Enterprises in Vietnam get greenlight for 5-month tax deferral

The Ministry of Finance (MoF) has drafted a new decree proposing a five-month extension for payment deadline of value added tax and land rent fee for enterprises hurt by Covid-19 epidemic, according to Pham Dinh Thi, head of the ministry's Tax Policy Department.

Overview of the meeting. Source: MoF.

The decree, which is scheduled to be approved by the government with immediate effect this month, would cover enterprises in the fields of tourism, agro-forestry-fishery, transportation, food processing, textile and garment, footwear, logistics, and catering services, said Thi at a press briefing on March 11.

Moreover, enterprises with revenue from the previous year of at least VND50 billion (US$2.14 million) or those with quarterly revenue of below VND50 billion (US$2.14 million) are entitled to the deferral, Thi added.

Thi, however, said enterprises of small and micro-size are subject to deferral in value-added tax payment regardless of their fields of operations.

Data from tax authority revealed 93% of enterprises declaring and paying taxes nationwide are of small and medium sized, indicating over 93% of enterprises in Vietnam would benefit from the decree.

The MoF said the extension of tax payment deadline would not affect state budget revenue for 2020, as enterprises still have to pay tax amount in full before December 31.

The move is in response to the government’s directive No.11 providing a host of measures to help businesses cope with the epidemic.

Under the directive, Prime Minister Nguyen Xuan Phuc requested the State Bank of Vietnam (SBV) to instruct banks to provide a monetary aid package worth a total of VND250 trillion (US$10.86 billion) in forms of simplification of lending procedures, rescheduling of debt payment, lowering and waiver of interest rates for customers affected by the Covid-19 epidemic.

The SBV, the country’s central bank, is responsible for promoting non-cash payment and lowering transaction costs for e-payment.

The SBV should submit a plan for the pilot implementation of mobile money, which allows people to transfer money through cellphone accounts instead of a bank account, to the PM for consideration as soon as possible.

Phuc also requested no price hikes of essential goods during the first and second quarters.

Nguyen Quoc Hung, director of SBV’s Credit Department cited a report from 23 banks saying as of March 4, over VND926 trillion (US$40.02 billion) in outstanding loans were affected by Covid-19, accounting for 14.27% of total outstanding loans of these banks and 11.3% of the system.

Banks in Vietnam have eased pressures on VND222 trillion (US$9.6 billion) loans for 44,000 customers in forms of rescheduling of debt payment, lowering of interest rates and fees, said Hung.

As of March 4, 15 more banks waived inter-bank transaction costs of less than VND500,000 (US$21.46), taking the total number of banks to 32 out of 45 in the banking sector participating in the program.