On September 25th 2020, the Prime Minister of Vietnam signed Decree 114/2020/NĐ-CP detailing the implementation of Resolution No.116/2020/QH14 of the National Assembly on the reduction of corporate income tax for enterprises, cooperatives, non-business units and other organizations. The effective date of the Decree 114 is from the effective date of Resolution No. 116/2020/QH14 and applies to the corporate income tax period of 2020. In particular, Clause 2 Article 1 of Decree 114/2020 /NĐ-CP clearly states a 30% reduction in corporate income tax for the 2020 corporate income tax period for an enterprise whose total revenue in 2020 does not exceed 200 billion VND.

1. Subjects of application: Enterprise income taxpayers are organizations engaged in the production and trading of goods and services with taxable income (referred to as enterprises) according to the provisions of Article 1 of Resolution 116/2020/QH14, including Enterprises established under the provisions of Vietnamese law; Organizations established under the Cooperative Law; Non-business units established under the provisions of Vietnamese law; Other organizations established under the provisions of Vietnamese law and have income-generating production and business activities.

2. Method for calculation of total revenue in 2020: The above total revenue in 2020 is the total revenue in the enterprise income tax period of 2020 of enterprises including all sales, processing and service fees including price subsidies, surcharges and supplements to which enterprises are entitled under the provisions of the Law on Enterprise Income Tax and its guiding documents.

However, in the case of a newly established enterprise or converting form of enterprises, ownership transformation, consolidation, merger, division, separation, dissolution, bankruptcy, plus in the corporate income tax period of the year 2020 that enterprise has not operated for 12 months, total revenue (TDT) in 2020 is determined as follows (in the 2020 corporate income tax period):

Total revenue in 2020 = (Actual total revenue 2020) /(Actual number of months of operating business activity in 2020) *12 months

In the case of newly established enterprises, converting form of enterprises, ownership transformation, consolidation, merger, division, separation, dissolution or bankruptcy in the month, the operation period shall be counted in full months.

3. The enterprise expects total revenue in 2020 corporate income tax period not to exceed 200 billion VND: In this case, the enterprise shall determine the temporary quarter payment as 70% of the quarterly corporate income tax payment.

At the end of the 2020 enterprise income tax period, if the total revenue in 2020 of the enterprise does not exceed 200 billion VND, the enterprise shall declare reducing the enterprise income tax of the year 2020 when finalizing the enterprise 2020 income tax in accordance with the regulations.

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