I. New mechanism for encouraging the development of solar power in Vietnam
On April 6th, 2020, the Prime Minister of Vietnam issued Decision No. 13/2020/QD-TTg on the mechanism for encouraging the development of solar power in Vietnam (“Decision 13”). Decision 13, which will take effect on May 22rd, 2020, introduces a number of new incentives and mechanisms for investors in solar power projects in Vietnam.
We would like to send you some key points of Decision 13 as follows:
1. Categories of solar power projects
Decision 13 classifies solar power projects into two categories of grid-connected solar power projects and rooftop solar power projects, in particular:
- Rooftop solar system: the solar system in which solar panels are installed on the roof of the construction with no more than 1 MW in power and directly or indirectly connected to power grid with up to 35kV of the Buyers;
- Grid-connected solar power project: the project in which solar electricity is connected to national grid, including:
- Floating solar energy project: a grid-connected solar power project with solar panels installed on constructions floating on water surface;
- Terrestrial solar energy project: a grid-connected solar power project bot being floating solar project.
2. Electricity price for solar power projects
One of the most notable features provided by Decision 13 is about the purchase price applied for solar projects that failed to reach commercial operation date by June 30, 2019 in accordance with the Decision 11/2017/QD-TTg of the Prime Minister.
Accordingly, grid-connected solar power projects prioritized for investment by competent authorities before November 23rd, 2019 whose commercial operation date lies within July 1st, 2019 to December 31st, 2020 inclusively may apply electricity purchase price schedule for grid-connected solar power as following:
- Floating solar energy projects: VND1,783 (USD 69);
- Terrestrial solar energy projects: VND 1,644 (USD7.09).
Besides, the Vietnam Electricity (EVN) or authorized member entities shall pay for the electricity transmitted to the national grid from rooftop solar power systems at the price of VND1,943 (USD8.38).
3. Feed-in Tariff (FiT) for Ninh Thuan Province
With respect to Ninh Thuan Province, Decision 13 continues to provide special incentives for projects located in this province.
Accordingly, the purchase price of electricity in grid-connected solar power projects in electricity development planning of all levels whose commercial operation date precedes January 1st, 2021 with total capacity no more than 2,000 MW is VND 2,086/kWh (VAT excluded, equals USD 9.35 cent/kWh, according to central conversion rate of VND to USD publicized by the State Bank of Vietnam in April 10th, 2017 is VND 22,316/USD) and applied for 20 years from the commercial operation date.
Electricity purchase price shall be adjusted depending on VND/USD conversion rate. The applied conversion rate shall be the central conversion rate of VND to USD publicized by the State Bank of Vietnam at the time on which the Seller produces invoices.
II. Extension of submission time of tax and land rent
On April 8th, 2020, the Government officially issued Decree No. 41/2020/ND-CP on the extension of submission time of tax and land rent based on the proposals of the Ministry of Finance as mentioned above. Decree No. 41/2020/ND-CP immediately took effect since signing date, and this is on April 8th, 2020. In particular, Decree No. 41/2020/ND-CP includes provisions as follow:
Subjects of application:
1| Enterprises, organizations, households and individuals engaged in production activities as follow:
- Agriculture, Forestry and Fisheries;
- Food manufacturing and processing; manufacture of textiles; costume manufacturing; leather and related products manufacturing; wood processing and wood, bamboo processing(except beds, wardrobes, tables, chairs); straw, plaiting materials processing; paper production and paper processing; rubber and plastic processing; other non-metallic minerals processing; metal production; machining machinery; treating and overlaying metal; production of electronic appliances, computers and optical products; automobiles and other motor vehicles manufacturing; beds, wardrobes, tables, and chairs manufacturing;
- Construction industry.
2| Enterprises, organizations, households and individuals engaged in production activities as follow:
- Warehouse transportation; accommodation and food and drink services; education and training; health and social assistance activities; real estate business;
- Labour and employment services; activities of travel agents, tour operators and support services related to tour promotion and organization;
- Creation, artistic and recreational activities; library activities, archives, museums and other cultural activities; sports activities, entertainment; motion picture projection service.
The list of business line mentioned in Clauses 1 and 2 of this Article is mentioned in Decision No. 27/2018/QD-TTg promulgating Vietnam’s economic system issued on July 6th, 2018 by the Prime Minister.
3| Enterprises, organizations, households and individuals engaged in the production of prioritized supporting products; key mechanical products.
4| Small and micro enterprises are mentioned in Law on provisions of assistance for small and medium-sized enterprises No. 04/2017/QH14 and Decree No. 39/2018/ND-CP on guidelines for law on support for small and medium-sized enterprises issued on March 11th, 2018, by the Government.
