Circular No. 106/2000/TT-BTC guides the reduction and exemption of various types of taxes for flood-stricken areas.

CIRCULAR

Guidelines for reducing and exempting various types of taxes

in flood-affected areas

In recent years, floods have repeatedly occurred in many regions across thecountry, causing losses to people and state assets, organizations, households,and individuals. At the same time, they have had negative impacts on productionand business activities, as well as the lives of organizations, households, andindividuals in flood-affected areas. Based on current tax laws and ResolutionNo. 15/2000/NQ-CP dated October 6, 2000 of the Government, the Ministry ofFinance provides guidelines for reducing and exempting various types of taxesfor organizations, households, and individuals in flood-affected areas asfollows:

I. Exemption and reduction of value-added tax:

1. For businesses that pay tax under the deduction method.

Input VAT for goods is determined promptly by the tax authority and fullydeducted. Output VAT is declared according to the actual amount of goods sold.If input VAT exceeds output VAT, the excess VAT will be refunded monthly.

Businesses and trading establishments that incur losses when paying VAT shallbe entitled to a tax reduction as stipulated in Article 28 of the Law on Value-Added Tax.

2. For individual traders who pay tax under the direct payment method or thefixed-rate method.

Depending on the extent of damage caused by floods to each individual trader,exemption from tax or a 50% reduction in tax payable for one or two months maybe considered. The People's Committee of provinces and centrally-administeredcities shall determine the extent of damage and specify the tax exemption andreduction measures.

II. Exemption and reduction of corporate income tax (CIT):

1. For enterprises and trading establishments, expenses incurred to remediatepost-flood consequences are recognized as reasonable costs for determiningtaxable income. If these reasonable costs are accounted for and there is no longerany taxable income, no CIT will be paid. If the enterprise or trading establishmentincurs a loss after accounting for all reasonable costs, this loss can be carriedforward to offset taxable income in future years (up to three years).

2. For individual traders in commerce and services, the exemption and reductionof CIT shall be implemented in accordance with Circular No. 24/2000/TT-BTC datedMarch 30, 2000 of the Ministry of Finance guiding the implementation of DecisionNo. 08/2000/QĐ-TTG dated January 17, 2000 of the Prime Minister regarding theexemption and reduction of CIT for individual traders in commerce and servicesaffected by natural disasters, fires, or unexpected accidents.

III. Exemption and reduction of land rental fees and real estate tax:

1. Exemption and reduction of land rental fees:

For production and trading establishments currently registered for landleasing contracts and paying land rental fees to the State, exemptions andreductions in land rental fees will be granted based on the extent of damage asfollows:

Production and trading establishments suffering damages exceeding 50% of thevalue of their assets, with post-flood consequences requiring a long period tostabilize production and business operations, shall be exempted from land rentalfees for one year.

Production and trading establishments suffering damages below 50% of the valueof their assets shall have their land rental fees reduced by 50% for one year.                             

2. Exemption and reduction of real estate tax:

For rural and urban households and trading establishments with declared areasfor real estate tax payments where houses and construction works have been sweptaway, lost, or collapsed due to floods, real estate tax will be exempted foroneyear.

For rural and urban households and trading establishments with declared areasfor real estate tax payments where houses and construction works have beendamaged by floods and require repair, real estate tax will be reduced by 50% foroneyear.

The People's Committee of provinces and centrally-administered cities shallspecify the criteria for assessing the extent of damage and the procedures forexempting or reducing real estate tax.     

IV. Exemption and reduction of agricultural land use tax for farminghouseholds in flood-affected areas:

The exemption and reduction of agricultural land use tax for farminghouseholds in flood-affected areas shall be implemented in accordance withCircular No. 79/2000/TT-BTC dated July 28, 2000 of the Ministry of Finance.

The People's Committee of provinces and centrally-administered cities shalldecide on the exemption and reduction of agricultural land use tax for farminghouseholds in flood-affected areas upon the proposal of the Director of theTaxation Department.

V. Implementation Organization:

1. The Chairperson of the People's Committees of provinces and centrally-administered cities shall be responsible:

Based on the provisions of tax laws and the above guidelines, directing taxauthorities and relevant departments at local levels to promptly organize theimplementation of tax reductions and exemptions for organizations, households,and individuals in flood-affected areas within their jurisdictions; Directinglocal information and propaganda agencies to strengthen the dissemination andexplanation of the government's tax exemption and reduction policies for flood-affected areas so that the public understands and complies with them.

Specifying detailed criteria for assessing the extent of damage to provide thetax authorities with grounds for considering tax exemptions and reductions foreach type of tax for organizations, households, and individuals in flood-affectedareas.

This circular takes effect from the date of signature and applies to allorganizations, households, and individuals affected by natural disasters in flood-affected areas nationwide./.