At present, although the pandemic is being controlled well in Vietnam, the impacts affecting the business community have not stopped. At this point, in order to recover the economy, it is necessary to have essential support helping enterprises to have more cash flow to turn over production.

The total amount of tax and land rent expected to be extended under the policy of
extending the deadline of tax payment in the draft Decree was VND115,000 billion.
Source: Internet

Practical meaning to enterprises

After a period of formulation and consulting, the Government has promulgated a Decree on extending deadline of tax payment and land rent in 2021. This is good news for enterprises because the impact brought by this policy has been proved by the facts in 2020.

Thai Duong Rubber Joint Stock Company is one of many enterprises directly benefitting from the policy of extending the deadline of tax payment of the Government. Accordingly, due to the impact of Covid-19, in 2020, this enterprise faced many difficulties in terms of working capital.

In April 2020, Decree 41/2020/NĐ-CP on extending deadline for tax payment and land rent for people affected by Covid-19 that was issued and took effect immediately, has become a “lifebuoy” for this enterprise.

At that time, thanks to the extension of corporate income tax payment, the firm has saved nearly VND500 million for importing more raw materials and maintaining jobs for nearly 100 employees. The difficulties at that time have been solved, creating motivations for the company to maintain production and bounce back at the end of the year.

In 2020, the tax sector extended deadlines of tax payment and land rent in accordance with the Decree 41/2020/NĐ-CP with the amount up to VND67,236.6 billion. Therefore, the State revenue collection in the last months of 2020 and in the early months of 2021 is good.

Mr. To Hoai Nam, Permanent Vice Chairman and General Secretary of Vietnam Association of Small and Medium Enterprises, said that in 2020, the supporting policies on finance in which the issuance of extending deadline of tax payment and land rent was in time, supporting enterprises on financial sources in difficult times to maintain production.

Until now, the pandemic is still causing negative impacts on business operations, especially small and medium enterprises. Therefore, to help businesses and individuals have more financial resources for overcoming difficulties and supporting the market, contributing to achieving the economic growth target of the whole of 2021, it was necessary to continue implementing solutions on extending deadlines of tax payment and land rent.

Does not affect the results of revenue collection

Despite the advantages of positive growth in 2020, Vietnam still faces many difficulties and challenges. Therefore, the State's supportive policy through the mechanism of deferring the payment of taxes would help businesses and individuals have more financial resources to overcome difficulties due to the impact of the pandemic and business recovery.

According to the Ministry of Finance, the total amount of tax and land rent expected to be extended under the policy of extending the deadline of tax payment in the draft Decree was VND115,000 billion. However, like in 2020, the extension of tax payment and land rent would not affect the state revenue because the tax deferral mechanism is a non-interest loan of the State for businesses and individuals in order to have financial resources for production and business operation.

The policy did not reduce state revenue and was consistent with the Government's jurisdiction as prescribed by the Law on Tax Administration. Therefore, like in 2020, the extension of tax payment did not affect the state revenue collection in 2021.

Currently, the business community is looking forward to the promulgation of the Decree on deadline extension of tax payment and land rent every day, because in the first months of the year, the business situation has not prospered.

Moreover, this is the second year that enterprises are enjoying this policy, so they are no longer afraid of implementing procedures for extending deadline of tax payment and land rent.

According to the Ministry of Finance, taxpayers only need to submit a single application for extending deadline of tax payment and land rent to the tax authority. In particular, this procedure has been processed online on the national public service portal, the web portal of tax authority to facilitate people and businesses.