Vietnam Issues New Taxation Regulation to Help Businesses Battle Against COVID-19
The uncertain and complex progress of COVID-19 have severely impacted the economy of Vietnam, especially when the second wave struck in July. In an effort to help the economy, Vietnam’s government has issued new tax support policies and regulations to help businesses overcome the difficult situation amid the pandemic.
As Vietnam experienced a second wave of the corona pandemic in July, many economists forecasted the country to experience a negative GDP growth rate this year. However, the Vietnamese government stated that they would do everything to foster this year GDP growth by providing economic support packages for enterprises and individuals. Subsequently, a regulation on delayed tax payments and tax cuts were released in the second quarter of 2020.
In particular, all micro and small businesses, which account for 93.7% of Vietnam’s total enterprises, are granted the tax and land rental payment deferral allowance. Besides, businesses working in the agriculture, forestry or aquaculture sector, as well as some selected industrial and service sectors are eligible for the incentive. According to the Ministry of Finance, with this Decree, approximately 180 trillion VND worth of taxes and fees will be extended, affecting more than 700,000 enterprises nationwide. With this new regulation, companies can reserve more capital to battle against COVID-19, as well as maintain business operation and production.
In June, the Vietnamese National Assembly passed a resolution to cut 30% of CIT for businesses whose total revenue don’t exceed 200 billion VND (8.54 million USD) during the financial year of 2020. In comparison to the original resolution proposal, the National Assembly raised the income ceiling from 50 billion to 200 billion VND, and thereby included medium-sized enterprises in the beneficiary group. Further, a criterion based on the number of full-time employees were also removed. These changes increase the exempted tax amount from 15.84 trillion VND (680.02 million USD) to 23 trillion VND (987.41 million USD). According to the Vietnamese government, the tax break will help companies overcome economic difficulties and reboot production.
In conclusion, the extended deadlines for tax submission and CIT reduction are aimed at helping businesses, especially SMEs, improve their cash flow, maintain operations, and develop their business during this difficult time. It has clearly reflected the Vietnamese government’s determination in recovering the economy and achieving positive GDP growth. The government is also committed to continue supporting enterprises affected by COVID-19 in the future through other necessary relief policies.