On September 25, 2020, the Government issued Decree No. 114/2020/ND-CP, detailing
the implementation of the National Assembly’s Resolution No. 116/2020/QH14 on
corporate income tax (“CIT”) payable in 2020 for enterprises, cooperatives, non-business
units and other organizations (“Decree 114/2020/ND-CP“).

Accordingly, enterprises that meet the following conditions will receive a 30% reduction
in CIT payable in 2020, specifically as follows:

1. Conditions on subjects eligible for tax reduction policy:

– Enterprises established in accordance with Vietnam’s law;

– Organizations established in accordance with the Law on Cooperatives;

– Public service providers established in accordance with Vietnam’s law;

– Other organizations established in accordance with Vietnam’s law and earning income
from business operation.

2. Conditions on total revenue in 2020 eligible for tax reduction policy:
The enterprises whose total revenue in 2020 do not exceed 200 billion VND. Specifically:

– Total revenue in 2020 is the total revenue in the CIT period 2020 of the enterprise
including all sales, processing and service charges including price subsidies, surcharges,
and extra which enterprises are entitled to under the provisions of the Law on CIT and its
guiding documents.

– In case of a newly established enterprise, enterprise transforming the form of enterprise,
ownership, consolidation, merger, division, separation, dissolution or bankruptcy in the
CIT period 2020 less than 12 months of operation: Total revenue in 2020 is determined by
the total actual revenue in the CIT period 2020 divided (:) by the number of months the
enterprise actually operates in the CIT period 2020 multiplied (x) by 12 months. In case a
newly established enterprise or enterprise transforms the form of enterprise, ownership,
consolidation, merger, division, separation, dissolution or bankruptcy in a month, the
operation period shall be counted for the full month.

– If the enterprise expects total revenue in the CIT period 2020 to not exceed VND 200
billion, the enterprise shall determine quarterly temporary payment equal to 70% of the
payable CIT amount of the quarter.

– At the end of the CIT period 2020, if the total revenue in 2020 of the enterprise does not
exceed VND 200 billion, the enterprise shall declare and reduce the CIT of the year 2020
When finalizing CIT according to regulations.

3. The value of the Decree 114/2020/ND-CP provides:
– It is a supporting policy from the state to help enterprises overcome difficult times due to
the impact of the Covid-19 epidemic;

– It is the capital facilitation for enterprises to develop production and business, improve
competitiveness, expand production scale;

– It is a measure to maintain long-term revenues for the state budget.
Above is the news: 30% reduction of CIT payable in 2020 in Decree No. 114/2020/ND-
CP.

Decree No. 114/2020/ND-CP takes effect from the effective date of Resolution No.
116/2020/QH14 and applies to the CIT period 2020, interpreted as August 3, 2020.

Hope the above information is helpful to The Valued Readers.

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