Vietnam Approves Corporate Income Tax Reduction for 2020
Vietnam’s government on September 25, 2020, signed off on implementing a 30 percent corporate income tax (CIT) cut for certain businesses for the 2020 financial year.
Earlier, Vietnam’s National Assembly on June 19 ratified the government’s proposal to cut corporate income tax by 30 percent. The reduction was approved by more than 90 percent of all State members.
Of note, the most important factor is that the CIT reduction will apply to all businesses if their total revenue does not exceed the VND 200 billion (US$8.8 million) threshold in 2020. This means that most small and medium enterprises (SMEs) will be eligible for such tax break regardless of the number of employees and the actual financial loss due to the pandemic.
The purpose of the ratification is to ensure an equal subsidy policy for businesses that have been making their best efforts to retain employees, which substantially contribute to social welfare.
As mentioned in our previous article, the tax reduction is primarily based on the principle of self-assessment. Businesses are expected to review their actual business circumstances and self-assess their eligibility for such tax breaks.
The official resolution is expected to take effect 45 days after approval and will be applied for the financial year of 2020. The government is expected to issue an official document within this timeframe to provide further guidance on the implementation of the tax break.
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This insight is a summary based on the recent approval from the government and does not constitute professional advice. Businesses should continue to follow our alerts for further updates.
For further information and assistance, please contact our tax, payroll, and HR professionals at Dezan Shira & Associates.
Note: This article was first published in June 2020 and has been updated to include the latest developments.
This article was first published by Vietnam Briefing, which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to firstname.lastname@example.org for more support.