Due to the impact of Covid-19, businesses are struggling with financial burdens and capital turnover: Where is the money to pay salaries to employees? Rent for land and premises? Taxes? Understanding these difficulties, a series of directives, resolutions, and official dispatches with support policies have been promptly issued to support businesses in tax exemptions and reductions and deferrals of tax and fee payments.
Union dues: deferred until June 2020
Document: Official dispatch 245/TLĐ dated March 18, 2020
Issuing agency: Vietnam General Confederation of Labor
Subjects: Enterprises with 50% or more of total employees participating in compulsory social insurance who must temporarily stop working.
Content:
+ Postpone the payment of union fees for the first 6 months of 2020 to June 30, 2020.
+ After June 30, 2020, if the Covid-19 epidemic has not subsided and businesses continue to face difficulties, the deadline will be postponed to December 31, 2020.
Extension of tax and land rent payment, no late payment penalty
Documents: Official dispatch 897/TCT-QLN dated March 3, 2020; Decree 41/2020/ND-CP dated April 8, 2020
Issuing agency: General Department of Taxation; Government
Object:
1. Enterprises, organizations, households and individuals operating in the following industries:
- Agriculture, forestry and fisheries;
- Food production and processing;
- Textile; apparel manufacturing; leather and related products manufacturing.
- Wood processing and production of products from wood, bamboo and rattan (except beds, wardrobes, tables and chairs); production of products from straw, thatch and plaiting materials; production of paper and paper products; production of products from rubber and plastic; production of products from other non-metallic minerals; metal production; mechanical processing; treatment and coating of metals; production of electronic products, computers and optical products; production of automobiles and other motor vehicles; production of beds, wardrobes, tables and chairs.
- Build.
2. Enterprises, organizations, households and individuals operating in the following industries:
- Transportation and warehousing; accommodation and catering services; education and training; healthcare and social assistance activities; real estate business activities;
- Labor and employment service activities; activities of travel agencies, tour businesses and support services related to promoting and organizing tours;
- Creative, artistic and entertainment activities; library, archive, museum and other cultural activities; sports, entertainment and recreation activities; cinema activities.
3. Enterprises, organizations, households and individuals producing priority supporting industrial products; key mechanical products.
(Prioritized supporting industrial products for development are determined according to Decree No. 111/2015/ND-CP dated November 3, 2015 of the Government on supporting industrial development; key mechanical products are determined according to Decision No. 319/QD-TTg dated March 15, 2018 of the Prime Minister approving the Strategy for development of Vietnam’s mechanical industry to 2025, with a vision to 2035).
4. Small and micro enterprises (determined according to the provisions of the Law on Support for Small and Medium Enterprises No. 04/2017/QH14 and Decree No. 39/2018/ND-CP dated March 11, 2018 of the Government, detailing a number of articles of the Law on Support for Small and Medium Enterprises).
5. Credit institutions and foreign bank branches shall implement solutions to support customers who are enterprises, organizations and individuals affected by the Covid-19 epidemic according to the regulations of the State Bank of Vietnam. The list of credit institutions and foreign bank branches participating in supporting these customers will be compiled by the State Bank of Vietnam, then sent to the tax authority to extend the deadline for tax and land rent payment according to Decree 41/2020/ND-CP.
(The economic sector and field of enterprises, organizations, households and business individuals specified in Clause 1, Clause 2 and Clause 3, Article 2 of Decree 41/2020/ND-CP is the sector and field in which enterprises, organizations, households and business individuals have production and business activities and generate revenue in 2019 or 2020).
Content: Tax payment extension, late payment exemption, land rent payment extension
For business
1. Extension of monthly and quarterly VAT payment deadline : Postpone 5 months of the tax calculation period of March, April, May, June 2020 (for monthly VAT declaration) and the tax calculation period of the first and second quarters of 2020 (for quarterly VAT declaration). The extension period is 5 months from the end date of the VAT payment deadline as prescribed.
Note:
- In case the taxpayer makes additional declarations in the tax declaration dossier of the extended tax period, leading to an increase in the amount of value added tax payable, and sends them to the tax authority before the extended tax payment deadline, the extended tax amount shall include the additional tax payable due to the additional declaration.
- Enterprises and organizations that are eligible for an extension must declare and submit monthly and quarterly value-added tax declarations in accordance with current law, but are not yet required to pay the value-added tax payable arising on the declared value-added tax declarations. The deadline for paying monthly and quarterly value-added tax is extended as follows:
- The deadline for paying value added tax for the March 2020 tax period is no later than September 20, 2020;
- The deadline for paying value added tax for the April 2020 tax period is no later than October 20, 2020;
- The deadline for paying value added tax for the tax period of May 2020 is no later than November 20, 2020. The deadline for paying value added tax for the tax period of June 2020 is no later than December 20, 2020;
- The deadline for paying value added tax for the first quarter of 2020 is no later than September 30, 2020;
- The deadline for paying value added tax for the second quarter of 2020 is December 30, 2020 at the latest.
