(VOVworld) - The Vietnamese government has taken tax-related measures to help companies boost production and services. This issue topped the agenda of Tuesday’s National Assembly session. VOV reporter Anh Huyen has more.
Never before have had Vietnamese companies suffered such numerous difficulties. In the first quarter of this year, the number of newly-established companies dropped by 10%, the number of failed or bankrupt companies rose by 15%. Turnover of 15 out of 21 key sectors, including trade, construction, production and services, has fallen significantly. A tax relief resolution is necessary, according to the majority of National Assembly deputies. However, the deputies say the measures need to be current, stable and long-term to really help companies.
According to a decree, the government will reduce or exempt 30% of income tax in 2012 for businesses in certain sectors such as those belonging to a particular economic group, employing a large number of workers, or processors of agricultural produce. Corporate income tax for 2011 and prior will be deferred by 9 months. In addition, fishing and salt making households will be exempt from business rates of this year. But National Assembly Deputy Do Van Ve from Thai Binh province says these tax incentives should be open to more businesses: “The beneficiaries of this tax policy are few and it’s still imbalanced. In fact, companies in other sectors are also under strain and need government support. We think that the government should include more small and medium sized companies into the beneficiary list”.
Huyen Van Tinh, a deputy from Tien Giang province says very few businesses enjoy the 30% tax reduction, while another 40% with potential should also be assisted: “I agree with the 30% tax reduction, but want to see more companies to benefit from this incentive. Furthermore, they should also be exempt from individual income tax”.
Nguyen Thi Nguyet Huong, a deputy from Hanoi, says the government should calculate carefully so that the aid will support the right people: “The criteria of small and medium sized enterprises (SMEs) is based on their total assets, total capital and the average number of employees per year. Capital will be the factor for priority. The decree should define SMEs based on their charter capital or owner’s capital instead of total asset, which can be owner’s capital or loans. So whether SMEs are subject to tax relief, it depends on negotiations, which may lead to a culture of asking for permission”.
National Assembly Deputies proposed that the 30% tax reduction offered by the government is not enough, especially when 50% of companies are suffering losses. But Finance Minister Vuong Dinh Hue says the government’s bailout package should be in line with Vietnam’s target of inflation control and macro-economic stabilization: “Now we think that financial and monetary measures are appropriate. But the situation should continue to be updated. If corporate performance improves, it’s good. If they remain in difficulties or even decline, the Ministry of Finance will propose the government additional measures”.
The government reports that budget collection for this year is expected to be 450 million USD lower. A tax relief program will definitely affect the budget, but will help maintain and develop production amidst the domestic and global economic downturn.