Financial sector drives tax reforms to fuel private sector growth

Financial sector drives tax reforms to fuel private sector growth

The Ministry of Finance is advancing major tax reforms to support private sector development, aligning with national strategies and removing legal barriers to foster innovation, growth, and green transformation.

Truong Ba Tuan, deputy director general of the Department of Tax Policies, Fees, and Charges Supervisory Authority under the Ministry of Finance (MoF), noted that adhering closely to the guidelines of the Party and the state, the MoF has conducted research and a comprehensive review and assessment of tax laws.

The financial sector is accelerating tax reforms and administrative procedure simplification to aid the private sector's development

A report will be submitted for competent authorities to consider tax amendments, with the goal of comprehensively and synchronously supplementing the tax laws within Vietnam’s tax system.

Tuan gave the remark at the MoF’s review meeting in Hanoi last month.

“Leveraging this comprehensive review, the MoF has submitted proposals to the government and the National Assembly (NA) to amend and supplement five key tax laws,” said Tuan.

These include the Law on Value Added Tax which was passed by the NA last November, the amended Law on Special Consumption Tax, and the amended Law on Corporate Income Tax. Both have been presented to the NA for feedback and are expected to be adopted at an NA session this month.

Revisions to the Law on Export and Import Duties are also slated for approval this month, while the replacement of the Law on Personal Income Tax has been proposed for inclusion in the 2025 legislative programme.

According to Tuan, these tax reforms aim to ensure a rational mobilisation of resources for the state budget to fulfill development tasks, uphold social security, and reduce poverty.

At the same time, the updated tax policies are designed to nurture and expand revenue sources for the state budget.

“The tax framework is built on the principle of equality, providing non-discriminatory treatment between different economic sectors, including domestic businesses and foreign-invested companies. It also includes targeted incentives to foster the growth of the private sector,” said Tuan.

Beyond policy development, the MoF has proactively advised the government on implementing a series of tax reduction measures to support business development.

Among these is the preferential corporate income tax rate of 15 per cent or 17 per cent for small firms, compared to the standard 20 per cent rate, aiming to strengthen this critical segment.

Additional measures include tax exemptions on income from the transfer of green bonds, first-time carbon credit transfers post-issuance, and income earned by public service units providing essential services, such as initiatives that contribute to green growth, sustainable development, and social welfare.

The MoF has also reviewed and rationalised preferential tax policies to encourage investment, job creation, technological advancement, innovation, and digital transformation, aiming at furthering national strategic priorities.

Simultaneously, specific tax policies have been introduced to curb the consumption of products harmful to public health or the environment.

On May 4, the Politburo issued a resolution to propel private sector development, laying out numerous tasks and solutions, including the refinement of tax policy.

Tuan revealed that, in response, the MoF quickly developed and submitted a proposal to the government, which led to the NA’s adoption of another resolution on special mechanisms for promoting private sector growth on May 17.

The resolution introduces several new, distinctive tax policies beyond the scope of existing legislation, some of which are being implemented in Vietnam for the first time.

“In addition to policymaking, the MoF has promoted administrative reform to create a more favourable environment for taxpayers, ensuring accurate and sufficient state budget revenue while addressing challenges encountered in implementing tax policies,” said Tuan.

VIR