This document provides several instructions on how to implement the regulations on applying the Decree No. 68/2020 in the tax finalization year 2019 and the retroactive processing of accounts remaining in 2017 and 2018 as follows:
1. For the tax finalization year 2019:
- For enterprises that have already filed returns for finalization of taxes accrued in 2019 (briefly called 2019 tax finalization return) by the submission deadline which is earlier than March 31, 2020, they must provide supplements to their CIT finalization returns according to the provisions of the Decree No. 68/2020;
- Enterprises whose deadline for filing 2019 tax finalization period does not expire must comply with the amended and supplemented regulations in Decree 68/2020.
2. For the retroactive processing of accounts remaining in the CIT finalization period of the tax year 2017 and 2018:
a. Scope of application:
The retroactive processing of lending interest expenses governed by clause 3 of Article 8 in the Decree No. 20/2017/ND-CP for the tax year 2017 and 2018 will only be subject to point a of clause 3 of Article 8 in the Decree No. 20/2017/ND-CP amended by Article 1 in the Decree No. 68/2020, including the following specific regulations:
- Raising the limitation on interest expense from 20% to 30%;
- Applying the method of calculation of net interest expense (interest on borrowed funds minus (-) deposit or lending interest);
- Accounts remaining in 2017 and 2018 which are regulated in Point (b) (cost transition) and Point (c) (expansion of exemption beneficiaries) in the Decree No. 68/2020 will not be retroactively processed.
b. Setoff of CIT payments in 2017 and 2018:
On carrying out the re-assessment of the CIT amount payable according to the Decree No. 68/2020, in case of such amount is reduced, taxpayers will be entitled to the proportionate deduction from the relevant tax deferral (if any). Below are the specific regulations:
- Concerning tax amounts not yet reviewed or audited:
Taxpayers may set off CIT and corresponding CIT deferral difference against CIT amounts payable in 2020.
If the tax cannot be set off completely in 2020, it may be set off against CIT amounts payable in 5 consecutive years from 2020. After such duration, the remaining CIT amount will not be processed.
- Concerning tax amounts already reviewed or audited, and subject to review or audit conclusions and response decisions:
Taxpayers may request directly supervisory Tax Departments or Subdepartments to re-determine the CIT amount payable. Based on taxpayer's requests and relevant documents, including documents of enterprises and documents or records of inspection and audit teams, directly supervisory tax authorities carry out the re-determination of CIT amounts payable and corresponding deferrals to set off the differences against CIT amounts payable in 2020.
+ Where necessary, directly supervisory tax authorities cooperate with inspection and audit teams to review and determine data of taxpayers at tax authority’s offices.
+ Like the case in which CIT amounts have not yet been subject to inspection or review, if the tax cannot be set off completely in 2020, it may be set off against CIT amounts payable in 5 consecutive years from 2020. After such duration, the remaining CIT amount will not be processed.
c. Location and form of retroactive processing action:
- The re-determination of tax amounts payable is carried out at tax authority's offices while the re-inspection or re-audit thereof is not allowed to take place at taxpayer’s offices. Any re-adjustment in an inspection or audit conclusion and decision in 2017 and 2018 is not allowed.
- In case where tax-related administrative penalties have already been enforced, or administrative violations are subject to complaint procedures, tax-related administrative fines will not be adjusted.
Official Dispatch No. 2835/TCT-TTKT is issued on July 14, 2020.
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