Enterprises hurt by COVID-19 can delay paying tax for five months

In the draft decree extending the deadline for tax and land rent payment, the Ministry of Finance (MoF) assessed that most industries and sectors, especially micro- and small-sized enterprises, individuals, groups of individuals, production households, and businesses are affected by the COVID-19.

Therefore, the MoF proposes extending payment deadlines by five months to businesses, organisations, individuals, groups of individuals, and households directly affected.

The subjects eligible for this extension those working in agriculture, forestry and fishery production, food processing, weaving, clothing production, shoe and footwear production, rubber products production, manufacturing electronic products, computers, manufacturing and assembling automobiles (except for manufacturing and assembling cars with less than nine seats).

The extension also applies to rail, road, waterway, aviation, warehousing, and other supporting activities for transportation, accommodation, catering and other activities of travel agencies, as well as tour and support services.

In addition, micro- and small-sized enterprises defined in the Law on Support for Small- and Medium-sized Enterprises are also entitled to this policy.

Enterprises would be eligible for an extension on VAT payments in the first and second quarter of 2020. It is estimated that the payment of about VND22.6 trillion ($982.6 million) of tax from enterprises will be extended for five months.

In addition, about VND3 trillion ($130.43 million) of VAT and personal income tax payable in 2020 by individuals, groups of individuals, and business households are also extended to December 15.

In addition, the MoF proposed to extend the land rent payments by five months for payments due in the first quarterof 2020. Extended land rent is expected at about VND4.5 trillion ($195.65 million). However, the revenue of the state budget in 2020 will not decrease due to business households and individuals still having to pay for the budget before October 31.

In spite of the extended schedule, taxpayers still have to declare and submit tax returns according to current regulations.

Instructions on extension or delay of tax payment by COVID-19

In the case of suffering material damage due to natural disasters or epidemics such as COVID-19, businesses can apply for an extension in tax payment and even exemption from late payment fees.

Due to the impacts of the novel coronavirus, many businesses suffered great losses and are having difficulties in producing and consuming goods and services, and were unable to pay taxes on time.

According to the newly issued guidelines of the tax authorities, in order to extend the tax payment deadline and receive an exemption from late tax payment fines, enterprises must prove they have suffered "material damage which directly affects production and business due to natural disasters, fires, or unexpected accident.”

The tax authorities define the case of "material damage" as property losses such as machines, equipment, vehicles, supplies, goods, workshops, workplaces, money, or valuable papers.

The "unexpected accident" is a sudden occurrence that happens unexpectedly to taxpayers, caused by an external factor that directly affects production and business. These cases, in addition to situations such as traffic accidents or serious illnesses, among others, also include "infectious epidemics at the announced area of ​​epidemics or other force majeure cases."

In order to enjoy the policy, the taxpayer has to make and send a dossier of request for tax payment extension to their direct tax administration agency, including a written request for tax payment extension, a stocktaking record, an evaluation of material damage, and a written certification from the police office or People's Committee of the commune, ward, or the management board of the industrial park or export processing zone. In addition, taxpayers should send any additional compensation file (if any) confirmed by the insurance agency.

In case of seeking exemption from late tax payment, the taxpayer must also submit a written request and a written certification of the extent of the property damage to the competent agency. VIR

Trang Duong/Chi Duong

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