The Vietnamese Government recently released Resolution 116/2020/QH14 dated 19 June 2020, which aims to provide small and medium sized enterprises with Corporate Income Tax (“CIT”) reductions for 2020 as a stimulus measure for the economy, following approval from the National Assembly in June.
REDUCTION IN CORPORATE INCOME TAX IN 2020 FOR SMALL & MEDIUM TAXPAYERS.
Accordingly, enterprises in Vietnam with revenue for 2020 not exceeding VND200 billion (approx. USD8.6 million) will be entitled to a reduction in CIT of 30% for the 2020 tax year. For most eligible taxpayers, this will result in a reduction in CIT from the standard 20% on taxable profits, to a CIT rate of 14% for 2020.
The Resolution comes into effect 45 days from release, which means that CIT payments and obligations prior to 3 August 2020 (including provisional tax) will need to be undertaken using the standard tax rate, with any obligations arising after this date using the new reduced rate. Where payments have previously been made using the higher rate, credits against future payments would arise.
This reduction in CIT for 2020 is in addition to the previous tax deferrals for up to 5 months for selected taxpayers per Decree 41/2020/ND-CP.
For further information contact:
Matthew Lourey, Managing Partner
Do Thi Thao, Manager, Tax & Accounting
Nguyen Thi Vu Phung, Manager, Tax & Accounting