LEGAL REGULATIONS ON LICENSE TAX IN 2020

On February 25th, 2020, the Government issued a new decree on license tax – Decree 22/2020/ND-CP amending and supplementing Decree 139/2016 regulating license tax.

Specifically, this Decree adds 3 cases of exemption from license fees: (Point c, Clause 1, Article 1 of Decree 22/2020/ND-CP)

“8. License tax exemption in the first year of establishment or out of production and business activities (from January 1st to December 31st) for:

  1. a) Newly established organizations (granted new tax code, new business code).
  2. b) Family households, individuals and groups of individuals that are first engaged in production and business activities.
  3. c) During the license tax exemption, organizations, households, individuals and groups of individuals establish branches, representative offices and business locations, branches, representative offices and business locations are exempt from license fees for the duration of organizations, households, individuals and groups of individuals are exempt from license tax.”

This Decree takes effect from February 25th, 2020. Therefore, enterprises established after February 25th, 2020 should note this, do not need to pay license fees for the first year. Any enterprise established before February 25th, 2020 is still subject to licensing tax in accordance with Decree 139/2016/ND-CP.

 

DECLARATION AND PAYMENT OF LICENSE TAX IN 2020:

I. License tax declaration dossiers: License tax declaration forms made according to the form issued together with Decree 139/2016/ND-CP.

II. License tax payment deadline:

“1. Declaring a one-time license tax when the new fee payer comes out of production, business or newly established operation.

a) The tax payer has just started a production, business or newly established operation; Small and medium-sized enterprises moving from business households shall declare license tax and submit Declaration form to tax agencies directly managing them before January 30th of the year after the year of new production or business activities or newly established enterprises.”

(Clause 3, Article 1 of Decree 22/2020/ND-CP)

“4. The deadline for paying license tax is January 30th annually.

a) Small and medium-sized enterprises transformed from business households (including branches, representative offices, business locations) to the end of the license fee exemption period (the fourth year from the year of establishment) pay license fees as follows:

– If the license tax exemption period ends within the first 6 months, the deadline for paying the license tax is the July 30th at the end of the exemption period.

– In case of the end of the license fee exemption period within the last 6 months, the deadline for paying license tax is the January 30th of the year preceding the year of ending the exemption period.

b) Households, individuals or groups of individuals, production and business that have been dissolved, or return to production and business activities shall pay license fees as follows:

– In case of commencement of operation in the first 6 months, the deadline for paying license tax latest is July 30th of the year that enterprises operate business.

– In case of operating in the last 6 months of the year, the deadline for paying license fee is on January 30th of the year preceding the year of operation.”

(Clause 4, Article 1 of Decree 22/2020/ND-CP)

III. License fee rates: (Article 4 of Decree 139/2016/ND-CP)

For businesses established before February 25th, 2020:

“License tax rates for organizations engaged in production and trading of goods and services are as follows:

a) Organizations with charter capital or investment capital of over 10 billion VND: VND 3,000,000 (three million) dong/year;

b) Organizations with charter capital or investment capital of VND 10 billion or less: VND 2,000,000 (two million)/year;

c) Branches, representative offices, business locations, non-business units, other economic organizations: VND 1,000,000 (one million) dong/year.”

Note: Organizations, individuals, groups of individuals, production or business households or newly established businesses, which are granted tax registration and tax identification numbers, business identification numbers during the first 6 months of the year, shall submit their license tax for the whole year; If established, granted tax registration and tax code, business code during the last 6 months, then pay 50% of the license fee for the whole year.

For enterprises exempted from license tax for the first year, in the second year, such enterprises must pay licensing fees as prescribed above.