Circular No. 03/2009/TT-BTC guiding the implementation of reductions and extensions for payment of corporate income tax according to Resolution No. 30/2008/NQ-CP dated December 11, 2008 of the Government on urgent measures to prevent economic decline, maintain economic growth, and ensure social security.

CIRCULAR

Guidelines for implementing reductions and extensions of deadlines for corporate income tax payments pursuant to Resolution No. 30/2008/NQ-CP dated December 11, 2008 of the Government on urgent measures to prevent economic decline, maintain economic growth, and ensure social welfare,  social security

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Pursuant to the Enterprise Income Tax Law and related guiding documents;

Based on the Law on Tax Administration and guiding documents;

Based on Resolution No. 21/2008/QH12 of the 12th National Assembly on the State Budget for 2009;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Based on Resolution No. 30/2008/NQ-CP dated December 11, 2008 of the Government on urgent measures to prevent economic decline, maintain economic growth, and ensure social welfare;

The Ministry of Finance provides guidelines for implementing reductions and extensions of deadlines for corporate income tax payments for businesses facing difficulties in 2009 as follows:

 I. GENERAL PROVISIONS

1. Small and medium-sized enterprises shall be granted a reduction of 30% of the corporate income tax payable for the fourth quarter of 2008 and the year 2009 according to the provisions set out in Section II of this Circular.

Small and medium-sized enterprises are those that meet one of the following criteria:

- Registered capital recorded in the Business Registration Certificate or Investment Certificate currently in effect before January 1, 2009 does not exceed 10 billion VND; in the case of newly established enterprises from January 1, 2009, the registered capital recorded in the initial Business Registration Certificate or Investment Certificate does not exceed 10 billion VND.

Example 1: Enterprise A has an initial Business Registration Certificate issued on July 1, 2007, recording registered capital of 11 billion VND; the first amended Business Registration Certificate issued on June 30, 2008, records registered capital of 10 billion VND. Therefore, Enterprise A is determined to be a small and medium-sized enterprise and eligible for tax reduction under this Circular; if the amended Business Registration Certificate records registered capital of 15 billion VND, then Enterprise A does not qualify as a small and medium-sized enterprise (except in cases meeting the labor condition specified in point 2 of this clause) to be eligible for tax reduction and extension of corporate income tax payment deadlines under this Circular.

- Average number of employees used in the fourth quarter of 2008 does not exceed 300 people, excluding short-term contracts of less than three months; in the case of newly established enterprises from October 1, 2008, the number of employees receiving wages or compensation in the first month (with full 30 days) with revenue not exceeding 300 people.

The average number of employees due to increases or decreases in the fourth quarter of 2008 is determined using a weighted average method based on the number of months, starting or ending work for the enterprise counted monthly.

Example 2: Enterprise B has 302 employees listed on the wage and compensation roster in October 2008. In November 2008, it hired two additional employees. In December, ten employees left. Thus, the average number of employees due to increases or decreases in the fourth quarter of 2008 is calculated as:

 (2 employees x 2 months - 10 employees x 1 month)/3 months = (-) 2 employees.

Average number of employees used in the fourth quarter of 2008 = 302 employees - 2 employees = 300 employees.

Therefore, Enterprise B qualifies as a small and medium-sized enterprise eligible for tax reduction and extension of corporate income tax payment deadlines under this Circular.

Example 3: Enterprise C is a newly established enterprise with its initial Business Registration Certificate issued in October 2008. December 10, 2008, was the first day of revenue generation. The number of employees listed on the wage and compensation roster in January 2009 was 295. Therefore, Enterprise C qualifies as a small and medium-sized enterprise eligible for tax reduction and extension of tax payment deadlines under this Circular.

2. Small and medium-sized enterprises as guided in Clause 1 of this Section and enterprises engaged in production, processing, and manufacturing of agricultural, forestry, fishery, textile, footwear, and electronic component products shall be granted an extension of tax payment deadlines according to the provisions set out in Section III of this Circular.

3. The reduction and extension of corporate income tax payment deadlines as guided in this Circular apply to enterprises that have implemented accounting systems, invoices, and other documents and have registered tax payments through declarations.

II. REDUCTION OF CORPORATE INCOME TAX

1. Small and medium-sized enterprises shall be granted a reduction of 30% of the corporate income tax payable for the fourth quarter of 2008 and the year 2009. Specifically, as follows:

a) The amount of corporate income tax reduced for the fourth quarter of 2008 is 30% of the corporate income tax payable for the fourth quarter of 2008. Enterprises shall determine the corporate income tax payable for the fourth quarter of 2008 as follows:

- If the revenue, expenses, and taxable income for the fourth quarter of 2008 can be identified, the corporate income tax payable for the fourth quarter of 2008 shall be determined based on the taxable income of the fourth quarter of 2008 recorded by the enterprise.

- If the revenue, expenses, and taxable income for the fourth quarter of 2008 cannot be identified, the corporate income tax payable for the fourth quarter of 2008 shall be determined as follows:

b) The amount of corporate income tax reduced for 2009 is 30% of the corporate income tax payable for the year.

