Vietnam

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Return to homepage  |  Last updated: 18 November, 2020

Vietnam plans to assist companies struggling amid the coronavirus outbreak with tax breaks, delayed tax payments and reductions in land lease fees. The assistance package totals USD 1.16 billion.

A credit support and fiscal package of 280 trillion VND ($12 billion) together. The former includes measures such as debt restricting and preferential interest rates, while the latter still needs to be confirmed.

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Suspension of social insurance payments

• According to Directive 11/CT-TTg dated 4 March, 2020, the Prime Minister requested the Vietnam Social Insurance to assume the primary responsibility and coordinate with the concerned agencies in guiding the suspension of payment of social insurance for those who are affected by the Covid-19 epidemic until the end of June or December 2020 without interest charge for late payment. Vietnam Social Insurance is drafting an official ruling on this issue.
  

• Central Bank has reduced policy rates by 0.25-1 percentage point
• Several commercial banks have already lowered interest rates for businesses affected by COVID-19.

The Decree 68/2020/ND-CP dated 24 June 2020 to increase the cap of deductible interest expenses under Clause 3 Article 8 of Decree 20/2017/ND-CP and a draft decree on invoicing.

Regarding deductible interest expenses According to the draft Decree:

• To increase the interest deductibility cap from the current 20% to a proposed 30% of earnings before interest, tax, depreciation and amortization (“EBITDA”).
• The Decree also clarifies that interest expense subject to this new 30% EBITDA cap is a net interest amount. That is to say, interest expenses can now be offset against interest income. Furthermore, capitalized interest is not included within the meaning of interest that is subject to this cap.
• Regrettably, un-deducted interest cannot be carried forward and used in future years.
• The cap shall not be applied to credit institutions incorporated under the Law on Credit Institutions, insurance companies incorporated under the Law on Insurance Trading, security companies incorporated under Law on Securities, loans under Official Development Assistance programs, the Government’s concessional loans whereby the Government acquires foreign loans to re-lend to enterprises.
• It was approved by the Prime Minister and to be applied for the 2019 financial year. 
  

Regarding e-invoicing

• According to the draft Decree, the proposed deadline for implementation of compulsory e-invoicing will be extended to 1 July 2022 (from the current deadline of 1 November 2020). This is in line with the new Law on Tax Administration 2019.

Export of mask

• Some restrictions on exportation of masks have been implemented.

Customs Duties

• The MoF issued Decision 155/QD-BTC promulgate the list of goods items which are exempt from import tax in service of prevention and fighting of COVID-19 and the Official Letter No: 864/TCHQ-TXNK to detail the Decision 155.

Customs audit

• According to following Decision No. 1616/QD-TCHQ dated 16 June 2020, Customs will suspend checking and assessing the compliance with the law of enterprises in 2020 including post-customs clearance audit and specialized inspection.
•  Circular 47/2020/TT-BTC  dated 27 May 2020 allowed late submission of Certificate of Origin to 180 days (currently 30 days) and applied for shipment registration from 23 January 2020 onwards due to the COVID-19.

• Textiles businesses, including several with no prior experience, have begun producing antibacterial masks after authorities announced a daily need of 10 million.
• OL: 5486/TCHQ-VP dated 19/08/2020 about strengthening methods of combatting covid-19.

Main sources of information

• Ministry of planning and investment
• Vietnam: Tax relief measures (COVID-19)

Tax: Thuy Duong Hoang – dthoang@kpmg.com.vn
Restructuring: John Ditty – jditty@kpmg.com.vn
Legal: Richard Stapley-Oh – rstapleyoh@kpmg.com.vn