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[Taxation] Obligation to pay to the Natural Disaster Prevention Fund


To support natural disaster prevention and control activities, companies and their workers are required to contribute annually to the natural disaster prevention fund of the city or province where their headquarters are located.
This newsletter introduces some important regulations regarding the obligation to contribute to the Natural Disaster Prevention Fund (the “Fund”) under Decree No. 78/2021/ND-CP (“Decree No. 78”), as well as the the new items included in the revised draft Cabinet Order.

1. People subject to contribution obligation:
(1) Companies (including companies with 100% Vietnamese capital and foreign-invested companies)
(2) Vietnamese workers of enterprises (excluding foreign workers)
In Article 14 of Cabinet Order No. 78, the following people are eligible for exemption, reduction, and payment postponement;
・Exemption is eligible for:
+ Companies whose assets, plants, and equipment were damaged by natural disasters during the current fiscal year, requiring repairs or purchases exceeding 0.02% of the total assets.
+ Enterprises that have suspended production or business for more than 5 consecutive days with the confirmation of the district People’s Committee during the current fiscal year
+ Companies exempted from paying corporate income tax for the current fiscal year
+ Female workers raising children under 12 months old at the time of payment

・Reduction/postponement are eligible for:
+ Companies in regions eligible for the corporate tax reduction will be considered for a reduction or postponement of their fund contributions, and the final decision will be made at the discretion of the authorities. The reduction rate for fund contributions will be the same as the corporate tax reduction rate announced annually by the tax authorities.

2. Contribution amount:
(1) For companies:
In principle, the contribution is equivalent to 0.02% of the total assets based on the financial report submitted to the tax office on December 31st every year, with the minimum amount being VND 500,000 and the maximum amount. The amount is said to be VND 100,000,000. The amount paid can be confirmed by the notification sent by the competent authority every year regarding the amount of funds paid and unpaid, etc., or by the authority’s public notice on its website. If you are unsure about the amount to be paid, please contact the relevant fund management department to confirm. The amount contributed could be recorded as a deduction when calculating corporate tax.

(2) For workers:
Pay an amount equal to one-half of the regional minimum wage divided by the average number of working days per month based on the labor contract. If you form contracts with multiple companies, you will only pay once a year based on the longest labor contract period.

3. Payment deadline:
At least 50% must be paid by the end of July each year, and the remining by the end of November.

Currently, the government has published a draft amendment to amend and supplement the provisions of Cabinet Order No. 78, and among the exempted persons, the provision for “female workers raising children under 12 months old” has been changed to “pregnant women”. It has been proposed to amend the term to “women who are currently raising children or are raising children under 36 months.”

Above we have explained the important provisions regarding the obligation to contribute to the Natural Disaster Prevention Fund. In particular, there is a risk that administrative penalties will be imposed on companies that have underpaid, unpaid, or delayed contributions, and companies that have incomplete or do not provide a list of plans for collecting and paying contributions from workers. The amount of the penalty ranges VND600,000~100,000,000 depending on the level of violation.

Companies need to understand the regulations regarding the Natural Disaster Prevention Fund, check their current situation, and make late payments or revise plans as necessary. When new government ordinances are finalized and announced, we will notify you through our legal news.

*This article was translated by Yarakuzen.