Tax exemption, reduction and extension policies for taxpayers affected by storms and floods
Faced with the severe damage caused by storms No. 10 and No. 11 and the subsequent floods, to support the recovery of production and business, the Department of Taxation - Ministry of Finance issued Official Dispatch No. 4328/CT-CS dated October 10, 2025, directing local tax authorities to guide the implementation of policies on tax exemption, reduction, and extension of tax and land rent for affected taxpayers.
Accordingly, tax payment extension will be considered when taxpayers suffer material damage, directly affecting production and business activities due to force majeure as prescribed in Clause 27, Article 3 of the Law on Tax Administration. In case enterprises and business households have to stop operations due to relocation of facilities at the request of competent authorities, affecting production and business results, they will also be considered for extension.
Taxpayers are granted an extension to pay all or part of their tax liability. During the extension period, they are not subject to penalties and late payment interest on the extended tax.
The Tax Department also provides clear guidance on exemption from late payment fees. According to Clause 1, Article 59 of the Law on Tax Administration, taxpayers are exempt from late payment fees in cases of force majeure, with documents and procedures implemented according to Circular No. 80/2021 of the Ministry of Finance.
Regarding exemption from administrative penalties for tax management violations, taxpayers who suffer losses due to force majeure will be exempted from paying fines. However, the total amount exempted must not exceed the value of the damaged assets and goods.
Regulations related to exemption and reduction of fines for administrative violations of tax and invoices; procedures and authority for implementation comply with Article 77 of the Law on Handling of Administrative Violations, Clause 38, Article 1 of the Law on Amendments and Supplements to the Law on Handling of Administrative Violations, and Clauses 2, 3, 4, 5, Article 43 of the Law on Tax Administration.
The maximum exemption or reduction is equal to the fine amount stated in the penalty decision and does not exceed the value of the damaged property, after deducting the insured or compensated part.
Documents proving damage include: Minutes of inventory and determination of material damage value prepared by the taxpayer or legal representative; Minutes of determination of damage value by the organization with valuation function; Compensation records accepted by the insurance agency (if any); Compensation liability records of related organizations and individuals (if any).
The Tax Department also stated that enterprises and organizations are allowed to deduct certain expenses when determining taxable income for corporate income tax, including the value of losses due to natural disasters, epidemics and other unforeseen circumstances that are not compensated.
In addition, funding for education, healthcare, scientific research, disaster recovery and direct welfare expenditures for employees such as support for families affected by natural disasters, accidents, illness, etc. are all included in reasonable expenses when determining taxable income.
Reduce income tax, excise tax and resources for business households
Official dispatch No. 4328 also provides guidance on other tax exemptions, reductions, and deductions such as: Value added tax, special consumption tax, resource tax, non-agricultural land use tax, and land rent.
For households and individuals whose businesses are facing difficulties due to natural disasters, they are considered for tax reductions according to the following principles: Personal income tax is reduced in proportion to the level of damage but not exceeding the amount of tax payable. Special consumption tax is reduced based on actual losses caused by natural disasters and unexpected accidents, but not exceeding 30% of the tax payable in the year of the damage and not exceeding the value of damaged assets after deducting the compensation (if any). Resource tax is reduced in proportion to the amount of lost resources. If tax has been paid, taxpayers will be refunded or deducted from the next payment period.
Non-agricultural land use tax: If the damage is over 50% of the taxable value, all land use tax will be exempted; if the damage is from 20% to less than 50%, the tax payable for that year will be reduced by 50%.
Regarding land rent: For land rented for agricultural, forestry, fishery, and salt production (land rent paid annually): if the damage is 40% or more, the entire land rent for that year will be exempted; if less than 40%, the rent will be reduced accordingly. If a business rents land for production and business purposes and must temporarily suspend operations to remedy the consequences, the land rent will be reduced by 50% during the suspension period.
Taxpayers affected by force majeure may be exempted from late payment and administrative fines for tax violations (authority and exemption level shall not exceed the value of damaged assets and goods after deducting the insured and compensated part, if any).
* Determining deductible expenses when calculating corporate/personal income tax: Enterprises are allowed to include the value of losses due to natural disasters that are not compensated in reasonable expenses when determining taxable income. Expenses to support the recovery of consequences of natural disasters, welfare expenses for affected employees, and funding for education and health care are also included in deductible expenses within prescribed limits. Goods and assets damaged by natural disasters without compensation with valid invoices and documents are deductible for input VAT.
Conditions, procedures and notes:
* Taxpayers must submit applications for tax or land rent exemption, reduction, or extension to the direct tax authority.
* The tax authority has 30 days (or in some cases actually 40 days) from the date of receiving complete documents totassess, decide or respond in writing if not qualified.
* Documents proving damage include: inventory report determining damage, valuation report of competent organization, insurance records, compensation records (if any).
* In case of loss of records and documents due to natural disasters, taxpayers can use electronic data and backup copies to make additional declarations after recovery. Local tax authorities are instructed to assist in recovering records and documents.