TAX EXEMPTION AND REDUCTION FOR BUSINESSES AND RESIDENTS DUE TO THE IMPACT OF THE COVID-19 EPIDEMIC

On October 19, 2021, Chairman of the National Assembly Vuong Dinh Hue signed and promulgated Resolution No. 406/NQ-UBTVQH15 promulgating a number of solutions to support businesses and residents affected by the Covid 19 pandemic. Accordingly, the Resolution clarifies a number of tax solutions for businesses and residents. TASCO tax agent will provide detailed information about this supporting document in the article below, welcome entrepreneurs, readers and residents to consult!

1. Corporate income tax reduction:

👉 Applicable subjects:

The corporate income tax reduction specified in this Article applies to taxpayers that are organizations engaged in production and business activities of goods and services with taxable income (collectively referred to as enterprises) according to the provisions of Article 1 of Resolution No. 406/NQ-UBTVQH15, including:

a) The enterprise is established in accordance with Vietnamese law.

b) Organizations established under the Law on Cooperatives.

c) Non-business units established in accordance with Vietnamese law.

d) Other organizations established in accordance with Vietnamese law have production and business activities with income.

👉 Reduction rate:

A 30% reduction of the payable corporate income tax amount of the corporate income tax period of 2021 for the case of an enterprise specified in Clause 1 of this Article has the revenue in the tax period of 2021 not exceeding 200 billion VND and the revenue in the tax period of 2021 is lower than the revenue in the tax period of 2019.

The criteria that the revenue in the tax period 2021 is lower than the revenue in the tax period 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 reduced corporate income tax amount:

The reduced corporate income tax amount of the tax period 2021 is calculated on the entire income of the enterprise, including the incomes specified in Clause 3, Article 18 of the Law on Corporate Income Tax, the income tax amount enterprises entitled to the reduction specified in this decree are calculated on the payable corporate income tax amount of the tax period of 2021, after deducting the corporate income tax that the enterprise is enjoying in accordance with the provisions of the Law on Corporate Income Tax and its guiding documents.

2. Tax exemption for business households and individuals:

👉 Applicable subjects:

Business households, business individuals are resident who operates in all professions, forms of tax declaration and payment, and has production and business activities in the districts, towns, urban districts, provincial cities and cities under the central government referred to as district-level areas) affected by the Covid-19 epidemic in 2021.

👉 Tax exemption payable:

a) Business households and individuals specified in Clause 1 of this Article are exempt from personal income tax, value added tax, special consumption tax, natural resources tax and environmental protection tax payable generated from production and business activities of the months in the third and fourth quarters of 2021.

✔️ The tax exemption specified in this Clause does not apply to incomes and revenues from providing software products and services; digital information content products and services on entertainment, video games, digital movies, digital photos, digital music; digital advertising.

b) Cases that have paid tax amounts payable from production and business activities of the months in the third and fourth quarters of 2021 will be cleared by the tax authority to offset the overpaid tax with debts or amounts incurred in the next period and overpaid refunds (if any) in accordance with the law on tax management.

👉 Determine the exempted tax amount:

a) For cases when the tax authority must issue a notice of payment: the tax authority base on the payable tax amount of the months in the third and fourth quarter of 2021 on the notice of payment to determine the exempted tax amount of the business households, business individuals.

b) For cases when the tax authority is not required to issue a notice of payment: taxpayers (including organizations and exempted individuals, declaring and paying on behalf of business households and business individuals; business households use single/volume invoices) based on the payable tax amount according to the tax declaration to determine the exempted tax amount of business households and individuals from production and business activities of the months in the third and fourth quarters. year 2021. If you are eligible to declare tax by payment period or declare tax by year (for property tax, private house construction, declaration of each other), the exempted tax amount is the payable tax amount corresponding to the actual revenue generated in the months in the third and fourth quarters of 2021. In the case of goods and service provision contracts of business households or individuals, it is not possible to determine the actual revenue generated in the months in the third and fourth quarters of 2021, it shall be determined according to the average monthly revenue according to the contract value.

✔️ In case a contract for provision of goods and services is signed by a business household or individual in a month, the duration of the contract shall be counted as full months.

3. VAT reduction:

👉 Value added tax reduction from November 1, 2021 to the end of December 31, 2021 for goods and services, including:

1️⃣ Transport services (railway transport, water transport, air transport, other road transport); Accommodation Service; Food Service; services of travel agencies, tour operators and support services, related to the promotion and tours organization.

2️⃣ Publishing products and services; cinematographic services, television program production, sound recording and music publishing; artwork and creative, artistic, entertainment services; services of libraries, archives, museums and other cultural activities; sports, entertainment services.

3️⃣ Details of goods and services eligible for tax reduction specified at Points a and b of this Clause shall comply with Appendix 1 of the List of goods and services eligible for value-added tax reduction promulgated together with this Decree, in which the goods and services specified at Point b of this Clause do not include publishing software and production and business goods and services in the online form.

4️⃣ In case the goods and services specified in this Clause are not subject to value added tax under the Law on Value Added Tax, the provisions of the Law on Value Added Tax should be applied.

👉 VAT reduction rate:

a) Enterprises and organizations that calculate value-added tax by the deduction method are entitled to a reduction of 30% of the value-added tax rate for goods and services specified in Clause 1 of this Article.

b) Enterprises and organizations that calculate value-added tax according to the percentage method on revenue are entitled to a 30% reduction of the percentage rate to calculate value-added tax on goods and services specified in Clause 1 of this Article.

4. Exemption of late payment:

Exemption of late payment arising in 2020 and 2021 of tax arrears, land use levy and land rent for taxpayers who are enterprises and organizations (including dependent units, business locations) incurs a loss in the tax period 2020.

👉 Determine the amount of late payment exempted:

The tax authority directly manages, the tax authority manages the tax, collects land use levy and land rent, based on tax management data, determines the amount of late payment arising in 2020 and 2021 of the taxpayer to issue a decision on exemption of late payment.

Note: If the taxpayer has paid late payment before the effective date of Resolution No. 406/NQ-UBTVQH15, it will not be re-handled.

Recently, on October 27, 2021, the Government also issued Decree No. 92/2021/ND-CP detailing the implementation of Resolution 406/NQ-UBTVQH15 of the National Assembly Standing Committee promulgating a number of solutions measures to support businesses and residents affected by the Covid-19 pandemic.

 

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