Decree No. 114/2020/ND-CP guidance on the National Assembly’s Resolution No. 116/2020/QH14

DECREE

On detailing the implementation of the National Assembly’s Resolution No. 116/2020/QH14 on reduction of enterprise income tax payable in 2020 for enterprises, cooperatives, non-business units and other organizations

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Pursuant to the Law on Organization of the Government dated June 19, 2015;

Pursuant to the Law on Tax Administration dated June 13, 2019;

Pursuant to the Enterprise Income Tax dated June 03, 2008, which is amended and supplemented by the Law No. 32/2013/QH13 and the Law No. 71/2014/QH13;

Pursuant to the National Assembly’s Resolution No. 116/2020/QH14 on deduction of enterprise income tax payable in 2020 for enterprises, cooperatives, non-business units and other organizations;

At the proposal of the Minister of Finance;

The Government hereby promulgates the Decree on detailing the implementation of the National Assembly’s Resolution No. 116/2020/QH14 on reduction of enterprise income tax payable in 2020 for enterprises, cooperatives, non-business units and other organizations.

Article 1. Subjects of application

This Decree applies to enterprise income taxpayers being goods and service production and business organizations which have taxable incomes (hereinafter referred to as enterprises) as prescribed in Article 1 of the Resolution No. 116/2020/QH14, including:

1. Enterprises established in accordance with Vietnamese Law.

2. Organizations established in accordance with the Law on Cooperatives.

3. Non-business units established in accordance with Vietnamese Law.

4.  Other organizations established in accordance with Vietnamese law and engaged in income-generating production and business activities.

Article 2. Reduction of enterprise income tax

1. To reduce 30% of enterprise income tax amount payable in the enterprise income tax period of 2020 for enterprises having total turnover no more than VND 200 billion in 2020.

2. The total turnover in 2020 which is used as the basis for determining subjects eligible for tax reduction as prescribed in Clause 1 of this Article is total turnover in the enterprise income tax period of 2020 of an enterprise, including all sales, processing and service charges, subsidies, surcharges and extra charges that an enterprise shall be entitled in accordance to the Law on Enterprise Income Tax and its guiding documents.

In case an enterprise which is newly established, converted into another form, or has it form of ownership transformed, or is consolidated, merged, split up, divided, dissolved or bankrupted in the enterprise income tax period of 2020 has not operated for 12 months, then the total turnover in 2020 shall be determined by the actual total turnover in the enterprise income tax period of 2020 divide by (:) the number of months that such enterprise actually conducts its production and business in the enterprise income tax period of 2020, multiply with (x) 12 months. In case an enterprise is newly established, converted into another form, or has it form of ownership transformed, or is consolidated, merged, split up, divided, dissolved or bankrupted in a month, then the operation period shall be counted as full month.

3. In case an enterprise’ expected total turnover in the enterprise income tax period of 2020 is not exceed VND 200 billion, such enterprise shall determine its quarterly temporary payment equivalent to 70% of the quarterly payable enterprise income tax amount.

4. At the end of the enterprise income tax period of 2020, if the enterprise’s total turnover in 2020 is not exceed VND 200 billion, such enterprise shall make a declaration of reduction of enterprise income tax for 2020 when settling enterprise income tax as prescribed.

The reduced enterprise income tax amount in the enterprise income tax period of 2020 shall be determined on the entire turnover of such enterprise, including incomes prescribed in Clause 3, Article 18 of the Law on Enterprise Income Tax.

The reduced enterprise income tax amount as prescribed in this Decree shall be determined on the payable enterprise income tax in the enterprise income tax period of 2020, after minus the enterprise income tax incentives in accordance with the Law on Enterprise Income Tax and its guiding documents.

5. The enterprise income tax period shall be determined according to the calendar year, if an enterprise applies a fiscal year other than the calendar year, the enterprise income tax period shall be determined according to the applied fiscal year as prescribed in the Law on Enterprise Income Tax and its guiding documents.

6. If the first enterprise income tax period of a newly established enterprise is 2019 or the last enterprise income tax period of an enterprise which is converted into another form, or has it form of ownership transformed, or is consolidated, merged, split up, divided, dissolved or bankrupted, is 2021, and such period is less than 03 months, then such period shall be added into the enterprise income tax period of 2020 to become an enterprise income tax period. The determination of the total turnover and the reduced tax amount in such case shall only applies for the enterprise income tax period of 2020 (12 months).

Article 3. Tax reduction declaration

1. Enterprises shall, determine by themselves the tax amount to be reduced when paying temporarily their enterprise income tax on a quarterly basis and when making declaration of enterprise income tax payable in the enterprise income tax period of 2020. When making tax declaration dossiers, enterprises shall declare the reduced enterprise income tax amount on declaration forms attached to the Ministry of Finance s Circular No. 151/2014/TT-BTC dated October 10, 2014 and its amending and supplementing documents (if any) and on the Appendix of enterprise income tax to be reduced according to the Resolution No. 116/2020/QH14 enclosed with this Decree.

2. When carry out the enterprise income tax settlement, if the enterprise has underpaid the tax amount to be temporarily paid for the quarter, it shall additionally pay the outstanding tax amount and calculate the late-payment interest according to the Law on Tax Administration and its guiding documents. If the enterprise has overpaid the tax amount to be paid in the enterprise income tax period of 2020, the overpaid amount shall be determined according to the Law on Tax Administration and its guiding documents.

3. If the competent agency inspects, examines and detects that an enterprise is not eligible for tax reduction according to this Decree or the enterprise income tax payable in the enterprise income tax period of 2020 is more than the paid amount as prescribed, such enterprise shall additionally pay the outstanding tax amount, late-payment interest from the date on which the time limit for tax payment expires in accordance with the Law on Tax Administration and its guiding documents.

In case an enterprise makes additional declaration for dossier of declaration of enterprise income tax for the tax period of 2020, or implements the competent agency s decisions after inspection and examination, leading to the increase of payable enterprise income tax, the additional tax amount shall be reduced by 30% according to this Decree.

In case an enterprise makes additional declaration for dossier of declaration of enterprise income tax for the tax period of 2020, or implements the competent agency s decisions after inspection and examination, leading to the reduction of payable enterprise income tax, the overpaid tax amount (if any) shall be handled in accordance with the Law on Tax Administration and its guiding documents.

Article 4. Implementation organization and effect

1. This Decree takes effect from the effective date of the Resolution No. 116/2020/QH14 and applies for the enterprise income tax period of 2020.

2. Any problems arising in the course of implementation shall be guided by the Ministry of Finance.

3. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, Chairpersons of People’s Committees of provinces and centrally-run cities, related enterprises and organizations shall be responsible for the implementation of this Decree./.

* All Appendices are not translated herein.