Without benchmark, 2021 CIT tax reduction not feasible: taxmen

1. Our company was established in August 2019 but there was no revenue generated in that year. In 2021, our annual revenue was less than VND200 billion ($8.55 million). Could we apply for a 30% CIT reduction according to the government's Decree 92/2021/ND-CP?

According to Decree 92/2021/ND-CP, enterprises with (i) revenue not exceeding VND200 billion in 2021 and (ii) a decrease in revenue compared to 2019 will be eligible for a 30% CIT reduction in 2021. The General Department of Taxation recently confirmed if taxpayers have no revenue generated in 2019 (i.e. there is no benchmark to determine the revenue decrease for 2021), then 30% CIT reduction to tax year 2021 will not be granted.

2. Our company was newly established from an investment project, which was licensed to be implemented in two phases. Phase 1 of the project has been complete and generated revenue from March 2022 while Phase 2 is still under construction. Could the input VAT incurred during the construction period of Phase 2 be eligible for a VAT refund?

According to the current regulation, in case a new investment project is registered to be implemented into multiple phases (which should be clearly stated under the Investment Registration Certificate), the input VAT incurred during the construction stage, after offsetting against the VAT payable at operation stage, could be refundable if the accumulated amount is from VND300 million ($12,800) and above.

3. Our company manufactures beverages for domestic sale. To boost sales, we offer trade discounts to distributors if the targeted purchase volume is achieved. The discounted value will be issued under a separate invoice at the end of the discount period. Should such a discount invoice be presented in negative or positive value?

In accordance with the current regulations, an invoice with negative value is only used to adjust the previously incorrect invoice for a downward adjustment. In case the company issues a separate invoice for trade discount, this is not an adjustment to an incorrect invoice and hence it should be presented in positive value. Of note, the description of the trade discount must be clearly stated on the invoice.

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