Following the latest legal updates on issues related to the COVID-19 pandemic, Victory LLC would like to share several important contents of the Official Letter No. 1307/TCT-CS dated 27 March 2020 (“Official Letter 1307”) of the General Department of Taxation providing updates of the Minister of Finance’s execution of Proposal to the Government on the Decree on extension of time limit for payment of tax and land rental (“Draft Decree“).
I. SUBJECTS OF APPLICATION
1. Enterprises, organizations, households, individuals engaged in manufacturing activities in the following business lines:
+ Agriculture and related service activities; forestry and related service activities; fishing and aquaculture;
+ Manufacture of food products; manufacture of textiles; manufacture of clothing; manufacture of footwear; manufacture of rubber products; manufacture of computer, electronic and optical products; manufacture of motor vehicles and other motor vehicles (excluding manufacture of motor vehicles with 9 or fewer seats).
2. Enterprises, organizations, households, individuals doing business in the following business lines:
+ Railway transport; passenger transport by buses; other land transport; waterway transport; air transport; warehousing and support activities for transportation;
+ Accommodation service; food and beverage service;
+ Travel agency, tour operator and related activities;
+ Education and training; human health and social work activities;
+ Creative, arts and entertainment activities; sports activities; botanical and zoological gardens and nature reserves activities; activities of amusement parks and theme parks; motion picture projection activities.
3. Small and micro-enterprises are determined by the provisions of law.
II. EXTENSION OF TIME LIMIT FOR PAYMENT OF TAX AND LAND RENTAL
1. Value-added tax (excluding import value-added tax)
The time limit for payment of the payable value-added tax arising in the tax periods of March, April, May and June 2020 (for cases of monthly value-added tax declaration) and the first and second quarter tax periods of 2020 (for cases of quarterly value-added tax declaration) of the aforementioned Subjects is extended.
The grace period is 05 months, from the last day of the time limit for paying value-added tax pursuant to the laws on tax administration.
In case the taxpayer provides supplementary documents of the tax declaration dossier for the extended tax period, which leads to an increase in the payable value-added tax amount and submits to the tax authorities before the expiry of the extended time limit, the tax amount subject to extension shall include the additional payable tax amount due to the supplementary declaration.
2. Corporate income tax
The time limit for payment of the remaining payable amount of corporate income tax under the 2019 tax finalization and the corporate income tax amount to be temporarily paid in the first quarter and the second quarter of 2020 of the aforementioned Subjects is extended.
The grace period is 05 months, from the last day of the time limit for payment of corporate income tax pursuant to the laws on tax administration.
In case enterprises, organizations have already paid the enterprise income tax amount to be paid according to the tax finalization of 2019 into the State Budget, such enterprises or organizations shall be offset against the payable tax amount of other taxes.
3. Households, individuals doing business
The time limit for payment of the payable value-added tax, personal income tax arising in 2020 of households and individuals engaged in business lines stipulated in sections I.1 and I.2. Households, individuals doing business shall pay the tax amount subject to extension in this Clause no later than 15 December 2020.
4. Land rental payment
The time limit for payment of land rent for the amounts to be paid in the first period of 2020 for enterprises, organizations, individuals, to whom the Government is directly leasing land under the form of annual rental payment pursuant to decisions and contracts of competent agencies, which state that such leases are for purpose of production and business specified in sections I.1 and I.2. For small and micro-enterprises specified in Section I.3, the time limit for payment of entire land rental for the first period of 2020 shall be extended. The grace period is 05 months, from 31 May 2020. The extended time limit for payment of land rental shall be no later than 31 October 2020.
Official Letter 1307 took the initiative in reviewing, understanding and classifying the subjects intended to be subject to extension of time limit for payment of tax and land rental under the Draft Decree. Accordingly, Official Letter 1307 not only aims to remove obstacles for manufacturing and business activities of enterprises during the COVID-19 pandemic, but also to actively and timely guide and support taxpayers once the Government officially issues the Decree.