DEADLINE EXTENSION PROPOSED FOR TAX PAYMENT FROM MARCH 2023

The Ministry of Finance officially submitted Report 43/TTr-BTC to the Government on a draft decree on the extended deadline for payment of VAT, CIT, PIT and land rent in 2023. Notably, the report had some changes compared to the original draft, including the deadline extension for VAT payment in 2023, starting from March instead of January 2023.

No extension for banks

In the report, the Ministry of Finance said, since the fourth quarter of 2022, domestic and global economic developments have become more complicated, with many recent forecasts of a potential recession in some major economies. Given the broad opening and intensive integration of Vietnam's economy, global fluctuations will certainly leave a strong impact on its economic recovery and business operations. The rapid monetary tightening adopted by the State Bank of Vietnam (SBV) has resulted in draining market liquidity and rapidly rising interest rates that have led to limited access to credit for companies in 2023. In order to support businesses and people to overcome difficulties in 2023 to maintain production and business while still ensuring minimal impact on the state budget, the Ministry of Finance underlined the need for a solution to extend tax and rent payment deadlines. The ministry submitted to the Government a draft decree on deadline extension for payment of value-added tax (VAT), corporate income tax (CIT), personal income tax (PIT) and land rent in 2023.

Taxpayers eligible for extension are specified in Article 3 of Decree 34/2022/ND-CP dated May 28, 2022 of the Government, but “foreign credit institutions and bank branches” are excluded. According to the Ministry of Finance, the business performance of state-owned commercial banks and joint stock commercial banks was quite good in 2022.

Among state-owned commercial banks, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) reported a 39% growth in pre-tax profit as compared to 2021. Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) made a pre-tax profit of VND20,500 billion. Vietnam Bank for Agriculture and Rural Development (Agribank) topped the profit target of VND20,000 billion assigned by the Ministry of Finance and the State Bank of Vietnam in 2022, an increase of about 40% compared to the previous year. Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) posted a consolidated profit before tax of VND23,190 billion, up 70% year on year.

Among joint stock commercial banks, Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) recorded a profit before tax of VND5,690 billion in 2022, up 56% year on year and equal to 118% of the annual plan. Tien Phong Commercial Joint Stock Bank (TPBank) made VND7,828 billion of pre-tax profit in 2022, a year-on-year growth of 30%. In 2023, the SBV set a credit growth of 14-15%, with actual market demands taken into account for future revisions.

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

VAT extension starts from March

Notably, in the report, the Ministry of Finance said that the deadline for February VAT payment was over, which ended on March 20, 2023. Therefore, to ensure full extension benefits for taxpayers, the ministry proposed extending the tax payment deadline from March to August instead of from January to June. Specifically, a 6-month payment extension is applied for VAT arising from March to May and the first quarter of 2023; a 5-month extension for VAT in June and the second quarter of 2023; a 4-month extension VAT in July 2023; and a 3-month extension for VAT in August 2023. Following the above plan, the total amount of VAT extended from March to August 2023 and the first and second quarters was estimated at VND64,000-65,000 billion. However, the state budget revenue in 2023 will not decrease because taxpayers must fulfill their tax payments to the State Budget before December 31, 2023.

Source: VCCI