The Government hereby promulgates the Decree on detailing the implementation of the National Assembly’s Resolution No. 116/2020/QH14 on the reduction of enterprise income tax payable in 2020 for enterprises, cooperatives, non-business units, and other organizations.
Who is eligible?
- The 30 percent CIT reduction will apply to all businesses with revenue of less than US$8.8 million (VND200 billion) for 2020;
- The CIT reduction will apply to the total revenue of the enterprise including incomes such as capital transfer, real estate transfer, and services subject to special consumption tax; and.
- Businesses that have been in operation for less than 12 months are also eligible. However, their tax cut will be calculated by total revenue earned in 2020 divided by the number of months they have been in operation, multiplied by 12.
- The CIT reduction is calculated on the entire income of the enterprise, including the incomes specified in Clause 3, Article 18 of the Law on Corporate Income Tax.
- The CIT reduction amount specified in this Decree is calculated on the payable CIT amount of the corporate income tax period 2020 after subtracting the CIT amount that the enterprise is enjoying incentives under the provisions of the Law on Corporate Income Tax and its guiding documents.
Which CIT period applies?
- The CIT period is determined according to the calendar year, in case the enterprise applies a fiscal year other than the calendar year, the CIT period is determined according to the applicable fiscal year specified in the Law on Corporate Income Tax and guiding documents.
- If the first enterprise income tax period of a newly established enterprise is 2019 or the last enterprise income tax period of an enterprise which is converted into another form, or has it form of ownership transformed, or is consolidated, merged, split up, divided, dissolved or bankrupted is 2021, and such period is less than 03 months, then such period shall be added into the enterprise income tax period of 2020 to become an enterprise income tax period.
How to declare tax cuts?
- Regarding tax reduction declaration, the Decree stipulates that enterprises determine by themselves the amount of CIT to be reduced when temporarily paying quarterly, and declare CIT payable in the CIT period of 2020. When preparing tax declaration documents, enterprises declare the CIT reduction amount on the prescribed declaration forms.
- Thorough inspection and examination, the competent authority discovered that the enterprise is not eligible for tax reduction under the provisions of this Decree or that the payable tax amount of the CIT period of 2020 is larger than the tax amount paid, enterprises must pay the tax arrears, fines, and late payment interest from the date of expiration of the tax payment time limit according to the provisions of the Law on Tax Administration and its guiding documents
- Handling underpaid / overpaid CIT in case of CIT finalization and inspection/examination in accordance with the Law on Tax Administration and its guiding documents:
Nộp bổ sung và tính tiền chậm nộp theo quy định
Handle overpaid amount according to regulations
Inspection / Examination
Submit additional payment and calculate late payment interest.
The additional tax is reduced by 30% according to the provisions of the decree