Corporate Income Tax Delayed One Year For Labor-Intensive Enterprises
By Lorenzo Martelli
Oct. 28 – Good news for labor-intensive firms in Vietnam. Decision 54/2011/QD-TT inked by the Prime Minister last week agrees to extend corporate income tax payments in 2011 for labor-intensive companies as well as “co-operatives lawfully established and operating which have revenue from the production or processing of agricultural, wood, seafood, garment, footwear, or electronic products, or from development, construction, and installation of infrastructure works.”
In order to benefit from the tax payment deferral, labor-intensive enterprises are required to employ at least 300 workers, not counting workers with contracts of three months or less. The right to delay payment for 2011 corporate income taxes for one year takes effect from the due date this year.
Accordingly, corporate income tax in the first quarter of 2011 shall be settled before April 30, 2012; tax in the second quarter of 2011 shall be cleared before July 30, 2012; tax in the third quarter of 2011 shall be paid before October 30, 2012; and tax in the fourth quarter of 2011 shall be settled before March 31, 2013. This decision takes effect on November 30, 2011.
Taxes eligible for delayed payment from the end of next month should be roughly calculated every quarter and declared in the firm’s tax statements for 2011, excluding the tax on incomes from other activities than business and production. The Finance Ministry will soon issue a circular guiding the implementation of the decision for local tax agencies.
The Decision comes after a proposal issued from the Ministry of Finance which is aimed at helping domestic as well as foreign enterprises in Vietnam cope with the current tough market conditions such as high inflation and high interest rates.
However, even though inflation in Vietnam is still quite high, it slowed for the second month according to data released a couple of days ago by the General Statistics Office in Hanoi. The inflation rate fell to 22.42 percent last month after reaching the highest level in more than two years in August. The recent inflationary easing may consequently reduce pressure on the central bank to further increase interest rates.
Confidence in the short term is pointed out by Matt Hildebrandt, a Singapore-based economist at JPMorgan Chase & Co that recently said: “[…] It now looks like inflation could get down to about 20 percent at the end of the year.”
Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, please email email@example.com, visit www.dezshira.com, or download the firm’s brochure here.
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