When declaring provisional corporate income tax payments for the fourth quarter of 2008 and each quarter of 2009, enterprises shall self-determine the provisional tax reduction amount at 30% of the provisional tax payment for the quarter. When settling the corporate income tax for 2008 and 2009, enterprises shall self-determine the corporate income tax reduction amount.

In cases where enterprises are currently benefiting from corporate income tax incentives, the 30% reduction shall be applied to the remaining tax after deducting the tax benefits granted according to the Corporate Income Tax Law.

Example 4: In the tax period of 2009, Enterprise X has taxable income of 500 million VND. Enterprise X is currently applying for preferential tax rate of 15% and is entitled to a reduction of 50% of the corporate income tax payable. The remaining corporate income tax payable is determined as follows:

- Corporate income tax paid at the rate of 15% is:

500 million VND x 15% = 75 million VND;

- Corporate income tax payable after being reduced by 50% is:

75 million VND x 50% = 37.5 million VND;

- Additional reduction of corporate income tax by 30% according to this Circular is:

37.5 million VND x 30% = 11.25 million VND;

- Remaining corporate income tax payable is:

37.5 million VND - 11.25 million VND = 26.25 million VND.

2. Procedure and formalities for implementation: Enterprises shall declare, pay taxes, and settle corporate income tax according to the current forms.

a) Self-declaration of provisional quarterly tax for Q4 2008 and each quarter of 2009:

Enterprises shall supplement two lines before the declaration commitment line on the provisional corporate income tax declaration form as follows:

- Corporate income tax reduced according to Resolution No. 30/2008/CP = (Corporate income tax payable in the period x 30%);

- Corporate income tax still payable in the period = (Corporate income tax payable in the period x 70%);

In case enterprises choose the method of determining the amount of corporate income tax reduced based on revenue, expenses, and taxable income of Q4 2008, enterprises must prepare a report on business results of Q4 2008 and submit it with the declaration.

b) Self-declaration of final settlement tax for 2008:

Enterprises shall supplement two lines before the declaration commitment line on the final settlement corporate income tax declaration form as follows:

- For cases where the amount of corporate income tax of Q4 2008 can be determined:

+ Corporate income tax reduced according to Resolution No. 30/2008/CP = (corporate income tax of Q4 2008 x 30%);

+ Corporate income tax still payable in 2008 = (Corporate income tax payable in 2008 - Corporate income tax reduced according to Resolution No. 30/2008/CP);

- For cases where the amount of corporate income tax of Q4 2008 cannot be determined:

+ Corporate income tax reduced according to Resolution No. 30/2008/CP = [(Corporate income tax payable in 2008 x 30%)/4].

+ Corporate income tax still payable in 2008 = (Corporate income tax payable in 2008 x 92.5%).

c) Self-declaration of final settlement tax for 2009:

Enterprises shall supplement two lines before the declaration commitment line on the final settlement corporate income tax declaration form as follows:

- Corporate income tax reduced according to Resolution No. 30/2008/CP = (Corporate income tax payable in 2009 x 30%);

- Corporate income tax still payable in 2009 = (Corporate income tax payable in 2009 x 70%).

III. EXTENSION OF PAYMENT DEADLINE FOR CORPORATE INCOME TAX:

1. The amount of corporate income tax eligible for extension of payment is determined as follows:

a) For small and medium-sized enterprises, it is the provisional quarterly corporate income tax for 2009 after being reduced according to the guidelines set out in Section II of this Circular.

b) For enterprises engaged in production, processing, manufacturing of agricultural, forestry, fishery products, textiles, footwear, electronic components, it is the provisional quarterly corporate income tax for 2009 from these activities.

In case enterprises cannot determine the provisional quarterly corporate income tax of production, processing, manufacturing activities from the provisional quarterly corporate income tax of other activities, the provisional quarterly corporate income tax of production, processing activities eligible for extension will be determined based on the percentage ratio between the total revenue of production, processing activities and the total revenue of the enterprise in 2008.

2. The period for extension of payment is nine months from the deadline for tax payment as stipulated in the Law on Tax Administration, specifically:

- Quarterly provisional tax for Q1 2009 is extended to the latest date of January 29, 2010;

- Quarterly provisional tax for Q2 2009 is extended to the latest date of April 29, 2010;

- Quarterly provisional tax for Q3 2009 is extended to the latest date of July 30, 2010;

- Quarterly provisional tax for Q4 2009 is extended to the latest date of October 29, 2010.

3. Procedure and formalities for extension of payment: Enterprises shall fill out the quarterly provisional corporate income tax declaration form according to the current regulations, and add the requested extension payment deadline in the commitment line of the declaration.

4. During the period of extended payment, enterprises will not be considered as late in tax payment and will not be subject to administrative penalties for late payment of taxes on the extended amount.

IV. IMPLEMENTATION

1. This Circular takes effect 45 days from the date of signature.

2. In case of any difficulties during implementation, organizations and individuals are requested to promptly report to the Ministry of Finance for further study and supplementary guidance.