30% Tax Cut for Enterprises in 2020

The Government recently issued Decree 114/2020/ND-CP on corporate income tax (CIT) reduction in 2020 for businesses, cooperatives, non-business units and other organizations. This Decree is applied to CIT payers engaged in manufacturing and trading activity of goods and services as per Article 1 of Resolution 116/2020/QH14 of the National Assembly on CIT reduction in 2020.

According to the decree, enterprises eligible for tax reduction must be established under Vietnamese law; organizations must be established under the Cooperative Law; and non-business units must be established under Vietnamese law; and other organizations must be established under Vietnamese law with income-generating business activities.

The decree also states that the 30% CIT reduction in 2020 is applied to enterprises whose total revenue in 2020 does not exceed VND200 billion.

This total revenue in 2020 is the total revenue in the tax-counting period of 2020, including all sales, outsourcing revenue, income from provision of services, including price subsidies, surcharges and other benefits that they are entitled to get under the Law on Corporate Income Tax and its guiding documents.

Decree 114 is effective from the effective date of Resolution 116/2020/HQ14 and applicable to the CIT period of 2020.

By Hien Le, Vietnam Business Forum