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​ 

April 10, 2023
On April 1, 2023, Myanmar’s Directorate of Investment and Companies Administration (DICA) announced additional reporting requirements for newly registered companies. According to the announcement, newly established companies must submit the required information to DICA by email within two months of their registration and before submitting their first annual return (AR) to DICA through the Myanmar Companies Online (MyCO) system as required under the Myanmar Companies Law 2017 (MCL). The reporting requirements include: Proof that the bank account established in the company’s name has been credited with the paid-up capital shown in the MyCO system. Verification of individuals listed as directors of the company. For directors who are Myanmar citizens, this consists of confirmation from the relevant township police office that the director actually resides at the address stated in the national registration card and the application for company registration (Form A). For directors who are foreign nationals, the required verification is proof of compliance with the Registration of Foreigners Rules 1948 (such as Immigration Form C). Confirmation from the relevant township police office that the registered address of the company matches an actual location and that the company is planning to open an office. Verification of individuals and entities listed as members of the company. For individual registered members, the requirements are the same as for individual directors (see above). For legal entities that are registered members, the entity’s certificate of incorporation must be provided. Once a newly registered company submits this information by email, the registrar will review it manually. Companies that fail to submit the required information will not be able to submit their first AR documentation. If this happens, the DICA registrar will issue a notice, and the company will have 28 days to submit its AR and pay all outstanding fees and penalties, or face automatic
Read More
March 29, 2023
On March 14, 2023, the Competition Commission of Cambodia (CCC) set out its merger filing thresholds in Decision No. 095 on Thresholds for Prior Notification of Business Mergers. This was a follow-up to the recent issuance of a regulation outlining the requirements and procedures for merger and acquisition filings. Decision No. 095 applies to all business combinations subject to premerger notification requirements under this prior regulation. The thresholds for when the CCC must be notified of a merger are laid out in the table below. In current practice, the term “turnover” typically refers to a company’s total sales revenue, while “input purchase turnover” denotes the value of materials or equipment acquired for production purposes. Although this reflects the initial interpretation of these terms, it is advisable to seek confirmation or clarification from the CCC before the filing to ensure accuracy and alignment with their current definitions, as it is conceivable that the interpretation may change. Decision No. 095 leaves room for the Ministry of Commerce to amend these thresholds as deemed necessary. Outlook In the last two years, Cambodia has steadily issued regulations to strengthen its legal framework for competition. Although gaps remain, especially with regard to enforcement of fines and certain unclear terms, more regulations are likely in 2025 and 2026.
Read More
March 22, 2023
Attorneys from Tilleke & Gibbins have contributed the Cambodia, Laos, Myanmar, and Vietnam sections to DLA Piper’s Global Government Contracting Country by Country guide, which provides essential information for businesses in 75 jurisdictions on how to source and enter into government contracting opportunities. The guide provides procurement information for jurisdictions in Africa, the Americas, Asia-Pacific, Europe, and the Middle East, and includes information on how to find procurement opportunities, the structure of procurement laws, and in-country resources and relevant publications. Each jurisdictional section includes valuable information on procedures for government tenders, bidding, and contract execution, as well as an overview of the legal and regulatory framework governing government procurement. Businesses can refer to the guide to gain a better understanding of procurement processes and regulations in each jurisdiction, which can help them identify potential opportunities and make informed decisions when pursuing government contracts. The guide’s procurement information for Cambodia, Laos, Myanmar, and Vietnam, combined with the online platform’s comprehensive resources, provides businesses and governments with a valuable tool to navigate the complex regulatory landscape of government contracting in the region. The full Global Contracting Country-by-Country guide is available on the DLA Piper website.
Read More
March 21, 2023
Thailand has issued a royal decree officially reducing the land and building tax due in 2023. The Royal Decree on Land and Building Tax Reduction (No. 3) B.E. 2566 (2023), which was announced and published in Thailand’s Government Gazette on March 19, 2023, and came into effect the following day, will effectively reduce land and building tax payments by 15% in 2023 for the following types of land and buildings: Land or buildings used for agricultural purposes; Land or buildings used for residential purposes; Land or buildings used for other purposes; and Vacant or unused land or buildings. Owners of these types of land or buildings are therefore only required to pay 85% of the land and building tax normally owed for 2023. Furthermore, owners of certain types of land or buildings that were eligible for tax reduction of 50% or 90% under the Royal Decree on Land and Building Tax Reduction B.E. 2563 (2020) will enjoy an additional 15% reduction of the tax amount that was reduced by 50% or a continuation of the 90% tax reduction, depending on the circumstances. For more details on these measures, or on any aspect relating to Thailand’s land and building tax, please contact Chaiwat Keratisuthisathorn at [email protected] or +66 2056 5507.
Read More