On September 25th, 2020 the Government issued Decree No. 114/2020/ND-CP on the reduction in CIT payable in 2020 with some following contents:
If the enterprise’s total revenue in 2020 does not exceed 200 billion VND, the payable CIT in the fiscal 2020 shall be reduced by 30%. The total revenue in 2020 which is used as the basis of eligibility for CIT reduction shall be determined as follows:
- The applicable entities for tax reduction are the total revenue in the year 2020 of the enterprise including revenue from sales of goods, processing and service provision, subsidies and extra charges to which the enterprise is entitled as prescribed by the Law on Corporate Income Tax and its guiding documents.
- For enterprises that are established and those that undergo conversion, ownership transfer, consolidation, merger, division, dissolution, bankruptcy in the fiscal year 2020 and have only operated for less than 12 months, the total revenue in 2020 will be determined by the total earned revenue in the fiscal year 2020 divided by (:) the number of months of actual business operation multiplied by (x) 12 months.
- The month in which the enterprise is established or undergoes conversion, ownership transfer, consolidation, merger, division, dissolution, bankruptcy will also be included in the months of actual business operation.
If the enterprise estimates that its total revenue in the fiscal year 2020 shall not exceed 200 billion VND, it will pay 70% of the quarterly CIT payable.
The CIT payable reduction shall be calculated on the payable CIT in the fiscal year 2020 after excluding the CIT eligible for incentives to which the enterprise is entitled according to the Law on Corporate Income Tax and its guiding documents.
The fiscal year for CIT calculation will be the calendar year, if the Fiscal year of the enterprise does not apply calendar year, it shall be determined in compliance with the Law on Corporate Income Tax and its guiding documents.
In case the first fiscal year of enterprises that are established in 2019 or the last fiscal year of enterprises that undergo conversion, ownership transfer, consolidation, merger, division, dissolution, bankruptcy in 2021 is less than 03 months, it shall be combined with the fiscal year 2020. The determination of the total revenue and the CIT reduction will only apply to the earned revenue in the fiscal year 2020 (12 months).
This Decree shall take effect from August 3rd ,2020 and will be applied for the CIT fiscal year 2020.