5| Credit institutions, foreign bank branches implement solutions to support enterprises, organizations and individuals affected by COVID-19 under the regulations of the State Bank of Vietnam. The State Bank of Vietnam is responsible for announcing the list of credit institutions and branches of foreign bank branches participating in supporting for the extension of paying tax and land rents in accordance with Decree. No. 41/2020/ND-CP.
6| The business lines ofenterprises, organizations, households and individuals mentioned in Clause 1, Clause 2 and Clause 3 of this Article are those taxpayers operate in and earn revenue from in 2019 or 2020.
Supported taxes:
1| Value Added Tax (VAT) (except value added tax imposed on the import)
a) Deadlines are extended for paying value-added tax in the tax period of March, April, May and June 2020 (for declaring tax monthly) and the first and second quarter tax periods of 2020 (for declaring tax quarterly) of enterprises and organizations as specified in Article 2 of Decree No. 41/2020/ND-CP. The extension is 05 months from the ending date of the deadline for paying value-added tax under provisions of the law on tax administration.
In case a taxpayer makes a revision to the tax declaration that results in an increase in the VAT payable and submit the revised tax declaration to the tax authority by the deadline, the VAT amount eligible for deferral will include the increase in VAT payable.
Enterprises and organizations that are eligible for the extension must submit their monthly or quarterly VAT declarations under current legislation, but they must not pay value-added tax mentioned in the value-added tax declaration. The deadline for payment of monthly or quarterly VAT is extended as follows:
- The deadline for payment of VAT incurred in March 2020 is on September 20th, 2020.
- The deadline for payment VAT incurred in April 2020 is on October 20th, 2020.
- The deadline for payment of VAT incurred in May 2020 0 is on November 20th, 2020.
- The deadline for payment of VAT incurred in June 2020 is on December 20th, 2020.
- The deadline for payment of AT incurred in the first quarter of 2020 is on September 30th, 2020.
- The deadline for payment of AT incurred in the second quarter of 2020 is on December 30th, 2020
b) If branches and affiliated units of enterprises and organizations mentioned in Article 2 of Decree No. 41/2020 / ND-CP make separate value-added tax declarations for directly managing tax agencies, branches and affiliated units will get the extension of deadlines for paying value-added tax. If branches, affiliated units of enterprises or organizations as mentioned in Clauses 1, 2 and 3, Article 2 of Decree No. 41/2020/ND-CP do not have production and business activities in extended economic sectors, and field, the branch or affiliated unit will not get the extension of deadlines for paying value-added tax.
2| Corporate Income Tax:
Deadlines are extended for paying corporate income tax mentioned in the balance sheet of the tax period in 2019 and the provisional corporate income tax in the first and second quarters of 2020 of enterprises, organizations as mentioned in Article 2 of Decree No. 41/2020/ND-CP. The extension is for 05 months from the deadline for corporate income tax payment prescribed by tax administration laws.
In case an enterprise or organization has already paid the corporate income tax declared in the 2019’s annual statement, it may offset the corporate income tax against other unpaid taxes. In this case, the taxpayer shall complete form No. C1-11/NS enclosed with Circular No. 84/2016/TT-BTC), enclose it with the tax payment documents or relevant documents and submit them to the tax authority.
In case an enterprise or organization mentioned in Article 2 of this Decree has a branch or affiliated unit that declares corporate income tax separately to its supervisory tax authority, the branch or unit is also eligible for corporate income tax deferral. The branches and units of the enterprises and organizations mentioned in Clause 1, Clause 2 and Clause 3 Article 2 of this Decree shall not be eligible for corporate income tax deferral if none of their business lines is eligible for deferral.
3| Land rents:
a) Deadline is extended for annual payment of rents that are due in beginning of 2020 of enterprises, organizations, households and individuals as mentioned in Article 2 of Decree No. 41/2020/ND-CP being directly leased land by the State under the Decision, Contract of the competent state authority in the form of annual land rent payment. The extension is within 05 months from May 31st, 2010.
b) This provision also applies for enterprises, organizations, business households and individuals that have many decisions, direct land lease contracts of the State and have many different production and business activities, including business line as specified in Clauses 1, 2, 3 and 5, Article 2 of Decree No. 41/2020/ND-CP.
If enterprises, organizations, households and individuals operates in multiple business lines, in which including business lines as specified in Clauses 1 and 2, Clauses 3 and 5, Article 2 of Decree No. 41/2020/ND-CP: deadlines for paying all value-added tax and corporate income tax are extended; deadlines for paying all value-added tax and personal income tax of business households and individuals also are extended under Decree No. 41/2020/ND-CP.
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