Taxes unlikely to be cut: finance minister
Taxes unlikely to be cut: finance minister
While local businesses have long yearned for a tax cut to assist them amid the myriad of financial and operational difficulties currently facing them, Minister of Finance Vuong Dinh Hue said there is little likelihood that any tax relief will be released.
“The government should slash corporate income tax from 25 percent to 20 percent,” said delegate Tran Du Lich from Ho Chi Minh City at a National Assembly discussion yesterday.
“The taxes must be reduced, and now is the time when the cut will bring in the most effective results,” he urged.
Sharing his view, Nguyen Cao Phuc, who represents Quang Ngai province, called on the government to cut value-added tax to reduce goods prices, and boost consumption, helping businesses to clear their stock.
Meanwhile, delegate Nguyen Cao Son from Hoa Binh Province proposed that the lending interest rate be lowered to below 10 percent a year to enable businesses to access loans and increase competitiveness.
In response to the delegates’ proposals, Minister of Finance Vuong Dinh Hue said it is difficult to cut the said taxes at the moment.
“The ministry has researched the VAT tax in more than 111 nations, and there are 87 countries whose VAT rate is between 12 and 25 percent, while the rate in Vietnam is only 10 percent,” the minister told the meeting.
“If VAT tax is reduced by 50 percent, the state budget collection will also drop by VND15 trillion, and there is no other collection to cover for this loss,” he said.
“On the other hand, we did cut VAT in 2009 but businesses didn’t reduce selling prices to help consumers.
“So, we will consider cutting taxes in only certain segments.”
Regarding the corporate income tax (CIT), Hue said there is already a roadmap to reduce the rate to 20 percent.
“But the average global rate is 27 percent, and the current 27 percent rate imposed on local businesses is considered low,” said Hue.
“Lowering the CIT to 20 percent will also cost the state budget collection a huge VND20 trillion.”
However, Hue added that “the National Assembly can announce that CIT next year will be cut to 22 – 23 percent.”
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