Vietnam Cuts Land Rent for Those Affected by COVID-19

• Vietnam issued Decision 27 on reducing land rent for those affected by the pandemic
• The Decision is effective September 25 and includes businesses, households, and individuals that lease land directly from the government.
• The Decision comes after Vietnam issued Decree 52 in April this year on extending the deadline for tax and land payments.

Vietnam issued Decision No 27/2021/QD-TTg (Decision 27) on reducing land rent for those affected by COVID-19. Eligible parties include businesses, households, and individuals that directly lease land from the State or are under contract with the relevant government agency with annual land rental payments.

The criteria is as follows:

• Reduction of 30 percent of land rent in 2021, but no reduction on any outstanding land rent before 2021 and late payment interest; and
• Reduction is calculated on the payable land rent in 2021.

If an entity is part of any other benefits on land rent, the reduced 30 percent will be calculated on the payable land rent after the existing benefit has been made as per applicable laws.

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Those eligible must submit a request for land lease reduction using the appendix enclosed with Decision 27 before December 31, 2021, along with other supporting documents such as certified copies of the land lease contract with the relevant government agency.

If the eligible entity has already paid the full lease for 2021 but can obtain the eligibility approval from the relevant government authority, the 30 percent overpayment can be carried forward to offset against the land lease obligation applicable in the following year.

Nevertheless, the eligible entity will be responsible for doing a self-assessment of their eligibility for such a reduction. If they are found to be ineligible for land lease reductions in future audits and inspections, they will be required to pay for such shortfalls and will be subject to interest penalties for late payments.

Decision 27 is effective September 25, 2021.

Decree 52 on extending payment for tax, land payments

Similar to last year, the government issued Decree 52/2020/ND-CP (Decree 52) on the extension of deadlines for the payments of taxes and land rental fees for the 2021 tax year. Decree 52 took effect on April 19 and is similar to Decree 41 last year, which catered to businesses affected by the pandemic.

Who is eligible?

In addition to business organizations that were eligible as per Decree 41 last year, Decree 52 also lists additional businesses that are eligible for the tax extension. Some of these include:

1. Publishing activities and music;
2. Crude oil and natural gas;
3. Manufacture of beverages, printing, copying, motorbike manufacturing, prefabricated material, chemical production;
4. Drainage and water treatment;
5. Radio and television, computer programming and consulting; and
6. Mining activities.

How are the deadlines for tax payment extended?

Eligible taxpayers are granted specific extensions on tax payments as follows:

Value Added Tax (VAT)  

Eligible taxpayers will be granted a five-month deferral:

Corporate Income Tax (CIT)

CIT payments for Q1 and Q2 will be extended by three months. So, for example, payment of Q1 CIT would be due by July 30, 2021. Of note, taxpayers should still consider the 75 percent rule when making provisional CIT remittances.

VAT and PIT for individuals and business households

The deadline for payment for VAT and PIT for individuals and business households such as SMEs will be extended to December 31, 2021.

Land lease

The deadline for payment of land lease for the first period of 2021 will be deferred for five months from May 31, 2021.

Procedures for the extension of tax payments

It is important to note that the tax deferral is not applied automatically, rather the eligible taxpayers must prepare and submit an application for tax and land rent deferral (either electronically, such as the form in Decree 52, or hard copy using the postal service) to the managing tax authority for their consideration.

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The deadline for submitting a tax and land lease deferral application is July 30, 2021. Any submission after this date will be considered overdue and will be subject to rejection by the tax authorities.

Taxpayers will be responsible for doing a self-assessment of their eligibility for deferment of tax payments and tax authorities do not have to inform businesses whether their application is accepted.

If taxpayers are found to be ineligible for deferment of tax and land lease payments in future tax audits, they will be subject to interest penalties for late payments by tax authorities.

Therefore, businesses should maintain enough evidence to justify their eligibility to mitigate the risks of any future tax payments and interest penalties. Firms are advised to seek professional advice to ensure they can take advantage of Decree 52 but also remain compliant.

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