Want to be in the loop?
subscribe to
our notification
Business News
FINANCE MINISTRY PROPOSES LOWER TAX RATE FOR MICRO AND SMALL ENTERPRISES
To support micro and small enterprises to accumulate capital and develop business, the Ministry of Finance (MoF) has proposed lowering the corporate income tax rate to 15-17 per cent for those with a total revenue of no more than 50 billion VND (1.99 million USD), instead of the current flat rate of 20 per cent.
The tax cut, included in the draft Law on Corporate Income Tax (amended), is expected to be presented to the National Assembly for first review in October 2024 and for approval in May 2025.
Meanwhile, the ministry has been gathering feedback on the draft law from governmental agencies and the public. It said one of the drafting committee’s key objectives was to create a more favourable tax regime for micro and small enterprises.
According to the draft law, a 15 per cent tax rate is proposed for businesses with total revenue not greater than 3 billion VND, and a 17 per cent tax rate is proposed for businesses with total revenue higher than 3 billion VND and lower than 50 billion VND.
The ministry said that out of the 900,000 businesses currently operating, micro and small businesses account for nearly 94 per cent and have been earmarked for preferential policies to help them develop production and long-term revenue. During the COVID-19 pandemic, they were also beneficiaries of many of the Vietnamese government’s support programmes.
International experience shows that many countries use tax support policies as a tool to promote the development of small businesses. For example, small businesses may be granted preferential tax rates, which could be a fixed tax rate or a progressive tax rate based on income streams.
The ministry said in principle small businesses should enjoy a lower tax rate in comparison to large enterprises, but in practice, this policy will not apply to all small businesses.
According to the Law on Supporting Small and Medium Enterprises, a business is classified as small or medium if it employs an average of 200 workers and meets one of the following two criteria - total capital not exceeding 100 billion VND or total revenue in the preceding year not exceeding 300 billion VND.
Based on these criteria, micro and small businesses currently account for nearly 94 per cent of all businesses in the country, and if medium-sized businesses are included, the group of micro, small and medium-sized enterprises accounts for over 97 per cent. If these criteria were used to determine eligibility for preferential tax rates, almost all businesses in the country would qualify.
During the initial feedback process on the draft Law on Corporate Income Tax (amended), the business community expressed enthusiasm about the tax incentives, but was also concerned that some provisions in the draft law could pose policy risks.
They have called for greater clarity and stronger measures to help businesses manage risk, promote investment activities, streamline operations and create additional jobs.
Source: VIR
Related News
GLOBAL SOURCING FAIR VIETNAM 2025
Global Sourcing Fair Vietnam 2025, held from 24-26 April at the Saigon Exhibition & Convention Center (SECC), Ho Chi Minh City, is the must-attend international expo for sourcing Fashion & Accessories and Home & Gifts
VIETNAMESE ENTERPRISES GRAPPLE WITH CHALLENGES IN Q3
In many sectors, businesses acknowledged that simply breaking even was an accomplishment this year. A prominent example is Nam Sông Hậu Trading Investment Petroleum JSC, once a leading fuel distributor in the Mekong Delta.
CENTRAL BANK ISSUES NEW DECISIONS ON DEPOSIT INTEREST RATES
The other holds that the maximum interest rate for Vietnamese đồng-denominated deposits with terms of less than one month of organisations and individuals at credit institutions and foreign bank branches is 0.5 per cent per year. Additionally the maximum interest rate applied to deposits with terms from one month to less than six months is 4.75 per cent per year.
REAL ESTATE BUSINESSES EXPAND INTEREST IN AVAILABLE LAND TO THRIVE IN 2025
Real estate companies are vigorously seeking available land to prepare for a new wave of investment in 2025.The Ministry of Construction’s October report highlighted that legality, liquidity, and land use fees are the primary considerations for businesses selecting land investments.
VIETNAM SET TO ENHANCE CUSTOMS QUALITY AND EFFICIENCY
The policy outlines the GDC's objectives to enhance the effectiveness and efficiency of State customs management, align with development and international integration needs, and streamline the import, export and transit of goods, as well as the entry, exit and transit of means of transport.
HIGH-TECH PERSONNEL TO DRIVE COMPETITION
Vietnam is advancing new mechanisms and incentives to strengthen workforce quality as part of a strategy to engage high-tech investment and enhance its economic competitiveness. The government announced at a recent National Assembly (NA) session that it would increase investments in education and training quality in the next few months.