Decree guiding reduction of corporate income tax of 2020 coming soon

The average monthly revenue and the amount of corporate income tax that is reduced will be self-determined by the enterprise

The draft stipulates that organisations manufacturing and trading in goods and services with gross revenue in 2020 not exceeding VND 200 billion will be reduced by 30% of total payable amount for their corporate income tax of 2020.

For a newly established enterprise in 2020 less than 12 months old, the gross revenue in 2020 will be determined by the actual revenue in 2020 divided by the number of months the enterprise is actually engaged in production and business activities in 2020 then multiply by 12 months.

Average monthly revenue will be self-determined by the enterprise. If the average monthly revenue does not exceed VND 16.67 billion, the enterprise will temporarily calculate the amount of tax the enterprise must pay by quarter in accordance with regulations, then temporarily pay corporate income tax of that quarter after it has deducted 30% of the tax being temporarily calculated.

At the end of the tax period in 2020, if the gross revenue of the enterprise in 2020 does not exceed VND 200 billion, the enterprise should make a declaration for reducing the corporate income tax of 2020 when finalising corporate income tax in accordance with regulations.

If an enterprise is newly established in the last three months of 2019 and has registered to determine the first tax period in 2020, including the months that the enterprise is established in 2019, the basis for determining corporate income tax that is reduced under the provisions of this clause is only calculated on income generated in 2020. The revenue generated in 2019 will not be included.

If the enterprise is newly established in the last three months of 2020 and registers to determine the first tax period in 2021 including months that enterprise was established in 2020, the basis for determining the amount of corporate income tax that is reduced under the provisions of this clause is only calculated on income generated in 2020.

When making corporate income tax finalisation, if the amount of reduction in quarterly taxes that are temporarily calculated is higher than the actual amount of reduction, the enterprise must make an additional declaration for paying the rest of tax amount and late payment as prescribed. If the amount of tax that is temporarily calculated lower than the actual reduction, the tax authority will handle the overpaid tax amount in accordance with the law on tax management.

In terms of tax reduction procedures, the draft stipulates that tax authorities have not notified businesses about accepting tax reductions. If during the tax reduction period, tax authorities have grounds to determine the enterprise is not eligible for tax reduction, tax authorities should notify the enterprise by document about the ineligibility of tax reduction and the enterprise must pay the full amount of taxes and late payment in accordance with regulations into the State budget.

If after the time of tax reduction is over, the tax authority detects that the enterprise is not eligible for tax reduction under this decree or the declared tax amount for reduction is larger than the amount of reduction as prescribed through inspection, the enterprise must pay back the tax arrears, fines and late payment which have been re-determined by the tax authority into the State budget.

If after the time of tax reduction is over, the tax authority detects that the enterprise is entitled to a tax reduction bigger than the declared tax amount, the enterprise should make an additional declaration to continue enjoying the tax reduced that has been re-determined by the tax authority.