Vietnam: Recent corporate income tax and VAT guidance

Guidance on the 30% corporate income tax reduction for small and medium enterprises for 2020 and 2021

Guidance on the 30% corporate income tax reduction for small and medium enterprises

Guidance on the 30% corporate income tax (CIT) reduction for small and medium enterprises for 2020 and 2021—Decree 114/2020/ND-CP and Decree 92/2021/ND-CP—provides that the total revenue for assessment of eligible enterprises does not include income from financial activities. However, according to Official Letter 4454/TCT-CS (19 November 2021) issued by the General Department of Taxation (GDT), when an enterprise registers its main business as financial support services, the revenue from financial activities will be included in the total revenue for the assessment of 30% CIT reduction eligibility. In addition, according to Official Letter 3918/TCT-CS (12 October 2021), for purposes of the 30% CIT reduction eligibility determination, revenue from the sale of goods and provision of services does not include indirect taxes such as output value added tax (VAT) (including cases declaring VAT on the deemed method), special consumption tax, export tax and environmental protection tax.

According to Official Letter 4325/TCT-CS (9 November 2021) of the GDT, upon the conversion of an advance payment into a receivable on the mutual agreement between the buyer and the seller, the seller is allowed to make provision for bad debts in accordance with Circular 48/2019/TT-BTC. Of note, the provision must be supported with proper documents as prescribed in Article 6 of Circular 48/2019/TT-BTC in order to be considered a CIT deductible expense.

Other recent VAT and other tax developments include the following:

  • An investment project that registers for implementation in multiple phases will be eligible for VAT for the phases under construction
  • No VAT refund for the reporting period that does not generate export revenue 
  • VAT refund still available when a construction permit is issued after the construction stage
  • Enterprises entitled to a VAT refund upon dissolution for the accumulated creditable VAT amount that was not eligible for a VAT refund during the operation period
  • Taxpayers must register to use the e-invoice types (either with or without code) as required under the notice from the tax authority
  • Circular 100/2021/TT-BTC amending Circular 40/2021/TT-BTC on VAT and individual (personal) income tax applicable to business households and individuals
  • Strengthening the coordination mechanism between the tax authorities and social insurance authorities
  • Reduction of 50% of the registration fee for domestically manufactured and assembled automobiles from December 2021 until the end of May 2022
     

Read a January 2022 report [PDF 128 KB] prepared by the KPMG member firm in Vietnam

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.