MoF proposes extending payment deadline of tax and land rent in 2023 to support businesses

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It is necessary to provide a solution on extending the payment deadline of tax and land rent, creating favorable conditions for businesses. Photo: Hoai Anh

Accordingly, the Ministry of Finance has submitted report No. 43/TTr-BTC to submit to the Government a draft Decree on extending the payment deadline of value-added tax (VAT), corporate income tax (CIT), and personal income tax (PIT) and land rent in 2023.

Credit institutions and foreign banks will not have payment deadline extended

In the report, the Ministry of Finance said that from the fourth quarter of 2022, the domestic and foreign economic situation has become more complicated. There are some forecasts about the recession risk of some major economies.

In the context of Vietnam's economy having great openness and deep integration, fluctuations in the external environment will certainly have a great impact on the recovery of the domestic economy and the operation of enterprises. The rapid tightening of monetary policy by the State Bank of Vietnam has resulted in a narrowing of market liquidity and a rapid increase in interest rates, thus limiting the credit access of many businesses. This is a big shock, threatening liquidity, maintaining cash flow to pay due debts and securing capital for business, especially for businesses in the fields of seafood, leather and footwear, textiles, and wood, which are facing difficulties in seeking orders for 2023.

The Ministry proposes to continue extending the payment deadline of tax and land rent for the subjects specified in Article 3 of Decree No. 34/2022/ND-CP dated May 28, 2022, but excluding “credit institutions and foreign bank branches”. The reason given by the Ministry is due to the fact that the income of state-owned commercial banks and joint-stock commercial banks in 2022 was quite successful.

For example, for the group of state-owned commercial banks, the separate pre-tax profit of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) increased by 39% compared to 2021; Joint Stock Commercial Bank for Industry and Trade of Vietnam (VietinBank) achieved a separate pre-tax profit of VND 20,500 billion; Vietnam Bank for Agriculture and Rural Development (Agribank) completed and exceeded the profit target of VND 20,000 billion assigned by the Ministry of Finance and the State Bank in 2022, up about 40% compared to the previous year; Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) achieved a consolidated pre-tax profit of VND 23,190 billion, up to 70% compared to 2021.

For the group of joint-stock commercial banks, Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) recorded pre-tax profit in 2022 of VND 5,690 billion, up 56% over the same period of the previous year, and meeting 118% of the year plan; Tien Phong Joint Stock Commercial Bank (TPBank) earned VND 7,828 billion in pre-tax profit for 2022, up about 30% compared to 2021.

Therefore, the Ministry of Finance proposed not extending the tax and land rent payment deadline in 2023 for credit institutions and foreign bank branches.

About VND110 trillion is extended

Regarding the extension mechanism for VAT, the Ministry of Finance said that the payment dealine in February of VAT is overdue (March 20, 2023). Therefore, to ensure the benefits for taxpayers to fully enjoy the extension policy, the Ministry of Finance proposes that instead of extending the VAT payment deadline from January to June, it will be extended from March to August.

Specifically, it will apply a 6-month extension for VAT amounts from March to May and the first quarter of 2023; 5-month extension for the VAT amount of June and the second quarter; 4-month extension for the VAT amount of July; and 3-month extension for the VAT amount of August.

Following the plan, the total amount of VAT extended from March to August 2023 and the first and second quarters of 2023 is about VND64,000-65,000 billion. However, the state budget revenue for 2023 will not decrease because enterprises must pay the tax before December 31.

For CIT, the Ministry suggests extending the payment deadline for the temporarily paid CIT amount of the first and second quarters of the tax period in 2023. The 3-month extension will be applied from the end of the CIT payment deadline under the Law on Tax Administration.

According to the plan, the estimated amount of CIT temporarily paid in the first quarter and second quarter of 2023 will be extended to about VND42,800-43,600 billion, and the state budget revenue in 2023 will not decrease.

For business households and individuals, the Ministry proposes extending the payable VAT and PIT amount deadline in 2023. The Ministry said that the total extended tax amount is about VND272 billion. Business households and individuals will pay the tax amounts subject to extension no later than 30 December 2023.

For land rent, as per provisions of Decree No. 126/2020/ND-CP, the annual land rent is paid in two periods (50% of land rent must be paid in the first period no later than May 31, the remaining amount must be paid no later than October 31 every year).

Therefore, the Ministry proposes to extend payment time limits for the payable land rent for the first period of 2023 with respect to relevant enterprises, organizations, business households and individuals to which land is leased directly by the State in the form of annual land rent payment.

The extension period is six months from May 31 to November 30. The extended amount is estimated at about VND3,500 billion. However, the state revenue of 2023 will not fall because businesses, business households, and individuals must pay the rent before November 30.

The extension of the payment deadline for tax and land is an urgent solution that needs to be issued immediately to promptly support businesses and people, the Ministry of Finance submits to the Government for approval of the effective date of the decree from the signing date.