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Detailed guidance on the 30% reduction in CIT payable in fiscal year 2020
On 25 September 2020, Government issued Decree 114/2020/NĐ-CP elaborating the national assembly’s resolution No 116/2020/QH14 on reduction in CIT payable in 2020 by enterprises, cooperatives, public service providers and other organizations (“enterprise”), there are some notable points as below:
CIT payable in the fiscal year 2020 by an enterprise whose
total revenue in 2020 does not exceed 200 billion VND
shall be reduced by 30%;
The total revenue of an enterprise in the fiscal year 2020, 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 have operated for less than 12 months, the total revenue in 2020 will be the total revenue divided by (:) the number of months of actual business operation multiplied by (x) 12.
The CIT reduction of the fiscal year 2020 shall apply to the total revenue of the enterprise, including the amounts specified in Clause 3 Article 18 of the Law on Corporate Income Tax.
The 30% reduction specified in this Decree shall apply to the enterprise’s CIT payable in the fiscal year 2020 minus 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:
The fiscal year will be the calendar year. Fiscal years of enterprises that do not apply calendar years shall be determined in accordance 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 shorter than 03 months, it will be combined with the fiscal year 2020, in which case CIT reduction will only apply to the revenue earned in the fiscal year 2020 (12 months).
Declaring CIT reduction:
Enterprises shall calculate the CIT reduction themselves when paying quarterly CIT and making the 2020’s CIT statement. When preparing tax statements, enterprises shall specify the CIT reduction on the set forms provided in Circular No. 151/2014/TT-BTC and its amending documents (if any) and the Declaration of CIT Eligible for Reduction Under Resolution No.116/2020/QH14, which is provided in the Appendix hereof.
In case a competent authority, through inspection, discovers that an enterprise is not eligible for CIT reduction under this Decree or the CIT payable of the fiscal year 2020 is greater than the amount paid, the enterprise shall pay the arrears, fines and late payment interest on the period after the tax payment deadline prescribed by the Law on Tax administration and its guiding documents.
The overpaid/underpaid amount (if any) shall be handled in accordance with the Law on Tax administration and its guiding documents.
Underpaid CIT amount
Overpaid CIT amount
Submit additional fees and late payment fee according to regulations
Handle in accordance with the regulations
Submit additional fees and late payment fee.
The additional tax is reduced by 30% according to the provisions of the decree.