Tax Relief for 26 Localities Affected by Typhoon Yagi

The General Department of Taxation (GDT) recently issued Official Letter  4062/TCT-CS to tax departments of 26 provinces and cities, namely Quang Ninh, Hai Phong, Thai Binh, Nam Dinh, Hoa Binh, Lao Cai, Yen Bai, Son La, Lai Chau, Dien Bien, Ha Giang, Cao Bang, Bac Kan, Thai Nguyen, Tuyen Quang, Phu Tho, Vinh Phuc, Lang Son, Bac Giang, Bac Ninh, Hai Duong, Hanoi, Hung Yen, Ha Nam, Ninh Binh and Thanh Hoa, delivering solutions to support organizations, individuals, and businesses heavily affected by Typhoon Yagi and subsequent flooding.

In response to the Prime Minister's directions in Official Dispatch 92/CD-TTg dated September 10, 2024 on solutions to address Typhoon Yagi consequences and subsequent floods, The GDT urged tax departments in provinces and cities affected by Typhoon Yagi and the subsequent floods to offer guidance to taxpayers impacted by the disaster.

On tax payment extension, according to the Tax Administration Law 38/2019/QH14, taxpayers who suffer damage caused by Typhoon Yagi 3 and subsequent floods and meet regulations on material damage caused by natural disasters, catastrophes, epidemics, fires, unexpected accidents or other force majeure cases as prescribed by the Government (Clause 27, Article 3, Tax Administration Law 38/2019/QH14) will be granted a tax payment extension. The tax payment extension may last up to two years from the expiration date of the original deadline for taxpayers facing material damage due to force majeure events affecting their production and business. If operations are halted due to the relocation of facilities at the request of authorities, the extension is limited to one year. During the extension period, taxpayers will not incur fines or late payment fees for overdue taxes.

On fine exemption for tax violations, Clause 1, Article 140 of the Law on Tax Administration clearly stipulates that taxpayers who are fined for administrative tax violations and suffer damage from force majeure cases specified in Clause 27, Article 3 of this Law shall be exempted from fines. The total amount of exempted fines shall not exceed the value of damaged assets and goods.

Pursuant to Article 9 of the Law on Corporate Income Tax and its guiding documents, enterprises are allowed to deduct expenses when determining taxable income for corporate income tax for expenses on the value of losses caused by natural disasters, epidemics and other force majeure events that are not compensated. The value of losses incurred from natural disasters, epidemics, fires, and other force majeure events that are not compensated is calculated as the total value of losses minus any compensation received from insurers or other organizations and individuals as stipulated by law.

On special consumption tax reduction, taxpayers manufacturing goods subject to special consumption tax and encountering difficulties due to natural disasters or unexpected accidents are entitled to tax reduction.

The tax reduction level is determined on the basis of actual losses caused by natural disasters or unexpected accidents, but not exceeding 30% of the tax payable in the year of the damage and not exceeding the value of damaged assets after compensation (if any).

Regarding resource tax, taxpayers who encounter natural disasters, fires, or unexpected accidents that cause damage to declared and taxed resources will be considered for exemption or reduction of tax payable for the amount of lost resources. In case the tax has been paid, such tax will be refunded or deducted from the resource tax payable in the following period. Enterprises will also receive a 50% reduction in non-agricultural land tax if their land and houses are damaged.

For individuals and business households affected by natural disasters, their personal income tax, special consumption tax, and resource tax will be reduced. In particular, the personal income tax rate will be reduced tantamount to the level of damage but not exceeding the amount of tax payable. The special consumption tax to be reduced is determined based on the actual damage caused by natural disasters or unexpected accidents but not exceeding 30% of the tax payable in the year of damage and not exceeding the value of damaged assets after compensation (if any). The resource tax will be reduced corresponding to the amount of lost resources. In case the tax has been paid, such tax will be refunded or deducted from the resource tax payable in the following period.

For business households that suffer material damage caused by natural disasters, directly affecting their production and business, their tax payment deadline will be extended for no more than two years from the date of such deadline. Taxpayers will not be fined or have to pay late payment fees calculated on the tax debt during the extended period.

The GDT also requested provincial and municipal tax departments to inform and disseminate the support policies related to tax extension, exemption, and reduction to organizations, individuals, and businesses. They should guide these entities in implementing the policies and coordinate with relevant agencies to promptly address issues related to administrative procedures. Tax departments are to provide tax records and documents held at tax agencies regarding the determination of damage value, as requested by affected organizations, individuals, and enterprises. They are to assign officers to assist taxpayers promptly and support damaged entities in restoring tax records, including tax declaration records, tax exemption and reduction records, tax refund records, and tax payment extension records. This includes documentation related to the determination of damage value for organizations, individuals, and enterprises.

By Hien Kien, Vietnam Business Forum