Vietnam Approves Corporate Income Tax Reduction for 2020
- Vietnam’s National Assembly on June 19 approved a 30 percent corporate income tax cut for the 2020 financial year.
- The reduction will apply to all businesses with revenue of less than US$8.8 million (VND200 billion) for 2020.
- The government is expected to issue guiding documents on the implementation of the CIT reduction.
Vietnam’s National Assembly on June 19 ratified the government’s proposal to cut corporate income tax (CIT) by 30 percent. The reduction was approved by more than 90 percent of all State members.
Of note, the most important factor is that the CIT reduction will apply to all businesses if their total revenue does not exceed the VND 200 billion (US$8.8 million) threshold in 2020. This means that most small and medium enterprises (SMEs) will be eligible for such tax break regardless of the number of employees and the actual financial loss due to the pandemic.
The purpose of the ratification is to ensure an equal subsidy policy for businesses that have been making their best efforts to retain employees, which substantially contribute to social welfare.
As mentioned in our previous article, the tax reduction is primarily based on the principle of self-assessment. Businesses are expected to review their actual business circumstances and self-assess their eligibility for such tax breaks.
The official resolution is expected to take effect 45 days after approval and will be applied for the financial year of 2020. The government is expected to issue an official document within this timeframe to provide further guidance on the implementation of the tax break.
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This insight is a summary based on the recent approval from the government and does not constitute professional advice. Businesses should continue to follow our alerts for updates once the resolution is officially finalized