Want to be in the loop?
subscribe to
our notification
Business News
TAX REDUCTION FOR MEDIUM-SIZED FIRMS MAY PROMPT UNFAIR COMPETITION: MINISTRY
If a corporate income tax reduction is proposed for micro, small and medium enterprises as a whole, nearly all enterprises will be subject to the incentive, which may lead to unfair competition among them, stated Nguyen Quoc Hung, deputy director of the Tax Policy Department under the Ministry of Finance.
The Ministry of Finance is preparing a resolution on corporate income tax policies, including a proposal to reduce the tax to 15%-17% for small and micro enterprises only.
Hung said that the ministry wants to ensure the effectiveness of the Government’s incentives and to support enterprises in need.
Micro, small and medium enterprises account for over 97% of the total number of firms in Vietnam. If a tax reduction is proposed for all of them, the proposal would make no sense, Hung said.
Moreover, the competition between medium firms and small and micro ones may be unfair as medium enterprises have more advantages in terms of capital, revenue, markets, workforce and technology than small and micro ones.
In addition, the proposal has been carefully considered, based on the current income structure of the State budget.
As estimated, the tax reduction for small and micro firms will reduce the State budget revenue by VND9.2 trillion (US$394.6 million) per year. The figure will be VND19.5 trillion if medium firms are also subject to the preferential policy.
Further, small and micro enterprises are vulnerable to the volatility of the economy and the fierce competition of foreign firms, so they are in need of more incentives.
Assessing the possible effects of the tax reduction, Hung said that it may put pressure on the State budget in the early stages but will become a driving force for small and micro enterprises to improve their production and business activities, allowing them to contribute more to the State budget in the future.
To ensure the State budget is balanced, the Ministry of Finance will coordinate with the relevant ministries, agencies and localities to deploy effectively all tax laws and to enhance control over tax payments to prevent tax losses and fraud, Hung said.
Under the Government Decree 39/2018/NĐ-CP dated March 11, 2018, an enterprise is categorized as a medium-sized one if it has no more than 200 employees and an annual revenue of no more than VND200 billion in the agriculture sector, or one with no more than 100 workers in the payroll and an annual revenue of no more than VND300 billion in the service or trade sector.
Source: The Saigon Times
Related News
VIETNAM EYES 8% GDP GROWTH IN 2025
The State Bank of Vietnam (SBV) has been tasked with closely monitoring global and regional economic developments and adjusting monetary policies to align with shifts in major economies. The directive emphasizes reducing lending rates, managing deposit rates at commercial banks, and ensuring credit flows remain uninterrupted in early 2025.
GOVERNMENT MEMBER FOR 2021-2026 TERM
The 2021-2026 government term was recently consolidated after the 8th session of the 15th National Assembly. It consists of 27 members, including the Prime Minister, five Deputy Prime Ministers, and 21 ministers and heads of ministerial-level agencies.
EXCLUSIVE OFFER FOR HKBAV MEMBERS
Minimum order: 1 box (10 gift boxes per box; 6 gift bags per box)Free shipping on orders over 2 million VND (nationwide delivery across Vietnam)Volume discounts available for large orders
TOTAL FDI REGISTERED IN VIETNAM HITS 31.4 BILLION USD IN JANUARY-NOVEMBER
As of November 30, 2024, the total newly registered capital, adjusted capital, and capital contributions or share purchases by foreign investors in Vietnam reached nearly 31.4 billion USD, up 1% increase compared to the same period last year.
QUANG TRI TARGETS 6,000 MW WIND POWER CAPACITY BOOST
The central province of Quang Tri is seeking the Government’s approval to expand its wind power capacity by an additional 1,500-2,000 MW for onshore projects and 2,600-4,000 MW for offshore projects, according to the Vietnam News Agency.
CONFERENCE EXAMINES PROSPECTS FOR DIFFERENT INVESTMENT CHANNELS IN 2025
Experts shed light on the factors shaping different investment channels in 2025, from real estate to stocks and cryptocurrency, at the second panel discussion at VIR's conference "Investing 2025: Decoding Variables - Embracing Opportunities" on December 12.