Government lowers income tax for firms
Government lowers income tax for firms
Viet Nam's Ministry of Finance has cut the general enterprise income tax rate to 22 per cent from 25 per cent from 2014 on and to 20 per cent by 2016.
Enterprise income eligible for the 22 per cent tax are from the transfer of real estate, investment projects, the right to participate in investment projects, and rights in exploration, mining and mineral processing.
Under Circular 78/2014/TT-BTC, which took effect last August 2, enterprises established under the provisions of Vietnamese laws, including those on cooperatives and business units, operating production, goods and services businesses with a total sales of VND20 billion (US$944,000) per year may qualify for the 20 per cent tax rate.
Truong Chi Trung, Deputy Minister of Finance said that the 22 per cent enterprise tax rate aimed to provide benefits to all sectors such as non-alcoholic drinks, textile, transport vehicles and devices, mining, communications and media.
The tax cut also aims to provide additional support to small- and medium-d enterprises, Trung added.
The enterprise income tax rate on prospecting, exploring and exploiting oil and gas in Viet Nam is between 32 and 50 per cent while the rate on the implementation of investment projects in social housing for sale, rent or lease purchase is 10 per cent.
Circular 78 also rules that for expenditures with invoices for goods and services valued at VND20 million ($943) or more upon payment, enterprises should have non-cash payment documents.
During the taxable period, enterprises with unpaid invoices for good and services and no non-cash payment documents shall include expenditures below VND20 million among the tax-deductible expenditures.
Enterprises that have no non-cash payment documents shall declare and reduce expenditures for the value of goods and services without non-cash payment documents in the period covering taxable incurred cash payments.
A workshop was held in HCM City last Wednesday to come up with measures to drastically reduce the time and cost of tax payment procedures for businesses. The event, which the US Agency for International Development is supporting, forms part of the project on the comprehensive improvement of state governance.
Nguyen Thi Cuc, Head of the Viet Nam Tax Consultants' Association, cited World Bank figures showing that the time required for businesses in the country to file tax returns has been remarkably reduced, from 1,050 hours per year seven years ago to 872 hours recently.
Viet Nam is aiming to set up online tax declarations for up to 95 per cent of enterprises by year-end, with15 out of 63 localities using e-tax payment by 2015. The changes are expected to cut the time spent by enterprises on tax clearance procedures to half by the end of 2015.
To shorten tax-payment duration, it is necessary to increase the use of electronic tax payment services among enterprises, Cuc noted.
Hoang Thi Lan, Deputy Head of the Committee for Taxation Reform and Modernisation under the Ministry of Finance's General Department of Taxation, cited enterprises' preparation of the required documents for tax declaration as one of the reasons behind time-consuming tax procedures.
The finance ministry announced that a number of changes would also be made to save on time for businesses, including the cutting of the number of tax declaration forms and adjustments in regulations mandating the documents needed for tax payments.
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