Articles
Interim remedies for the Vietnamese economy

17 - 06 - 2013
by Nguyen Chi Trung, Associate *)  

The Ministry of Finance issued Circular No. 16/2013/TT-BTC, dated 8 February 2013, guiding implementation of Resolution No. 02/NQ-CP, dated 7 January 2013, of the Government on several remedies for solving the business difficulties, assisting the market and resolving bad debts ("Circular 16"). Remedies addressed by Circular 16 are optional incentives regarding  corporate income tax (CIT), value added tax (VAT), land rent and land use fees.

 CIT

 Under Circular 16, the following enterprises will be entitled to an extension of CIT payment up to 6 months for the taxable CIT amount arising in the first quarter of 2013, and 3 months for the taxable CIT amount arising in the second and third quarters of 2013:

  •  Small and medium sized enterprises;
  • Enterprises hiring more than 300 employees and specializing in producing and processing agricultural products, forest products, aquatic products, garment, shoes, electronic accessories, building public infrastructures; and
  •  Enterprises investing in residential housing;

 VAT

 Under Circular 16, the following enterprises paying VAT according to the deduction method will be entitled to an extension of VAT payments of up to 6 months for the taxable VAT amounts arising in January, February and March of 2013:

  •  Small and medium sized enterprises exclusive of enterprises operating in the sectors of finance, banking, insurance, securities, lottery, gaming, goods production, services subject to special consumption tax;
  •  Enterprises hiring more than 300 employees and specializing in producing and processing agricultural products, forest products, aquatic products, garment, shoes, electronic accessories, building public infrastructures; and
  •  Enterprises investing in residential housing, and enterprises producing iron, steel, cement, brick or tile.

 Land rent

 Tenants that leased land from the State on an annual payment basis beginning prior to 31 December 2010 and whose  land rent has increased by at least two times the original land rent , will have their rents reduced by 50% in 2013 and 2014. If such reduction is insufficient to reduce the land rent to double the original land rent , the land rent will be further reduced until it is equal to double the original land rent.

 Land use fees (LUF)

 Investors in real estate projects who have been allocated land with the requirement of the payment of LUF by the State, but have not been able to pay the LUF due to financial difficulties, may delay such LUF payment for a period of up to 24 months from the payment date recorded in the payment notice issued by the tax authority without being subject to any penalty for payment delay.

 The incentives explicated by Circular 16 require eligible enterprises to opt for the incentive, they must conduct certain procedures and applications to enjoy the incentives.

 Circular 16 takes effect from 25 March 2013.

*) Please contact the authors at trung.nguyen@indochinecounsel.com if you wish to have more information or specific advice for the topic of this article.

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