Floods wash away your warehouse; the factory is underwater: is the company entitled to a “full tax exemption”? The honest answer: there is no blanket tax exemption — the law provides a combination of mechanisms per tax type: tax payment extensions, late-payment interest exemption, no penalties in force majeure, deductible expenses, input VAT credit, tax reductions, and even tax debt write-off in special cases. The common condition: material damage directly affecting production and business caused by natural disasters, catastrophes, epidemics, fires or unexpected accidents (force majeure events).
1. Tax payment extension with no late-payment interest (Law 108/2025, Article 14.7.a)
Taxpayers suffering material damage directly affecting production and business due to force majeure are entitled to extend tax payment — covering taxes, other state revenues, late-payment interest and fines. During the extension period, no late-payment interest accrues on the extended amounts. Important note: the extension period is set by the Government (Article 14.8 of Law 108/2025) — we do not state a “maximum of 2 years” figure, as that came from guidance under the old Tax Administration Law 38/2019 and has not been confirmed correspondingly under Law 108/2025.
2. Late-payment interest exemption and no penalties in force majeure
- Late-payment interest exemption (Article 16.5 of Law 108/2025): taxpayers in force majeure situations (defined in Article 4.21) are exempted from late-payment interest;
- No administrative tax/invoice penalties for violations caused by force majeure — Article 9 of Decree 125/2020 (amended by Article 1.7 of Decree 310/2025, effective 16/1/2026); Decree 310/2025 also adds an enumerated list of force majeure events, including natural disasters, catastrophes, epidemics, fires, unexpected accidents, wars, riots, strikes…
3. CIT: uncompensated disaster losses → deductible expenses
Under Article 9.1.b7 of the CIT Law 67/2025, the uncompensated value of losses caused by natural disasters, epidemics, fires and other force majeure events counts as deductible expenses when determining taxable income. Supporting dossiers include: loss inventory records, in-out inventory statements, insurance compensation files (if any), and liability/compensation records (if any) — guided by Circular 20/2026/TT-BTC. The hard rule: amounts already compensated by insurance may not be deducted again.
4. VAT: input VAT on damaged goods remains fully creditable
Under Article 14.1.a of the VAT Law 48/2024, input VAT on VAT-taxable goods and services that are damaged is fully creditable, including the uncompensated portion — for businesses under the credit method with complete dossiers. Update note: Law 149/2025/QH15 (amending the VAT Law) did not amend Article 14 per the published list of changes. Additionally, imported goods for donation/sponsorship of disaster recovery are not subject to VAT.
5. PIT: tax reduction matching the damage
Under Article 5.1 of the PIT Law 109/2025/QH15, taxpayers facing hardship from natural disasters affecting their ability to pay are entitled to a tax reduction matching the damage, capped at the tax payable — applicable to business households and individual businesses.
6. Tax debt write-off: a notable new mechanism (Article 21.1.d of Law 108/2025)
Where a widespread natural disaster, catastrophe or epidemic has occurred, late-payment interest exemption and payment extension have already been granted, but the taxpayer still cannot restore production/business and cannot pay → tax debt write-off may be considered. Conditions and competence for write-off are detailed by the Government — a new mechanism under Law 108/2025; affected businesses should track the guidance and prepare complete supporting dossiers.
7. ⚠️ Per-disaster-event relief rates — not fixed rates
The figures below are policies applied per disaster event, based on tax authority guidance issued when the event occurs (e.g., Typhoon Yagi practice; Official Letter 4328/CT-CS of 10/10/2025 supporting typhoons No. 10 and 11) — not automatic entitlements; always check the specific guidance for the relevant event:
- Special consumption tax: reduced according to actual loss, capped at 30% of the tax payable for the year the damage occurred and not exceeding the damaged asset value after compensation;
- Non-agricultural land use tax: 50% reduction where damage equals 20–50% of the taxable price;
- Natural resource tax: exemption/reduction considered for damaged resources (amounts already paid are refunded or offset against the following period);
- Tax and filing extensions: per the General Department of Taxation / provincial tax authority guidance for each event — the specific period follows that event’s documents, not mechanically the previous event’s.
8. Risks and practical advice
- Documentation is everything: every mechanism (extension, exemption, reduction, deductible expenses, VAT credit) requires complete damage-proving dossiers — draw up loss inventory records as soon as the event occurs, not at year-end settlement;
- Don’t “exempt” yourself: extensions, exemptions and reductions all follow tax authority procedures and guidance — failing to pay without an extension decision still accrues late-payment interest;
- Carve out compensated amounts: losses already compensated by insurance or third parties may not be double-deducted or double-credited;
- Track per-event guidance: per-event relief rates apply only when the tax authority issues guidance for that event — check before applying.
9. Frequently asked questions
A storm flooded the warehouse. Is the company exempt from all VAT and CIT?
There is no blanket exemption. The company may: extend tax payment; be exempted from late-payment interest in force majeure; treat uncompensated losses as deductible CIT expenses; and keep full input VAT credit on damaged goods.
Is there a 30% special consumption tax reduction for storm damage?
The SCT reduction (capped at 30% of the year’s payable tax) is a per-disaster-event policy applied under tax authority guidance for the event — not an automatic fixed rate.
Losses fully compensated by insurance — still deductible?
No. Compensated amounts may not be double-deducted or double-credited.
A disaster makes tax payment impossible. Are there late-payment penalties?
Tax payment may be extended (no late-payment interest during extension); late-payment interest is exempted in force majeure; no administrative tax/invoice penalties for force-majeure violations — but procedures must be followed and dossiers prepared.
Sources
- Tax Administration Law 108/2025/QH15 — effective 1/7/2026: Article 14.7.a (payment extension in force majeure), Article 14.8 (extension period set by the Government), Article 16.5 (late-payment interest exemption in force majeure; force majeure in Article 4.21), Article 21.1.d (tax debt write-off for widespread disasters);
- CIT Law 67/2025/QH15 — effective 1/10/2025: Article 9.1.b7 (uncompensated disaster losses → deductible expenses); dossiers per Circular 20/2026/TT-BTC;
- VAT Law 48/2024/QH15 — effective 1/1/2026: Article 14.1.a (input VAT on damaged goods fully creditable); Law 149/2025/QH15 did not amend Article 14 per the published changes;
- PIT Law 109/2025/QH15: Article 5.1 (disaster tax reduction, capped at tax payable);
- Decree 125/2020/ND-CP, Article 9 (amended by Article 1.7 of Decree 310/2025, effective 16/1/2026): no administrative tax/invoice penalties for force-majeure violations.
For reference only; not legal advice. This content was drafted by AI and will be quality-checked by the AI Legal Council of FLAT Law Firm before publication review; it is not legal advice from a human lawyer. Regulations may change; please check the current legal texts before relying on this information.
Has your business suffered natural disaster damage and needs to review tax relief, reduction and extension mechanisms? Contact FLAT Law Firm for advice.