In compliance with the directive from the Prime Minister of Vietnam on focusing efforts to address the aftermath of Storm No. 3 and post-storm flooding, the General Department of Taxation (GDT) issued Official Letter No. 4062/TCT-CS, providing guidance on measures to support enterprises suffering losses due to storms and floods. The guidance from the GDT covers the following issues:
1. Tax Payment Extension:
Tax authorities will review requests for tax payment extensions from enterprises affected by natural disasters.
The extension period for tax payment:
· No more than 2 years for cases of material damage that directly impact business operations due to natural disasters.
· No more than 1 year if the enterprise must cease operations due to the relocation of production facilities as required by competent authorities, affecting business results.
During the extension period, enterprises will not be penalized or required to pay taxes.
The leader of the tax authority will decide on the amount of tax to be paid and the extension period based on the submitted tax extension documents.
(Article 62 of the Law on Tax Administration 2019)
2. Exemption from Late Payment Penalties:
Enterprises are exempt from late payment penalties in cases of material damage caused by natural disasters.
(Article 59 of the Law on Tax Administration 2019)
3. Exemption from Administrative Tax Penalties:
If an enterprise is fined for administrative tax violations, the fine is waived in cases of damage caused by natural disasters.
The total waived fine must not exceed the value of the damaged assets or goods.
(Article 140 of the Law on Tax Administration 2019)
4. VAT Deduction:
The input VAT on goods lost due to natural disasters, without compensation from insurance, can be deducted when calculating corporate income tax. (CIT)
(Article 14 of Circular No. 219/2013/TT-BTC)
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5. CIT Deductions:
Expenses that enterprises can deduct when calculating taxable income for corporate income tax include:
· Losses due to natural disasters that are not compensated. The deductible loss amount is the remaining loss value after subtracting compensation received from insurance companies or other entities.
· Donations for disaster recovery efforts.
· Support for employees affected by natural disasters.
Enterprises can deduct up to one month’s actual average salary in the tax year.
Conditions for tax-deductible expenses:
· Directly related to business operations.
· Valid invoices and documents are required, and for transactions over 20 million VND, non-cash payment documentation is required.
(Article 9 of the Corporate Income Tax Law 2008)
6. Special Consumption Tax Reduction:
Taxpayers producing goods subject to special consumption tax that are facing difficulties due to natural disasters will be eligible for a tax reduction.
The tax reduction is based on actual losses but must not exceed 30% of the payable tax for the year in which the damage occurred, and the reduced amount must not exceed the value of the damaged assets after compensation (if any).
(Article 9 of the Special Consumption Tax Law 2008)
The GDT requests that provincial tax authorities in Vietnam guide enterprises in implementing the above tax exemption and reduction policies to promptly support those affected by Storm No. 3.
Enterprises in need of assistance are encouraged to contact UNI for detailed guidance on tax exemption and reduction procedures.
(According to Official Letter No. 4062/TCT-CS dated September 13, 2024).