Vietnam small and medium enterprises get 50% tax cut proposed

The Ministry of Planning and Investment has asked for corporate income tax (CIT) to be 50% reduced for small and medium-sized enterprises (SMEs) this year in an effort to boost growth and save the economy from the impact of COVID-19 pandemic. 
April 22, 2020 | 12:03
50 tax cuts proposed for vietnam small and medium enterprises Hanoi, Ho Chi Minh City propose to ease social distancing order
50 tax cuts proposed for vietnam small and medium enterprises "Why entitlement could be a danger to business", Phuong Uyen Tran
50 tax cuts proposed for vietnam small and medium enterprises Vietnamese businesses take initiatives to adapt COVID-19
50 tax cuts proposed for vietnam small and medium enterprises
(Photo: Vietnam Plus)

The Covid-19 epidemic continues to be more complicated and unpredictable. It has spread in many countries and regions around the world. In Vietnam, the Covid-19 epidemic has been affecting many aspects of economic and social life, disrupting supply chains and trading flows; negatively impacting production and business activities in many fields; Increasing unemployment in the short term.

In this context, the Government continues to propose solutions to remove difficulties for production and business, promote disbursement of public investment capital, and respond to pandemics.

Specifically, the Government proposed for the deduction of personal income tax; exemption and reduction of environmental protection tax for input fuels of transport industries, especially research on further reduction of E5 RON92 bio-petrol.

Apart from that, the Government proposed 50% reduction of registration fee when registering domestically manufactured or assembled cars by the end of 2020 to stimulate domestic consumption.

Also, the Government suggested the practice of preferential policies on special consumption tax for domestic automobile industry.

Notably, the Governmemt proposed to reduce 50% of corporate income tax for small and medium enterprises in 2020 to support and develop small and micro enterprises; exempt and reduce 50% VAT rate (currently 10%) for goods and services in trouble to reduce input costs for production of businesses.

50 tax cuts proposed for vietnam small and medium enterprises
(Photo: Investment News)

Reducing CIT for SMEs was just a part of the efforts to lower production costs for businesses, of which a number of taxes and fees would also be cut, according to the draft resolution.

Under the draft, the Ministry of Finance would be in charge of forming policies for exemptions or tax reductions to be submitted to the National Assembly this month.

The finance ministry would also be in charge of issuing circulars about cutting fees for water resources and construction project evaluations. Other fees to be cut included road tolls, seaport charges, aviation service charges and road maintenance fees, reported by Vietnam News.

The Ministry of Finance estimated that the value of taxes and fees exempted or reduced would reach VND46 trillion (US$1.98 billion).

This would be a bold move after Government Decree No 41/2020/ND-CP promised a five-month extension for tax and land use fees worth VND180 trillion (US$7.7 billion). Under the draft, the postponement could be increased by up to one year.

Furthermore, the Government proposed agricultural land tax exemption for households and farmers; temporarily reduce or exempt enterprise income tax and personal income tax for enterprises and individual business households in 2020; consider refunding VAT in 2020 for a number of industries heavily affected by Covid-19, such as aviation and tourism.

50 tax cuts proposed for vietnam small and medium enterprises
(Photo: Banking Times)

The Ministry of Finance is assigned to study and report to the Government to extend the deadline for payment of corporate income tax in 2019, value added tax, personal income tax and land rent to 1 year (Decree No. 41/2020/ND-CP is 05 months).

Also, the ministry is to supplement the regulations on deferment or postponement of flat tax payment to business households engaged in production and business activities affected by Covid-19 epidemic; implement 100% exemption from license fees in 2020 for business households affected by Covid-19 epidemic; for business households already paid, the amount paid is deducted from the license fees payable in the years after.

At the same time, it is allowed to delay the payment of a part of export tax for about 5 months (until the end of the second quarter of 2020) to create conditions for enterprises to have additional working capital to boost exports. Moreover, the Ministry is to review import and export tariffs issued by the Government to promptly adjust tax rates for a number of sectors such as import tax on aviation, according to The Leader.

Under the draft resolution, interest rates for new and existing loans would be cut by 2 percentage points. Loan packages with preferential rates would also be raised for medium and large enterprises suffering from the pandemic, especially those with more than 100 workers that had seen a drop of more than 50 per cent in revenue in the first two quarters of this year.

Focus would also be placed on developing trade and ensuring food security to control inflation. The draft resolution also raised a number of solutions to speed up the disbursement of public investment to drive growth after the pandemic.

According to the Ministry of Finance, total public investment for this year was planned at nearly VND700 trillion (US$30 billion), 2.2 times higher than the sum disbursed in 2019.

50 tax cuts proposed for vietnam small and medium enterprises Vietnam specific industries are proposed for various tax and fee priorities by MoIT

Several tax support solutions for industrial enterprises in the textile and apparel industries; shoe leather; production and assembly of automobiles are proposed by the Ministry ...

50 tax cuts proposed for vietnam small and medium enterprises Tax could be reduced for transport firms

The Ministry of Transport has proposed the Government to reduce several taxes for transport firms affected by COVID-19.

50 tax cuts proposed for vietnam small and medium enterprises Over 55,000 tons of Vietnam rice exports to Korea offered 5% preferential tax

The Republic of Korea (RoK) plans import 50% of its total quota of 55,112 tonnes of rice from Vietnam this May with a preferential import ...

Candy Lee
Phiên bản di động