2. 5-month extension for the remaining corporate income tax payable according to the final settlement of the 2019 tax period, and the provisional corporate income tax payable for the first and second quarters of 2020, from the end date of the corporate income tax payment deadline according to the provisions of the law on tax administration.
Note:
- In case an enterprise or organization has paid the remaining corporate income tax payable according to the 2019 settlement to the state budget, it is allowed to adjust the paid corporate income tax to pay other payable taxes such as VAT, personal income tax, etc.
- To make adjustments, taxpayers prepare a verification letter (Form No. C1-11/NS issued with Circular 84/2016/TT-BTC) with tax payment documents or information related to the content of the adjustment request and send it to the tax authority;
- In case an enterprise or organization that is granted an extension to pay tax has branches or affiliated units (these branches or affiliated units declare corporate income tax separately with the directly managing tax authority), the branches or affiliated units will also be granted an extension;
- In case a branch or affiliated unit does not have production or business activities in the economic sector or field eligible for an extension, the branch or affiliated unit will not be granted an extension for tax payment.
For households and individual businesses
- Extension of the deadline for payment of value added tax and personal income tax for the tax amount payable in 2020 by households and individuals doing business in economic sectors and fields eligible for tax payment extension.;
- The deadline for paying the extended tax amount is December 31, 2020.
For land rent
Extension of land rent payment deadline for the first period of 2020 is 5 months from May 31, 2020.
According to the Ministry of Finance, 98% of businesses will be eligible for tax and land rent deferral.
This exemption and reduction amount may not be large for small-scale manufacturing enterprises. But for enterprises with large factories, rented land, etc., this is timely and necessary support.
Exemption and reduction of interest and fees according to internal regulations of credit institutions
Document: Circular 01/2020/TT-NHNN
Issuing agency: State Bank
Subjects: Customers of credit institutions (CIs), branches of foreign banks (SBV) that:
- Obligated to repay principal and/or interest due within the period from January 23, 2020 to the next day after 3 months from the date the Prime Minister announces the end of the Covid-19 epidemic;
- Unable to pay principal and/or interest on time according to the signed contract or agreement due to decreased revenue and income due to the impact of the Covid-19 pandemic.
Customers who meet the above two conditions will be exempted or have their interest and fees reduced or reduced according to internal regulations for outstanding debt arising from credit activities (except for purchasing and investing in corporate bonds).
Businesses need money to pay employees: get loans with 0% interest
Document: Resolution 42/NQ-CP
Issuing agency: Government
Subjects: Employers, businesses and employees
Condition:
| Object | Get loan/support | Duration |
| Employees working under labor contracts who must temporarily suspend their contracts/take unpaid leave for 1 month or more due to the business facing difficulties due to the Covid-19 pandemic and have no revenue/financial resources to pay salaries. | Supported 1,800,000 VND/person/month. | According to the actual time of suspension of labor contract/unpaid leave. Depending on the actual epidemic situation, calculated from April 1, 2020. Not more than 3 months. |
| Employers facing financial difficulties + have paid in advance at least 50% of the severance pay to employees (according to Clause 3, Article 98 of the Labor Code) in April, May, June 2020. | Loan without collateral up to 50% of the regional minimum wage for each employee, based on actual salary payment time to pay the remaining salary and disburse directly monthly to the suspended employee. Amount: Not more than 3 months of regional minimum wage. Interest rate 0%. |
Maximum 12 months, at the Social Policy Bank. |
| Individual business households with taxable revenue under 100 million VND/year + temporarily suspend business from April 1, 2020. | Supported 1,000,000 VND/household/month, received monthly. | Depending on the epidemic situation. Not more than 3 months. |
| Employees whose labor contracts or employment contracts are terminated but are not eligible for unemployment benefits. Employees who do not have labor contracts and lose their jobs. |
Supported 1,000,000 VND/person/month, received monthly. | Depending on the epidemic situation. Not more than 3 months. Applicable from April to June 2020. |
| People with revolutionary contributions are receiving monthly preferential allowances. | Additional support of 500,000 VND/person/month. One-time payment. | 3 months, from April to June 2020. |
| Social protection beneficiaries are receiving monthly social benefits. | Additional support of 500,000 VND/person/month. One-time payment. | 3 months, from April to June 2020. |
| Poor and near-poor households according to national poverty standards in the list as of December 31, 2019. | Supported 250,000 VND/person/month. One-time payment. | 3 months, from April to June 2020. |
Besides:
Workers are allowed to submit applications for unemployment benefits by post, and job search notices indirectly (by post, email, fax, etc.) from April 1, 2020 until the end of the epidemic is announced. These documents and notices do not require confirmation from the People’s Committee of the commune, ward, or town about the outbreak of the epidemic in the area.
