Vietnam Chamber of Commerce and Industry (VCCI) has just commented on the Draft Circular guiding Corporate income tax for socialization establishments which have not yet been collected taxas stipulated inthe Government Resolution 63/NQ-CP dated August 25, 2014.

The VCCI has just commented on the Draft Circular guiding Corporate income
tax for the socialization establishment that has not yet been collected tax as
stipulated in the Government Resolution 63/NQ-CP. 

New detailed list

According to the draft, socializationestablishments that are established before the effective date of the Government Decision 1470/QD-TTg dated July 22, 2016 and do not meet the conditions under the detailed list of regimes, scale criteria, standards of establishments implementing socialization in the fields of education-training, vocational training, health, culture, sports, and environment issuedtogether with Decision 1466/ QD-TTg dated October 10, 2008, Decision 693/QD-TTg dated May 6, 2013 of the Prime Minister, shall make additional declarations of insufficient corporate income tax or shall be collected tax arrears.

In addition, Decision 1470 stipulates that “during the performance, the Ministry of Finance shall lead and work with relevant ministries and agencies in proposing the promulgation of a new decision to replace Decision 1466/QD-TTg dated October 10, 2008 of the Prime Minister, complying with the requirements of socialization and socio-economic development of the country”.

According to the VCCI, the criteria and standards stipulated in the list of decisions 1466, 693, 1470 still have shortcomings (especially in the digital transformation trends in current education and training, the norms of trainers, land, facilities are no longer traditional training models).

Therefore, the VCCI said it is necessary to consider issuing a new decision to replace the list instead of revising each criterion and standard in many current documents. In addition, some businesses proposed not to collect corporate income tax for socialized establishments until the new list of regimes, scale criteria and standards is issued. When the new list is issued, VCCI recommends that the tax collection shall comply with the new list instead of complying with the former list.

Specific guidance on criteria stated in Decisions

Decision 1470 amends some criteria and standards as stipulated in the list of Decision 1466. Accordingly, it provides that “other contents in the list of regimes, scale criteria, standards of establishments implementing socialization in the fields of education-training, vocational training, health, culture, sports, and environment,issued together with Decision 1466/ QD-TTg dated October 10, 2008 of the Prime Minister and are not amended and supplemented in this decision, are still valid”.

According to the VCCI, there are noprovisions in Decision 1470 mentioning Decision 693. Therefore, the above provisions in Decision 1470 can lead to an understanding that the criteria and standards in the list of Decision 1466 amended in Decision 693 shall not be applied, and the criteria, standards in the list of Decision 1466 shall be applied.

Thus, there will be the situation that the socialization establishment meets the conditions in Decision 693 but it does not meet conditions in Decision 1470. VCCI takes the sample, Decision 1466 stipulates that the non-public university and college must meet the criteria of 55m2 of land per student; this criterion is amended in Decision 693 to 2m2 of construction floor per student.

If Decision 1470 does not mention Decision 693 but only mentions the criteria of Decision 1466, non-public university and college must meet the criteria of 55m2 of land construction floor per student instead of 2m2 construction floor per student in accordance with Decision 1470.

Therefore, VCCI said that the guidance on the application of the criteria of the above decisions should be issued to ensure consistency.

Consider tax payment deadline

Regarding tax payment, Clause 4, Article 2 of the draft stipulates that the socialization establishment must pay tax when the circular takes effect. However, VCCI said that in the context ofthe Covid-19 pandemic, the collection of corporate income tax arrears will cause significant difficulties for taxpayers.

Therefore, VCCI suggested the Ministry of Finance consider the tax payment deadline when the circular takes effect for these establishments to fulfill their tax obligations.

Although this regulation has been explained by the drafting agency that, “the Law on Tax Administration and its guiding documents stipulate conditions, responsibility of taxpayer for gradual tax payment and competency for handling of gradual tax payment”.

However, VCCI said that according to the tax law, in order to be allowed to pay tax debt gradually, the taxpayer must have a guarantee from a credit institution and pay a late payment interest rate of 0.003%/day of the tax late payment amount. This regulation does not create conditions for the socialization establishment subject to be collected tax arrears, while the establishments’ operation is encouraged by the State.