The Ministry of Finance has proposed corporate income tax rates on small and micro businesses to be lowered from currently 20 percent to 15-17 percent. (Photo: vneconomy.vn)Hanoi (VNS/VNA) - The Ministry of Financehas proposed cutting corporate income tax (CIT) rates on small and microbusinesses from the current 20 percent to 15-17 percent.
The idea was raised in a National Assembly draft resolution which the ministryrecently published for comments.
The move aims to promote the development of small- and medium – sizedenterprises and to encourage business households to transform into enterprises,as well as enhance their competitiveness and create jobs.
The Vietnamese Government aims to have one million businesses by 2020, 1.5million by 2025 and two million by 2030.
The ministry said that SMEs played a significant role in the country’ssocio-economic development and were recognised to be the driver for economicgrowth, citing statistics that Vietnam had more than 600,000 firms, nearly500,000 of them were private firms with 96 percent of being small and microscales.
The private firms created 1.2 million jobs and contributed more than 40 percentof gross domestic product (GDP).
Tax incentive policies are a commonly-used tool to promote SMEs in manycountries, according to the finance ministry.
China uses a 5 percent, 10 percent and 20 percent CIT rates for different levelsof taxable incomes of SMEs, while Thailand has rates of 15 percent and even taxexemptions for SMEs.
In Vietnam, SMEs must pay CIT rate of 20 percent, the same as otherenterprises, prompting the need for “reasonably CIT rates for SMEs”, theministry said.
In the draft resolution, the finance ministry proposed a CIT tax rate of 17percent on small businesses and 15 percent on micro businesses. Smallbusinesses would be those with annual revenue from 3 billion VND to 50 billion VNDand less than 100 regular employees while micro businesses would be those withan annual revenue of less than 3 billion VND and less than 10 regularemployees.
The ministry said that CIT incentive rates would not be applied forsubsidiaries to prevent tax avoidance.
In the draft, the ministry also proposed tax exemptions for two years afterfirst reporting taxable income for firms which transform from businesshouseholds. This aimed to encourage business households to transform intoenterprises.
The ministry estimated that if these tax policies were applied, the Statebudget would lose a sum of about 9.2 billion VND per year in tax revenue.
The reduction of tax collection in the short term would create pressure on theState budget. However, the policies would promote the development of SMEs,encourage them to expand investment and production which would help increasetax revenue in the long term, the ministry said.–VNS/VNA
The idea was raised in a National Assembly draft resolution which the ministryrecently published for comments.
The move aims to promote the development of small- and medium – sizedenterprises and to encourage business households to transform into enterprises,as well as enhance their competitiveness and create jobs.
The Vietnamese Government aims to have one million businesses by 2020, 1.5million by 2025 and two million by 2030.
The ministry said that SMEs played a significant role in the country’ssocio-economic development and were recognised to be the driver for economicgrowth, citing statistics that Vietnam had more than 600,000 firms, nearly500,000 of them were private firms with 96 percent of being small and microscales.
The private firms created 1.2 million jobs and contributed more than 40 percentof gross domestic product (GDP).
Tax incentive policies are a commonly-used tool to promote SMEs in manycountries, according to the finance ministry.
China uses a 5 percent, 10 percent and 20 percent CIT rates for different levelsof taxable incomes of SMEs, while Thailand has rates of 15 percent and even taxexemptions for SMEs.
In Vietnam, SMEs must pay CIT rate of 20 percent, the same as otherenterprises, prompting the need for “reasonably CIT rates for SMEs”, theministry said.
In the draft resolution, the finance ministry proposed a CIT tax rate of 17percent on small businesses and 15 percent on micro businesses. Smallbusinesses would be those with annual revenue from 3 billion VND to 50 billion VNDand less than 100 regular employees while micro businesses would be those withan annual revenue of less than 3 billion VND and less than 10 regularemployees.
The ministry said that CIT incentive rates would not be applied forsubsidiaries to prevent tax avoidance.
In the draft, the ministry also proposed tax exemptions for two years afterfirst reporting taxable income for firms which transform from businesshouseholds. This aimed to encourage business households to transform intoenterprises.
The ministry estimated that if these tax policies were applied, the Statebudget would lose a sum of about 9.2 billion VND per year in tax revenue.
The reduction of tax collection in the short term would create pressure on theState budget. However, the policies would promote the development of SMEs,encourage them to expand investment and production which would help increasetax revenue in the long term, the ministry said.–VNS/VNA
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