Vietnamese Tiếng Việt | Wednesday, November 14, 2018 | Advertise with Us
   
Text Size

NFSC proposes lowering corporate income tax on SMEs

Share
(0 votes, average 0 out of 5)

Corporate income tax levied on small and medium – sized enterprises (SMEs) should be reduced to promote the business development, a solution together with broadening tax base to increase budget revenue from business and production.

The National Financial Supervisory Committee has proposed cuts to corporate income tax for small-and-medium sized enterprises to promote their development. - VNA Photo

 

This was a highlighted in the January – September fiscal and budget report by the National Financial Supervisory Committee (NFSC) published last week which said that the tax cut would help restructure budget revenue in a sustainable direction.

The NFSC said that Việt Nam ran the lowest budget deficit in three years as of September 30 at VNĐ26.7 trillion (US$1.16 billion), compared to VNĐ61.5 trillion during the same period in 2017 and VNĐ152.2 billion in 2016.

However, budget collection lacked sustainability, the NFSC said.

The committee pointed out in the report that budget collection was still largely dependent on unsustainable sources such as crude oil. In the short term, budget collection from crude oil was affected by fluctuations of global prices and output while in the long term, budget collection from crude oil also lacked sustainability due to limited reserves.

In addition, increases in domestic budget collection mainly came from taxes on land and houses while collection from businesses was much lower than estimated.

The report cited statistics that said as of the end of September, collection from land and houses had reached 104.4 per cent of estimate but only 65.3 per cent from SOEs, 58.8 per cent from the foreign direct investment (FDI) sector and 68.7 per cent from the private sector.

Budget collection in many provinces and cities remained heavily dependent on sales of public assets, especially land use rights.

The NFSC’s report also pointed out that disbursement of investment in capital construction was lower than estimated at only 50.2 per cent.

Another report by the State Audit of Việt Nam showed that budget collection was estimated to total nearly VNĐ1.36 quadrillion for the full year, 3 per cent higher than expected and 5.5 per cent higher than in 2017.

The State Audit of Việt Nam, however, said in the report that the excess amounts mainly came from land, houses and crude oil. Collection from land and houses increased by 35.9 per cent and from crude oil by 53.2 per cent.

Collection from the SOE, FDI and private sectors all saw declines of 2.9 per cent, 15.1 per cent and 2.2 per cent.

According to the NFSC, it was necessary to strengthen measures to support businesses to boost their development to increase budget revenue from business and production and reduce reliance on unstable sources.

The committee said that lowering corporate income tax for SMEs could be a solution, together with broadening the tax base.

In addition, the NFSC said that the privasitation and capital divestment at SOEs must be accelerated to increase their efficiency.

At the Greater Mekong Subregion Business Summit, Prime Minister Nguyễn Xuân Phúc said that the Vietnamese Government intended to cut corporate income tax from the current 20-22 per cent to 15-17 per cent to create an attractive investment environment for Việt Nam.

In August 2017, the Ministry of Finance also proposed a tax rate of 15 per cent on micro-businesses (those with an annual revenue of less than VNĐ3 billion) and 17 per cent for SMEs (those with less than 200 employees and annual revenue from VNĐ3 billion to VNĐ50 billion).

According to Tô Hoài Nam, deputy chairman of the Việt Nam Association of SMEs, the tax cuts for businesses were good but not enough. In the long term, policies should focus on improving the competitiveness of enterprises and their operational efficiency.

He said that tax policies must be transparent.

According to the General Department of Taxation, it was necessary to review tax policies comprehensively to increase the sustainability of budget revenue in terms of scale and structure.

Policies would be reviewed on the basis that the tax base would be expanded, the tax authority said.

For SMEs, reasonable tax rates would be proposed to increase competitiveness but ensure compliance with the Law on Supporting SMEs.

 

Source: VNS

Maybe You Also Interesting :

» Component suppliers to Japan enterprises? Still a distant goal

Only a few Vietnamese enterprises have become vendors that supply components and accessories to multinationals, though Vietnam has vowed to develop supporting...

» Supply chain finance helps SMEs in emerging markets

FinTech helps small- and medium-sized enterprises (SMEs) in emerging markets like Việt Nam participate in supply chain finance, spurring company growth,...

» Local corporations pay higher corporate income tax

Many local enterprises are concerned with paying higher corporate income tax according to regulations on the deductibility of loan interest under Decree 20, in...

Login