Resolution 02/NQ-CP "savior" for real estate businesses

(Baonghean) -On January 7, 2013, the Government issued Resolution 02/NQ-CP on removing difficulties for production and business, supporting the market, and resolving bad debts with the following basic contents:

Extend the deadline for paying corporate income tax for the first quarter and the deadline for paying corporate income tax for the second and third quarters of 2013 by 6 months for the following subjects:

- Small and medium-sized enterprises (employing less than 200 full-time employees and having annual revenue of no more than VND 20 billion). The extended corporate income tax amount does not include tax calculated on income from financial, banking, insurance, securities, lottery, prize-winning games, and income from trading in goods and services subject to special consumption tax.

- Enterprises employing a lot of labor (using more than 300 workers) in the fields of production, processing, and manufacturing: agricultural products, forestry products, aquatic products, textiles, footwear, electronic components; construction of economic and social infrastructure works.

- Enterprises investing and trading (selling, leasing, leasing-purchasing) houses are granted an extension in paying taxes on income from housing investment and trading activities, regardless of the size of the enterprise and the number of employees employed.

Extend by 6 months the deadline for paying value added tax for the value added tax payable in January, February and March 2013 for the following enterprises that are paying value added tax by the deduction method:

- Small and medium-sized enterprises (employing less than 200 full-time employees and having annual revenue of no more than VND 20 billion), excluding enterprises operating in the fields of finance, banking, insurance, securities, lottery, prize games, production of goods and services subject to special consumption tax.

- Enterprises employing a lot of labor (using more than 300 workers) in the fields of production, processing, and manufacturing: Agricultural products, forestry products, aquatic products, textiles, footwear, electronic components; construction of economic and social infrastructure works.

- Enterprises investing and trading (selling, leasing, leasing) houses and enterprises producing the following products: Iron, steel, cement, bricks, tiles (only extending the amount of value added tax payable, for products such as houses, iron, steel, cement, bricks, tiles; in case of not being able to account separately, it will be allocated according to the proportion of revenue).

Along with that, refund the environmental protection tax paid from January 1, 2012 to November 14, 2012 for nylon bags used for pre-packaged products according to the provisions of Decree No. 69/2012/ND-CP dated September 14, 2012 of the Government.

The Resolution clearly states that no policy is issued to collect fees to limit personal road vehicles based on the number of vehicles. The registration fee for passenger cars with less than 10 seats is reduced in the following directions: (i) For cars registered for the first time: The general fee is 10%, localities are allowed to adjust the increase to no more than 50% of the general regulation; (ii) For cars registered for the second time or later: The general fee is 2% and is implemented uniformly nationwide.

50% reduction in land rent in 2013 and 2014 for economic organizations, households and individuals who are leased land by the State and the land rent payable under the provisions of Decree No. 121/2010/ND-CP dated December 30, 2010 of the Government increases by more than 2 times compared to the payment in 2010 (according to the land rent collection policy before the effective date of Decree No. 121/2010/ND-CP). In case the land rent after reduction is still greater than 2 times the land rent payable in 2010, the land rent shall be further reduced to the level of 2 times the land rent payable in 2010.

Amending regulations on procedures for land rent reduction in a simplified manner for implementation (this amendment also applies to cases eligible for land rent reduction in 2012 but not yet processed due to problems with documents).

Allow project investors who have been allocated land by the State but have not yet fulfilled their obligations to pay land use fees due to financial difficulties to pay land use fees according to the payment schedule for sales within a maximum period of 24 months from the date of notice of land use fee payment from the tax authority.

Based on the ability to balance the local budget, the Provincial People's Committee shall consider and decide on the specific extension period for land use fee payment for each project after reporting to the Standing Committee of the People's Council at the same level.

Shorten customs clearance time, enhance online tax declaration, promote tax payment through the banking system, promote automation of the process of receiving and processing tax and customs administrative documents and procedures. Strive to reduce 10 - 15% of the cost of complying with tax and customs administrative procedures for individuals, organizations and businesses.

Strengthen monitoring, inspection and control of tax declaration and payment, tax refund; strengthen inspection and review of registered business entities, promptly detect cases of non-tax registration to put them under management. Organize full and timely collection into the state budget of taxes and budget revenues in 2012 which have been extended to 2013.

The Minister of Finance, authorized by the Prime Minister, reports to the National Assembly for consideration and decision:

- Apply corporate income tax rate of 20% from July 1, 2013 (6 months earlier than the expected roadmap for implementing the Law amending and supplementing a number of articles of the Law on Corporate Income Tax) for small and medium-sized enterprises (employing less than 200 full-time employees and having annual revenue of no more than VND 20 billion).

- Apply the corporate income tax rate of 10% from July 1, 2013 (6 months earlier than the expected implementation schedule of the Law amending and supplementing a number of articles of the Law on Corporate Income Tax) to income from investment and business in social housing. Social housing is determined according to the provisions of the law on housing.

- 50% reduction in output value added tax from July 1, 2013 to June 30, 2014 for social housing investment and business activities.

- 30% reduction in output value added tax from July 1, 2013 to June 30, 2014 for investment and business activities (sale, lease, hire purchase) of apartments with floor area under 70 m2 and selling price under 15 million VND/m2.

- Supplementing tax incentives for expansion investment in preferential sectors, industries, and locations according to the provisions of the Law on Corporate Income Tax to be implemented from July 1, 2013 (6 months earlier than the expected roadmap for implementing the Law amending and supplementing a number of articles of the Law on Corporate Income Tax). The tax exemption and reduction period applicable to expansion investment is equal to the tax exemption and reduction period applicable to newly established enterprises in the same preferential sectors and locations of corporate income tax.

The Resolution also provides a series of solutions to support real estate businesses. The Government assigns the State Bank to preside over and direct state-owned commercial banks to allocate a reasonable amount of capital (at least about 3% of the total outstanding loans of state-owned commercial banks) to lend to low-income earners, civil servants, public employees, and armed forces to rent or purchase social housing and to rent or purchase commercial housing with an area of ​​less than 70m2 and a selling price of less than VND15 million/m2 with low interest rates and repayment terms suitable to the repayment capacity of customers, and to lend to social housing construction enterprises and enterprises converting the function of investment projects to social housing projects with reasonable interest rates and repayment terms suitable to the term of the capital source and the repayment capacity of customers.

Duong Hong Quang (Nghe An Tax Department)