Resolution 406 on tax reduction and exemption in 2021

On 19 October 2021, the National Assembly Standing Committee issued Resolution 406/NQ-UBTVQH15 on a number of solutions to support businesses and people affected by the Covid-19 pandemic.

According to Resolution 406, businesses and business households/individuals are entitled to various tax support policies.

Corporate Income Tax (“CIT”)

A reduction of 30% in the payable corporate income tax amount of 2021 will be given to a taxpayer regulated by the Law on Corporate Income Tax that has a turnover of not greater than VND 200 billion in 2021 and a decrease in revenue in 2021 compared to the revenue in 2019.

However, the decrease in revenue in 2021 compared to the revenue in 2019 will not prevail as a criterion for reduction of payable corporate income tax if the taxpayer has just been established, engaged in consolidation, merger, partial division, or full division in the tax period of 2020 or 2021.

Tax exemption to business households/individuals

Business households and individuals carrying out business activities in district areas affected by the Covid-19 pandemic in 2021 will be exempt from personal income tax, value added tax and other taxes payable in the third and fourth quarters of 2021. The subjects eligible for tax exemption will be decided by the Chairman of the relevant city/provincial People’s Committees. The above tax exemption does not apply to income earned from providing software products and services, digital content products and services of an entertainment nature, video games, digital movies, pictures, music and advertising.

Value Added Tax (“VAT”)

30% reduction on the VAT rate (for credit method) or on the deemed percentage (for deemed method) will apply from 1st November 2021 to 31th December 2021 to the following industries:

– Transportation services (railway, waterway, air, road);

– Accommodation and catering services;

– Travel agency, tour business and related support services to promote and organised tours.

– Publishing products and services;

– Film services, television programs, recording, music publishing;

– Creative, arts and entertainment;

– Libraries, storage, museums and other cultural activities;

– Sports, entertainment and recreation.

The above VAT reduction does not apply to publishing of software and goods and provision of online services.
 

Exemption of late payment interest

Resolution 406 also stipulates that there will be an exemption from late payment interest arising in 2020 and 2021 on outstanding tax, land use fees and land rental for enterprises that incurred tax losses in 2020. No refund will be applied in case the late payment interest has already been paid.

Please contact WinWin Audit for further consulting on the tax relief policies under Resolution 406.