Vietnam tax deferral decree 41: who qualifies and how

Vietnam tax deferral decree 41 gives many businesses five extra months to pay some taxes and land rent. The Government issued Decree 41/2020/ND-CP on 8 April 2020 to ease cash pressure during the COVID-19 outbreak. It delays the payment date. It does not cancel any tax, and it does not lower the amount you owe.

What the decree does

The decree extends the deadline to pay value added tax, corporate income tax and land rent. It also covers personal income tax for households and individuals who run a business. You still file your returns on the normal dates. Only the payment is pushed back. The decree states that no late payment interest is charged during the extension.

Import VAT is not covered. Tax collected at customs follows the usual rules.

Think of it as a payment holiday. If your cash is tight now, you can keep more money in the business for a few months. Owners who still have cash may choose to pay on time anyway. The choice is yours, but you must ask first if you want the delay.

Sources: Decree 41/2020/ND-CP of the Government of Vietnam, issued 8 April 2020, on the extension of the deadline for payment of taxes and land rent.

Who qualifies

The decree applies to companies, other organisations, business households and individuals that carry out production and business activity. It focuses on the sectors hit hardest by the outbreak. These include farming, forestry and fishing, food and drink services, hotels and other accommodation, transport and warehousing, tourism and travel services, and education and training. It also lists many manufacturers, such as makers of textiles, garments, leather goods, wood and paper products, electronics, machinery and motor vehicles, and the construction sector.

Small and medium enterprises as defined by Vietnamese law are also covered. If your business is not in the list, check the decree text for the exact activity code. If your main line of work is on the list, you are likely eligible. Confirm with your tax adviser before you rely on it.

Sources: Decree 41/2020/ND-CP, provisions on the entities and sectors that may claim the extension.

How long you get

For most taxes the extension is five months from the date the payment was originally due. Here is how it works in practice.

• VAT: the extension covers the monthly returns for March to June 2020 and the quarterly returns for the first and second quarters of 2020.
• Corporate income tax: the extension covers the 2019 final payment and the provisional payments for the first and second quarters of 2020.
• Land rent: the extension applies to the first payment due in 2020 for land leased directly from the State and paid each year. It runs five months from 31 May.
• Business households and individuals: the VAT and personal income tax due for 2020 may be paid as late as 31 December 2020. This is a year-end date, not a five-month count.

For companies, count five months from your own original due date. A March VAT payment due on 20 April moves to 20 September 2020. The June payment moves to 20 December. The first quarter payment moves to 30 September, and the second quarter to 30 December.

Sources: Decree 41/2020/ND-CP, provisions on the extension periods for each tax and for land rent.

How to claim the extension

You must ask for it. The extension is not automatic. Follow these steps.

1. Check that your main activity is covered.
2. Prepare the written request, using the form attached to the decree.
3. Send it to your tax office with your monthly or quarterly return. If you send it on its own, it must arrive no later than 30 July 2020. A late request loses the extension.
4. Keep filing your returns on time. Pay on the new date.

One request covers all the taxes and land rent you want to defer. You judge your own eligibility. If the tax office later finds you did not qualify, you must pay the tax and the interest for the extension period, and maybe a fine. If you run several branches, ask your tax adviser how to file for each one.

Sources: Decree 41/2020/ND-CP, provisions on the request for extension and its attachments.

What to watch for

An extension is a loan from the state in practice. The full amount is still due, and it is due on one date. Plan your cash now so the bill does not arrive as a surprise in the second half of the year.

Details may change as officials issue guidance on how to apply the decree. Read the tax office notices for your province. This article gives general information, not legal or tax advice.

Sources: Decree 41/2020/ND-CP of the Government of Vietnam, 8 April 2020.

Sources

• Decree 41/2020/ND-CP of the Government of Vietnam, issued 8 April 2020, on the extension of the deadline for payment of taxes and land rent.