Tax extensions could support sustainable growth

Tax extensions could support sustainable growth

Continued fiscal support is expected to benefit individuals and businesses in production activities.

The Ministry of Finance (MoF) is collecting comments on the draft decree on extending the deadline for payment of VAT, corporate income tax (CIT), personal income tax, and land rent.

It is believed that the move would help expand production and business as well as encourage economic growth, with the global economy currently struggling with disruptions in global supply chains and upward pressure on raw material prices.

The total extended VAT value would be about $2.48 billion, but state budget revenues for 2025 would not decrease as enterprises must pay to the state budget no later than December 31.

Meanwhile, the MoF proposes an extension for provisional CIT payments of Q1 and Q2, estimated at $1.44 billion.

Business households and individual firms would also see an extension of the deadline for payment of VAT and personal income tax until the end of the year, with the amount estimated at $14 million.

Additionally, the ministry proposes to extend the deadline for paying half of the land rent payable in 2025, at a cost of $144 million. The extension period would cover the six months from May 31.

According to the MoF, the total estimated tax amount extended according to the draft decree would be nearly $4.08 billion, the largest figure involving tax and land rent extension policies since 2023.

On the last day of February, at a meeting between the government and small- and medium-sized enterprises (SMEs), Dang Hong Anh, chairman of the Vietnam Young Entrepreneurs Association, appreciated the proposal.

“Extending and reducing taxes and fees encourages cooperation mechanisms between large enterprises and SMEs to develop supporting industries, and improve the competitiveness of domestic enterprises,” Anh said. “Extending the deadline of CIT payment by 6-12 months for the SME sector is necessary now.”

Nguyen Van Than, chairman of Vietnam Association of Small and Medium-sized Enterprises (VINASME) proposed that the Law on Corporate Income Tax should be revised to support SMEs.

“Provisions to reduce taxes for the entire sector should be added to the law to help sustain revenue sources. SMEs should be entitled to a CIT rate lower than the normal tax rate for a limited period of time,” Than said. “A tax reduction along with additional support for small and medium-sized enterprises is essential.”

The 20 per cent CIT rate has been in place since 2016. It is currently the same rate as Thailand, Laos, and Cambodia, but lower than in the Philippines, Malaysia, and Indonesia.

Minister of Finance Nguyen Van Thang said that the ministry agrees with the idea of reducing CIT for small businesses, and it will consider and report on specific reductions.

The private sector contributes about half of GDP and 56 per cent of total social investment capital, while creating more than 80 per cent of jobs, according to the VINASME. Of this, the domestic private sector accounts for 28 per cent of GDP, higher than other economic sectors.

“If this sector can grow sustainably at a double-digit rate, the GDP target of over 8 per cent this year and at least 10 per cent for the 2026-2030 period might be achievable,” Than from VINASME said.

In December, the government requested the MoF to preside over and coordinate to consider and propose policies to exempt and reduce land rents, support individuals and businesses to develop production and business to apply from the beginning of 2025, contributing to achieve the economic growth target of 8 per cent upward this year.

VIR

- 14:56 18/03/2025