Circular 71 guiding uncollected CIT for businesses performing socialized activities according to Resolution 63

Per the provision of Resolution 63 and later clarified in Official Letter 17143/BTC-TCT (“Official Letter 17143”) dated 02 December 2016 of the Ministry of Finance (“MoF”), the Government was considering the amendment of regulations on conditions to be considered as the establishments performing socialized activities (“EPSA”) as well as the possibility of applying Corporate Income Tax (“CIT”) incentives for socialization activities but have not yet met the requirements conditions as in prevailing regulations, namely Decision 1466/QD-TTg dated 10 October 2008 (“Decision 1466”), Decision 693/QD-TTg dated 06 May 2013 (Decision 693”). Until 2016, although the Prime Minister issued Decision 1470/QD-TTg dated 22 July 2016 (“Decision 1470”), according to the guidance in Official Letter 17143, EPSA have not been imposed any tax collections yet but waits until there is further document to amend, supplement or replace. On 10 August 2020, the Government issued Resolution 118/NQ-CP, accordingly the proposal of holding the CIT collection from EPSA failed these required conditions as mentioned in Resolution 63/NQ-CP (“Resolution 63”) of the Government dated 25 August 2014 would be ceased, the MoF was requested to promulgate documents guiding such collection.

On 17 August 2021, the MoF issued Circular 71/2021/TT-BTC ("Circular 71"), guiding CIT for the EPSA not yet imposed any tax collections according to Resolution 63.

The Circular has the following notable points:

• EPSA which fall into the conditions under the guidance of which Decision will be entitled to CIT incentives for the remaining time according to the provisions of CIT from the time they satisfy the requirements under such Decisions from the effective dates such Decisions;
• EPSA which do not satisfy the conditions specified in the above decisions are required to make an additional declaration of the remaining CIT amount (if any), self-recalculate the CIT payable amount, or being imposed tax collection by authorities according to current regulations. Of note, these EPSA are not imposed any administrative penalties for violations pertaining to taxation and interest on late payment calculated on the temporarily uncollected CIT amount until the effective date of this Circular (i.e. 01 November 2021).

This Circular takes effect from 01 November 2021.

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