“Latching” to cut 30% of corporate income tax need to be paid in 2020-09-28

illustration image. Source: Internet

This decree applies for taxpayers that are organisations engaged in production and trading of goods and services with taxable income as prescribed in Article 1 of Resolution 116/2020/QH14 of the National Assembly on reduction of corporate income tax payable by 2020 for enterprises, cooperatives, public non-business units and other organisations.

According to the decree, an enterprise is eligible for tax reduction is one established under the provisions of Vietnamese law; organisations established under the Cooperative Law; public non-business units established under the provisions of Vietnamese law, and other organisations established under the provisions of Vietnamese law with income-generating from production and business activities.

The decree also states that the reduction of 30% in corporate income tax to be paid in the 2020 corporate income tax period applies to enterprises that have total revenue in 2020 of less than VND 200 billion.

This is the total revenue generating in the tax period of the corporation income in 2020 of the enterprise including all revenue from sales, processing and service charges included price subsidies, extra and surcharges that enterprises are entitled to under the provisions of the Law on Corporate Income Tax as well as guidance documents.

If an enterprise is newly established or converting business types, converting ownership form, consolidation, merger, division, separation, dissolution or bankruptcy in the tax period for corporate income in 2020 and operation less than 12 months, the total revenue in 2020 is determined as follows :

Total revenue in 2020 = (Actual total revenue in 2020) x 12 months / (Actual number of months of production and business activities in 2020)

If a newly established enterprise or enterprise converted the form of business, ownership, consolidation, merger, division, separation, dissolution or bankruptcy in a month, the operation period is counted as a full month.

When as enterprise expects the total revenue in the tax period of corporate income in 2020 is under VND 200 billion, the enterprise will determine the quarterly temporary payment equal to 70% of the payable amount of corporate income tax of the quarter. At the end of the tax period of corporate income in 2020, if the total revenue does not exceed VND 200 billion, the enterprise should make a declaration for cutting corporate income tax in 2020 upon making finalisation of the corporation income tax in accordance with regulations.

Decree No. 114 will take effect since the effective date of Resolution No. 116/2020/HQ14 and applies to the tax period of corporate income in 2020.