Help solve difficulties in capital, finance, tax, trade and electronic payment
Document: Directive 11/CT-TTg dated March 4, 2020
Issuing agency: Prime Minister
Objects: Enterprises, business households
Content:
1. The Government assigns the State Bank of Vietnam:
- Direct credit institutions to balance, fully and promptly meet capital needs for production and business. At the same time, it is necessary to promote administrative procedure reform, shorten the time for reviewing loan applications, and improve customers’ access to loans. Along with that, promptly apply measures to restructure debt repayment terms, consider reducing or exempting interest rates, maintaining debt groups, and reducing fees… for customers facing difficulties due to the impact of the Covid-19 epidemic;
- Preside over and coordinate with the Ministry of Planning and Investment, the Ministry of Finance and relevant agencies to urgently propose appropriate credit policies to remove difficulties for those affected by the Covid-19 epidemic, and report to the Prime Minister in March 2019;
- Continue to implement solutions to promote cashless payments; programs to exempt and reduce electronic payment service fees to directly support service users, especially online payment fees for public administrative services;
- Immediately submit to the Prime Minister a specific decision on piloting the use of telecommunications accounts to pay for small-value services (Mobile Money services).
2. Ministry of Finance
- Submit to the Government for promulgation a Decree on extension of tax and land rent payment for subjects affected by the Covid-19 epidemic, report to the Government and the Prime Minister in March 2020;
- Urgently submit to the Government the exemption and reduction of taxes, fees and charges to remove difficulties for those affected by the Covid-19 epidemic;
- Review and propose to competent authorities solutions on taxes and state budget expenditures, first of all a support package of about 30 trillion VND to help remove difficulties for production and business, ensure social security in response to the Covid-19 pandemic, and submit to the Prime Minister in March 2020.
3. The Ministry of Information and Communications focuses on research and promptly develops solutions to promote digital technology enterprises to develop products in e-commerce – digital economy, transportation, delivery, fintech, electronic payment, etc. in the digital environment; at the same time, request all levels, sectors and propose the business community and people to strongly deploy applications in economic and social life.
4. Vietnam Social Security shall preside over and coordinate with relevant agencies to guide the temporary suspension of social insurance payments for subjects affected by the Covid-19 epidemic until the end of June or December 2020 and shall not charge late payment interest according to its authority and regulations of law.
5. Propose that the Vietnam General Confederation of Labor, within its authority, consider and provide guidance on appropriate time for paying union fees, contributing to removing difficulties for businesses and organizations affected by the Covid-19 pandemic.
Temporarily stop paying social insurance to the pension and death fund
Document: Official dispatch 860/BHXH-BT dated March 17, 2020
Issuing agency: Vietnam Social Security
Object:
- Agencies, units, organizations, and enterprises (collectively referred to as enterprises) in the passenger transport, tourism, accommodation, restaurant and other special industries facing difficulties caused by the epidemic, resulting in the inability to arrange jobs for workers;
- The number of employees participating in social insurance, present before the temporary suspension of production, and forced to take temporary leave is from 50% or more;
- Or the business suffers damage of over 50% of the total asset value caused by the epidemic (excluding the value of land assets).
(According to the provisions of Clause 1, Article 88 of the Law on Social Insurance 2014; Clauses 1, 2, 3, 4, Article 16 of Decree No. 115/2015/ND-CP dated November 11, 2015 of the Government; Article 28 of Circular No. 59/2015/TT-BLDTBXH dated December 29, 2015 of the Ministry of Labor, Invalids and Social Affairs).
Content:
Enterprises are allowed to submit applications to temporarily suspend contributions to the pension and death benefit fund until June 2020 and will not be charged late payment interest. In case the Covid-19 epidemic has not subsided by the end of June 2020, if enterprises have a request, they must promptly coordinate with the Department of Labor, War Invalids and Social Affairs and the Department of Finance to report to the People’s Committee of the province or city to send to the Vietnam Social Security for consideration and settlement of temporary suspension of contributions to the pension and death benefit fund until December 2020.
During the suspension period, if the enterprise affected by Covid-19 shows no signs of violating the law on social insurance, health insurance, and unemployment insurance, relevant agencies will not conduct specialized inspections of payment or checks on this matter.
For sickness and maternity funds, occupational accident and disease funds, health insurance funds and unemployment insurance funds, authorities must still urge businesses to pay fully and promptly every month to ensure the rights of employees.
Above is a summary of the state’s support for businesses during difficult times due to Covid-19. If you have any unanswered questions or need further legal advice or services from fdiinvietnam.com, please call us at 0978 578 866 (North) , 033 9962 333 (Central) or 033 9962 333 (South) for support!