a merger of two or more companies, resulting in either a new company with all merged juristic entities ceasing to exist or one of the companies continuing to exist with the other companies ceasing to exist as juristic entities. The merger replaces the “amalgamation” in the previous version of the code, which merely prescribed a legal framework and identified the implications of mergers but did not specify a concrete legal framework for the acquisition of assets or businesses. Arguably, the first type of merger described above is the same as an amalgamation under the previous version of the code, while the end
Read More
July 28, 2023
Myanmar’s Ministry of Commerce (MOC) issued three notifications related to e-commerce on July 21, 2023, classifying online retail businesses as essential services, requiring them to register with the relevant authorities, and setting the criteria for their registration. Under Notification No. 49/2023 the MOC authorized the Department of Trade (DOT) to issue notifications, orders, and directives relating to online retail businesses. This was followed by Notification No. 50/2023, which classifies online retail businesses as essential services under the Essential Supplies and Services Law and requires them to register with the DOT within six months of the issuance of the notification (i.e., by January 21, 2024). Failure to register within the specified period will be punishable by imprisonment for six months to three years and a fine of up to MMK 500,000 (approx. USD 238). Finally, under Notification No. 51/2023, the MOC set out the criteria and requirements for the registration of online retail businesses by entities, business institutions, and individuals, as well as the duties and liabilities of sellers and consumers. Pursuant to this notification, registration should be completed via the DOT’s online system, fees must be paid digitally, and electronic registration certificates will be issued. Certificates are initially valid for two years, and can be renewed. The MOC will provide information at a later time on the prescribed forms, certificate format, registration and online fees, and online registration portal. In applying for registration, an entity or business institution established under the Myanmar Companies Law, Special Company Act, Co-operative Society Law, or any other existing Myanmar laws must have a website with its own domain name or an online channel with an exact address that is used for online sales and a registered business address within Myanmar. Individual applicants must be at least 18 years old, reside in Myanmar, and
Read More
June 5, 2023
Vietnam’s Law on the Protection of Consumer Rights (“Consumer Protection Law” or “CPL”) was passed in 2010 and has been effective since July 1, 2011, providing a legal framework for protecting the rights of consumers in Vietnam. Over the past 12 years of implementation and application, however, the CPL has revealed its shortcomings and limitations. For example, there are issues related to inconsistency between the CPL and other laws such as the Civil Code, Law on Competition, Enterprise Law, and Cybersecurity Law. The current CPL also has not kept pace with modern consumption practices, especially the rapid changes and emerging trends in e-commerce, cross-border transactions, and services via digital platforms. The government of Vietnam has therefore entrusted the Ministry of Industry and Trade (MOIT) to take the lead in drafting a new amended CPL to replace the old one, to improve the policies and legislation on consumer protection, and protect the vulnerabilities of consumers in transactions with businesses. During the 5th session of the National Assembly at the end of May 2023, the National Assembly discussed and reviewed the latest draft of the CPL (“Draft CPL”), which is expected to be approved on June 21, 2023. The following are some key contents of the Draft CPL: 1. Revised Subjects of Application Unlike the current CPL, which applies only to consumers; traders of goods and services; and agencies, organizations and individuals involved in consumer protection activities within the territory of Vietnam, the Draft CPL adds “the Vietnamese Fatherland Front, socio-political organizations and social organizations participating in protecting consumers’ interests” as new subjects of its application, and clarifies that “agencies, organizations, and individuals” include both domestic and offshore agencies, organizations, and individuals involved in activities of consumer rights protection. The Draft CPL also removes “within the territory of Vietnam” from the
Read More