Vietnamese Gov’t opts for US$936 million rescue package in tax waiving
Vietnamese Gov’t opts for US$936 million rescue package in tax waiving
If the National Assembly approves the Government's proposal, enterprises will benefit from corporate income tax and value-added tax cuts by 30%.
Businesses struggling with Covid-19 impacts may be subject to various support in a new rescue package under the form of waiving and reducing tax payments worth VND21,300 ($936 million).
Production at a manufacturing plant in Hanoi. Photo: Nguyen Viet
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The move was revealed during a discussion session held by the National Assembly (NA) Standing Committee on September 16 to review a draft resolution proposed by the Government on supporting the people and enterprises affected by the pandemic.
Under the draft resolution, the Government proposed a 30% cut in value-added tax from October 1, 2021, to December 31, 2021, for businesses in the fields of transportation, catering and hospitality services, publishing, movie, sports, and entertainment.
According to the Government, such a move may lead to a decline of VND5 trillion ($220 million) in State budget revenue.
Minister of Finance Ho Duc Phoc said customers would benefit directly from the 30% cut in tax as prices of goods and products are lowered, while the businesses and producers also have the incentive to expand production activities.
Chairman of the NA’s Committee for Economic Affairs Vu Hong Thanh said while the policy targets customers as the main beneficiary, inefficient management of invoices may steer said benefit back to enterprises, not the public.
Thanh called for the Government to tighten tax management and ensure the lawful rights of customers.
Meanwhile, the Government also proposed a 30% reduction in corporate income tax for businesses with revenue below VND200 billion ($8.78 million), and the combined revenue in 2021 declines against the previous year.
In case enterprises were newly-formed or changed their business lines, the requirement of earning less revenue in 2021 compared to 2020 is not applicable.
Explaining the proposal, Minister Phoc said the requirement is to ensure those qualified for the support are those affected by the pandemic and may reduce the tax revenue by VND2.2 trillion ($97 million).
NA Chairman Vuong Dinh Hue stressed a corporate income tax cut should only focus on those that are hurt by the pandemic, as in reality, many industries have thrived during the pandemic, such as medical equipment, or e-commerce.
For individual businesses and households, the draft resolution noted they are exempted from paying personal income tax, value-added taxes, and other fees incurred in the third and fourth quarter, estimated at around VND8.8 trillion ($386.8 million).
The Government also expected to waive penalties for late payment of land rental fees during 2020-2021 for businesses suffering losses in 2020 worth VND5.3 trillion ($233 million).
The resolution is scheduled to be approved by the NA before October 1, 2021.
