Decree 41 serves to support companies during the Covid-19 Epidemic. It sets out which taxes (VAT, CIT, PIT) and land rent can be deferred for how long and in which sectors. It is worthwhile to be aware that the tax authorities may not agree with deferral as requirements are not met and penalties might apply. Furthermore, if the fiscal year is not the same as a calendar year it is not clear if deferral will be possible.

10 Apr 2020



The rapid spread of Covid-19 across the globe has dramatically impinged on the worldwide economic health, and Vietnam is no exception. On 1 April 2020, Vietnam’s Prime Minister officially declared Covid-19 a nationwide pandemic (Pandemic). To support businesses during this hard period the Vietnamese Government issued Decree 41/2020/ND-CP (Decree 41) on deferral of tax and land rent payments for those affected by the Pandemic.

Decree 41 took effect on 8 April 2020, its signing date.

In this update, we will present relevant conditions under which extension of tax and land rent payments in accordance with Decree 41 might be granted.

1. Eligible Subjects

Under Decree 41, the extension of tax and land rent payments is applied to enterprises, organisations, business households and individuals highly susceptible to the Pandemic, including:

1. Micro- and small enterprises;

2. Commercial banks, other credit institutions and branches of foreign banks supporting customers affected by the Pandemic under the regulations issued by the State Bank of Vietnam; and

3. Enterprises, organisations, business households and individuals running a business in certain fields, including, inter alia:

- Production and manufacturing sectors: agriculture, forestry and aquaculture; food; garment and textile; wood, straw and plastic products; paper products; metallurgy, mechanical engineering; electronic products; motors; and construction;

- Services sectors: transportation; accommodation and catering services; education; healthcare; real estate; labour and employment; tourism; sports, artists and entertainment; and

- Prioritised sectors: manufacturing of prioritised auxiliary industry products and key mechanical products.

It is worth noting that for a taxpayer mentioned in item 3 in section 1 before to be eligible for the extension under Decree 41, such taxpayer must have business activities and turnover arising in 2019 or 2020 in the said business fields.

In case only part of a taxpayer’s business activities belongs to the eligible business fields listed in Decree 41, deferral is possible for all due taxes of such taxpayer, regardless from which business activities such payables are sourced.

2. Which Taxes Qualify for Which Entities?

2.1 Enterprises and Organisations
2.1.1 VAT

The extension period for VAT is 5 months as of the last VAT payment due date prescribed by law and is applicable in case of:

- Monthly declaration: from March to June 2020, where March needs to be settled by 20 September and so on for the other monthly payments;

- Quarterly declaration: for Quarter 1 and Quarter 2 of 2020, where Quarter 1 needs to be settled by 30 September and Quarter 2 by 30 December.

Note that the extension does not apply to VAT for import. Important to note is also that lodgments are still required to be performed on time.

2.1.2 CIT

The extension period for CIT is 5 months as of the last CIT payment due date prescribed by law and is applicable to:

- additional CIT arising from the tax finalisation for the 2019 tax assessment period, which was due on 30 March 2020; and

- CIT payables for Quarter 1 and Quarter 2 of the 2020 tax assessment period which will be due on 30 April and 30 July respectively.

In case the additional CIT has already been paid, it can be offset against any other tax payable amounts. To request for adjustment, f orm C1-11/NS from Circular 84/2016/TT-BTC needs to be used.

2.2 Business Households and Individuals

The extension is applicable to VAT and PIT due in 2020 and must be settled no later than 31 December 2020.

3. Fiscal Year Different from Calendar Year

Important to note is that in case a taxpayer has registered that the fiscal year is different from the calendar year, the tax assessment period of such taxpayer shall be determined in accordance with its registered fiscal year. For example, if the fiscal year has been registered from 1 July to 30 June, then the tax assessment period of 2019 is from 1 July 2019 to 30 June 2020, which has not been finalised, and the Quarter 1 and Quarter 2 of the tax assessment period of 2020 is Quarter 3 and Quarter 4 respectively of the calendar year 2020, which has not been due yet. Accordingly, the provisions of Decree 41 may not be directly applicable in such case. It is advised to consult with the relevant tax authority for further clarification and instructions.

4. Land Rent

As per Decree 41, the payment extension applies to land rents payable in the first tranche of 2020 for lands directly leased from the State under the form of an annual rent payment. The extension term is 5 months as of 31 May 2020.

5. Extension Applications

5.1 Deadline

The deadline for filing an extension request with the tax relevant authorities in accordance with Decree 41 is 30 July 2020. A form attached to Decree 41 shall be used for extension applications.

5.2 Unjustified Extension

It is noteworthy that approval for extension from a competent tax authority is not required to trigger the payment extension to which a taxpayer is entitled. However, if the tax authorities have a ground to determine that a taxpayer is not entitled to the extension, the tax authorities shall notify such taxpayer in writing that the extension period has finished, and the taxpayer must pay the due amounts of taxes and land rent, and may have to pay penalties for late payment in accordance with the laws.

Contact Information

Should you have any questions, please feel free to contact our lawyers at the below email addresses.

Mark Oakley / Managing Partner

Phuong Huynh / Senior Associate

© 2020 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

Download pdf: Decree 41 Defers Tax and Land Rent Payment to Support Businesses During The Covid-19 Pandemic