Regulation changes on corporate income tax (CIT) in 2021

Decree No.126/2020/NĐ-CP on the elaboration of the law on tax administration issued by The Government which has come into force since December 05th, 2020, has a lot of changes in comparison to the older regulations of the same problems. 

Most of the regulations are changed to facilitate the business process, helping corporates to conduct business more smoothly. 

Sửa đổi, bổ sung Luật Thuế thu nhập doanh nghiệp

These changes include:

1. Regulation about the taxpayer’s responsibility relating to tax procedures before the relocation of the headquarters to another province.

Decree No.83/2013/NĐ-CP did not regulate what the taxpayers are allowed to offset the CIT and post-tax profit after making provisional fund contributions before the tax finalization dossier is submitted against the amount payable under the tax finalization dossier when the headquarters are relocated to another province. But the newly issued Decree No.126/2020/NĐ-CP has now been adjusted to deal with this situation (Article 6.3(d)).

2. Amend the regulation on declaring tax separately on real estate transferring.

Accordingly, the separate declaration of CIT now applies to real estate transfers incurred by taxpayers who pay the tax directly on revenue under CIT laws (Article 8.4(e). Compare to Circular 151/2014/TT-BTC which was issued before this Decree, the declaration applied to the taxpayer that is not a real estate company, or by the real estate company that wishes to do.

3. Amend the regulation on provisional CIT paid quarterly.

Consistently, the total amount of provisional CIT paid in the first 03 quarters of the year shall be at least 75% of the terminal tax. Otherwise, late payment interest shall be charged on the arrears over the period from the deadline for paying CIT of the third quarter to the date of payment of the arrears. (Article 8.6(b)).

Comparing to the regulation before, such as Decree No.91/2014/NĐ-CP and Circular No.151/2014/TT-BTC, if the total of four provisional payments is lower than 20% or more of the terminal tax, the corporate must pay the interest on late payment calculated from the day after the last day of the deadline for fourth-quarter tax payment to the date of actual payment of the insufficient tax amount compared with the terminal amount.

4. Amendment on rules relating to provisional CIT

In case the taxpayer executes a project of investment in infrastructure or housing for transfer or lease purchase and collect progress payments from customers that are in accordance with the law, provisional CIT shall be paid quarterly at the rate of 1% of the amount collect (Article 8.6(b)).

According to Circular No.151/2014/TT-BTC, the company shall pay CIT according to the difference between revenues and expenses (if the company has determined the expenses in proportion to recorded revenues) or at 1% of the revenue (if the company is not able to determine the expenses in proportion to recorded revenues).

5. Adding regulations on declaring CIT with the incentives eligible income.

Circular No.151/2014/TT-BTC ruled that the taxpayer must submit the tax declaration dossier with the income eligible for CIT incentives to the tax authority where the headquarter is placed.

However, with this new decree, the taxpayer can submit the tax declaration dossier to the tax authority of the province where the dependent unit or business operates, not only at the headquartered place (Article 11.1(h)).


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