Ministry of Finance proposes to reduce corporate income tax by 30% for small and micro businesses

The Ministry of Finance has proposed that the Government reduce corporate income tax by 30% for small and micro enterprises in 2020 to help them overcome difficulties caused by the Covid-19 pandemic.
May 27, 2020 | 06:05
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ministry of finance proposes to reduce corporate income tax by 30 for small and micro businesses
Workers doing manual work at a small enterprise in Binh Dinh Province (Photo: VNA)

According to Financial Times, the Government proposes to reduce 30% of the payable CIT amount of 2020 for enterprises with total turnover in 2020 not exceeding VND 3 billion (US$ 128,000) and the number of employees participating in insurance not exceeding 10 people (micro enterprises).

Also the proposal is for enterprises with a total turnover of not more than 50 billion VND (US$ 2.1 million) in 2020 and an average number of employees participating in social insurance not exceeding 100 people (small enterprises).

Enterprises shall base themselves on the above provisions to determine the tax amounts to be reduced when declaring and temporarily paying CIT quarterly and finalizing CIT in 2020. In case of violations, they shall be handled according to the provisions of law on tax administration. .

ministry of finance proposes to reduce corporate income tax by 30 for small and micro businesses
Small and micro enterprises are proposed to reduce tax (Photo: Financial Times)

According to the Ministry of Finance, the Covid-19 epidemic on a global scale has been negatively affecting many aspects of the world and domestic socio-economic life.

In fact, recently, many industries and production sectors have encountered difficulties; production and business activities of many enterprises were delayed, especially small and micro enterprises, which had to shrink or suspend operations, causing significant impacts on the economy and the implementation of economic development targets.

By the end of 2019, Vietnam has about 760,000 businesses in operation. In the structure of Vietnam's enterprises, the group of small and medium-sized enterprises accounts for about 97% of the total number of enterprises, of which, enterprises with micro and small scale account for over 93% of the total number of enterprises.

ministry of finance proposes to reduce corporate income tax by 30 for small and micro businesses
The tax cut will reduce the state budget revenue by about VND 15,840 billion (Photo: Bao dau thau)

These are the most vulnerable businesses in the economy, so according to the Ministry of Finance, the consideration and issuance of resolutions of the National Assembly to reduce the payable CIT of 2020 for small and micro enterprises is very necessary.

The policy is also expected to help small and micro businesses recover production, improve competitiveness and expand operations.

The Ministry of Finance said that the above tax solutions have a great impact on promoting the development of production and business for small and micro enterprises, creating a favorable, transparent and reformed investment environment.

It is estimated that a 30% reduction of the payable CIT amount for 2020 for small and micro enterprises will reduce the state budget revenue by about VND 15,840 billion (US$ 679 million). If Vietnam continues to expand the tax reduction for medium-sized enterprises that will reduce the state budget revenue.of about 22,440 billion (US$ 961 million).

The proposed reduction of 30% of the payable CIT amount for 2020 for small and micro enterprises will contribute to supporting these businesses to overcome difficulties due to the impact of the Covid-19 epidemic, facilitating accumulating capital for production and business development, raising the competitiveness of enterprises, and being a premise for development and transformation into a larger-scale enterprise.

However, the Ministry of Finance noted that some businesses will take advantage of the policy by falsifying their employee numbers and revenues to enjoy a tax reduction, reported by Vietnamnet.

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