Tax Alert - Decree 114 on the reduction of CIT payable for fiscal year 2020

On 25 September 2020, the Government issued Decree 114/2020/ND-CP providing further guidance for Resolution 116/2020/QH14 ("Resolution 116") on reduction of Corporate Income Tax ("CIT") for fiscal year 2020 which is applicable for enterprises, co-operatives, public non-business units, and other organizations whose revenues do not exceed VND 200 billion.

In comparison with Resolution 116, the Decree provides further guidance as below:

  • The CIT reduction shall be applied for fiscal year 2020.
  • If taxpayers operate for less than 12 months in fiscal year 2020 due to the following events: company establishment, transformation of business type, transformation of form of ownership, merger and acquisition, company split, dissolution, bankruptcy, then the total revenue will be calculated based on the number of months in operation. In case the aforementioned events happen in the middle of a month, that month shall be considered as a full month of operation.
  • In case the first or the last fiscal year lasts more than 12 months per regulation, the calculation of total revenue and amount of tax reduction shall only be applicable for fiscal year 2020 (full of 12 months).
  • The 30% reduction of CIT is applied in specific cases as below:
    • The taxpayers can apply the tax reduction for the quarterly temporarily calculation and payment of CIT if the expected total revenue in fiscal year does not exceed VND 200 billion;
    • The 30% reduction of CIT shall be applied for the taxpayers' total income, including types of incomes that are normally excluded from applying incentive such as income from capital transfer, real estate transfer, and income from services subject to special consumption tax, etc.;
    • In case additional CIT payable arises as a result of supplemented/revised declaration or tax collection decision of competent authority, such additional CIT payable shall also be entitled to 30% CIT reduction;
    • If as a result of a tax audit, it is found that taxpayers are not eligible for the tax relief or the CIT paid for fiscal year 2020 is less than the actual amount of CIT payable, taxpayers shall have to pay the under-declared amount and the corresponding penalty and late payment interest as per regulations.
  • At the CIT finalization process for fiscal year 2020, taxpayers must declare the amount of reduced CIT on the form attached to this Decree.



We do trust the above points are notable and sufficient, but should you have any questions or need a deeper discussion on this issue, please do not hesitate to contact us.

Download full issue in English and Vietnamese below


[ENG] Mazars Vietnam_Tax Alert_Decree 114 on the reduction of CIT payable for fiscal year 2020_October 2020
[ENG] Mazars Vietnam_​Tax Alert_​Decree 114 on the reduction of CIT payable for fiscal year 2020_​October 2020
[VIE] Mazars Vietnam_Tin Thuế_Nghị định 114 hướng dẫn về giảm thuế TNDN phải nộp trong năm 2020_Tháng 10-2020
[VIE] Mazars Vietnam_​Tin Thuế_​Nghị định 114 hướng dẫn về giảm thuế TNDN phải nộp trong năm 2020_​Tháng 10-2020