Up to 30% tax reduction and land rent exemption for agricultural enterprises in storm-hit areas

According to Official Dispatch No. 4328/CT-CS sent to local tax authorities on October 10, organizations and individuals using non-agricultural land affected by storms or floods will be eligible for land tax exemptions or reductions depending on the extent of the damage. Specifically, those with losses valued between 20% and under 50% will receive a 50% tax reduction, while those suffering losses of 50% or more will be fully exempt from land tax for the year in which the disaster occurred.

This is a key policy initiative designed to support production households, agricultural processing facilities, and craft villages that have suffered severe damage to their infrastructure and workshops.

The directive provides for land rent exemption or reduction based on the actual level of damage for those leasing land for agricultural, forestry, fishery production, or salt making. If the damage rate is below 40%, the rent will be reduced proportionally; if 40% or higher, the land rent will be fully exempted for the year of the disaster, provided the lessee has been operating for at least three years and the damage is verified by tax, finance, and local authorities.

Producers of goods subject to special consumption tax who face difficulties due to natural disasters may receive up to a 30% reduction in payable tax for the year of the disaster, based on the actual losses incurred, but not exceeding the value of the damaged assets after insurance compensation.

In addition to tax exemption and reduction policies, the directive also provides for tax payment extensions for affected enterprises, production households, and individuals. The Tax Department instructs local tax offices to review each case based on the actual extent of the damage to grant extensions without charging late payment interest. Entities that have lost records, suffered production disruptions, or been forced to suspend operations due to flooding are allowed to postpone tax filing and settlement until recovery is complete.

Taxpayers directly affected by storms and floods are also exempt from late payment interest and administrative penalties. Local tax authorities are authorized to recognize force majeure circumstances, ensuring no late payment interest is applied during production downtime, thereby easing the financial burden on businesses in the recovery process.

The exemption from administrative penalties for tax management violations applies to cases of delayed declarations, late payments, or errors caused by natural disasters, provided that local authorities have verified the damages. At the same time, tax authorities will temporarily suspend enforcement measures and defer tax debts for small businesses and household enterprises that have lost their ability to pay.

Value-added tax (VAT) deductions for goods or assets damaged by natural disasters will continue to be applied if valid invoices, documents, and official verification records are available. In cases where goods must be destroyed, enterprises only need to prepare a destruction report witnessed by representatives from the tax, finance, and market management agencies, without waiting for formal appraisal, shortening processing time and ensuring transparency.

Expenses related to repairs, recovery efforts, and losses of assets, materials, and supplies caused by flooding are deductible when determining taxable income. This ensures that businesses are not taxed on actual losses, even if insurance compensation has not yet been received. Enterprises are required to work with tax authorities to separate insured and uninsured losses for accurate reporting.

The Tax Department also noted that accounting records and tax documents lost due to natural disasters may be replaced with electronic data, with supplementary filings allowed after recovery to prevent disruption of tax obligations. Subsidiary units must coordinate with banks, insurance companies, the Department of Finance, and local authorities to verify damages, serving as the basis for disbursement, compensation, and accurate assessment of eligibility for tax exemptions or reductions.

As of October 10, according to reports from 32 non-life insurance companies and 19 life insurance companies, total estimated losses had reached over VND 1.674 trillion, including 3,748 cases of property and vehicle damage and 7 cases of human casualties.

Of this, property and engineering insurance accounted for nearly VND 1.593 trillion, while motor vehicle insurance losses totaled more than VND 76 billion. Insurance companies are continuing their assessments and compensation payments to affected individuals and businesses.

$ 1 = VND 26.114 - Source: Vietcombank.