New CIT Payment Deferral Incentives for SMEs

A decision concerning small and medium-sized enterprises’ (SMEs’) corporate income tax was published, and thereby become effective, on April 6, 2011. This decision from the Vietnamese prime minister allows SMEs to defer their CIT settlements of one year. This new incentive should help the SMEs to overcome their hardships and also stimulate economic development in 2011.

The enterprises entitled to this extension are the SMEs defined in Decree 56/2009/ND-CP: according to the size of their total capital or to their average annual number of laborers, those criteria requirements varying depending on the sectors of activity of the company. In any case, a SME’s capital and number of laborers cannot be higher than VND100 billion or 300 persons (for companies in the trade and services sector, those criteria’s maxima are VND50 billion and 100 persons).
Also, affiliates owned at more than 50 percent by a parent company are not eligible for this tax payment deferral. Finally, profits coming from some types of activities (property trading, finance, banking, insurance, securities, lottery trading activities or services subject to special sales tax) are not concerned by this incentive.

According to the recent decision offering the SMEs to defer their CIT payments, the tax has to be paid as follows:

•1st Quarter 2011 provisional CIT: before April 30, 2012
•2nd Quarter 2011 provisional CIT: before July 30, 2012
•3rd Quarter 2011 provisional CIT: before October 30, 2012
•4th Quarter 2011 provisional CIT and 2011 final CIT : before March 31, 2013.

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