CIT reduction according to Decree 92/2021/ND-CP

In order to support businesses and people to overcome difficulties caused by the impact of the COVID-19 epidemic. The Government has issued Decree 92/2021/ND-CP guiding policies on CIT exemption and reduction. This article of TASCO will provide more specific information to customers about the above policies.

1. Applicable objects:

🔅 The enterprise is established in accordance with the law of Vietnam.

🔅 The organization was established under the Law on Cooperatives.

🔅 Non-business units are established under Vietnamese law.

🔅 Other organizations established in accordance with the law of Vietnam have income production and business activities.

2. CIT reduction rate:

⏩ A 30% reduction of the payable corporate income tax amount of the corporate income tax period of 2021 for the case mentioned above, with revenue in the tax period 2021 is not more than VND 200 billion and the revenue in the tax period 2021 is lower than the revenue in the tax period 2019.

⏩ The criterion that the revenue in the tax period 2021 is reduced compared to the revenue in the tax period of 2019 is not applied to the case of newly established enterprises, consolidation, merger, division, or separation in the tax period of 2020  and 2021.

✔ The corporate income tax period is determined according to the calendar year, in case the enterprise applies a fiscal year different from the calendar year, the corporate income tax period is determined according to the applicable fiscal year specified in the Law on enterprise income tax and guiding documents.

✔ Turnover in the corporate income tax period includes all sales, processing, service provision, and business activities in the form of business cooperation contracts, including price subsidies, revenues, and extras that an enterprise is entitled to in accordance with the Law on Corporate Income Tax and its guiding documents, excluding deductions from revenue, revenue from financial activities and other incomes.

🔰 In the case of newly established enterprises, enterprise transformation, ownership transformation, consolidation, merger, division, separation, dissolution, or bankruptcy in the corporate income tax period, the enterprise does not operate full 12 months, the actual revenue determines the turnover of that tax period in the tax period divided (:) by the number of months the enterprise actually conducts production and business activities in the tax period multiplied (x) by 12. month. In case an enterprise is newly established, enterprise transforms its form of enterprise, transforms its form of ownership, merges, merges, divides, separates, dissolves, or goes bankrupt within a month, the operation period shall be counted in full months. 

🔰 In case the tax period for the first year for a newly established enterprise is 2020 or the last tax period for an enterprise that converts the form of enterprise, transforms the form of ownership, consolidates, merges, or divides separation, dissolution, bankruptcy is 2022. Still, the time is shorter than 03 months and the enterprise is added to the tax period of 2021 to form a corporate income tax period, the determination of revenue and tax reduction is only applicable for 12 months of the tax year 2021.

🔰 In case an enterprise has a dependent unit and a business location, the revenue in the enterprise income tax period includes the revenue of the dependent unit and business location shown in the annual consolidated financial statements.

🔰 In case enterprises operating in 2019 do not generate revenue, they are not eligible for corporate income tax reduction according to Resolution No. 406/NQ-UBTVQH15 and Decree No. 92/2021/ND-CP.

🔰 In case an enterprise established in 2019 has an operating time of fewer than 3 months and generates revenue, the revenue in 2019 shall be determined according to the principles specified in the first bullet point, point b, clause 2, Article 1 of Decree No. 92. 2021/ND-CP dated October 27, 2021 of the Government.

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