Five-month tax deferral proposed for COVID-19 hit firms

The Ministry of Finance has proposed a tax deferral to support people and businesses affected by the coronavirus disease (COVID-19) fallout.

five-month tax deferral proposed for covid-19 hit firms  hinh 0
Illustrative image (Source: VNA)

The proposal, made as part of a draft decree already submitted to the Government, suggests the government extend the deadline for payment of value-added tax (VAT), personal income tax and land lease fees by five months for people and businesses hurt by the COVID-19 outbreak. 

The policy is applicable to companies, organizations, individuals, groups of individual, household businesses operating in the areas of agriculture, forestry and fisheries; food processing and production; textile and garment; footwear; rubber production; electronics and computer manufacturing; automotive manufacturing and assembling (except for vehicles with fewer than 9 passenger seats); transportation; lodging and catering services; and tourism.

The total value of taxes and fees subject to the policy is estimated at around VND30.1 trillion (nearly US$1.3 billion).

Under the proposal, monthly taxpayers will receive a five-month extension for VAT payment from March to June while for quarterly taxpayers, the extension will be applied to payment of the first and second quarters of this year.

As the virus is spreading globally, a number of preventive measures, including quarantine and travel restrictions, have been put in place, causing difficulty for the transportation of people and goods between countries, like Vietnam and China. Many sectors in Vietnam are facing shortage of materials, which were mainly imported from China, making them struggle to seek alternatives.

The Ministry of Finance said the outbreak has been negatively affecting most industries and sectors with micro- and small-sized enterprises and household businesses being the hardest hit.

The proposed policy aims to financially support these vulnerable groups and allow them to maintain and resume production, contributing to the achievement of economic growth goals in 2020, it said.

According to the Ministry of Planning and Investment, if the new coronavirus is contained in the first quarter of 2020, Vietnam’s economic growth this year is projected to be 6.25%, down 0.55 percentage point from the 6.8% goal set by the government. If the epidemic persists until the second quarter, the economic growth may only reach 5.96%, 0.84 percentage point lower than the yearly plan.