Tax incentives drive small business investment and expansion

Tax incentives drive small business investment and expansion

The Ministry of Finance's tax relief measures are giving small businesses stronger cash flow, lower costs, and greater capacity to invest and expand.

The Ministry of Finance (MoF) has rolled out a series of tax, fee, and charge measures in 2026 to support businesses and individuals while promoting economic growth. Among the most significant measures is the extension of the 2 percentage-point reduction in VAT through the end of 2026.

In response to volatility in global energy markets, the MoF has also advised the government and the National Assembly to adopt a series of tax relief measures on petroleum products during 2026.

These included reductions in preferential import tariffs, environmental protection tax, VAT and special consumption tax (SCT) on petrol and oil products during appropriate periods, helping stabilise fuel supplies and curb rising energy prices.

Alongside these short-term measures, the MoF proposed amendments to several tax laws, which were adopted by the National Assembly on April 24 as Law No.09/2026/QH16.

The legislation raises the revenue threshold below which individual business operators are exempt from personal income tax, increases the VAT exemption threshold for household businesses and individual entrepreneurs, and extends the preferential SCT treatment for battery-powered vehicles carrying fewer than 24 passengers through the end of 2030.

The government has also issued regulations extending payment deadlines for VAT, corporate income tax, personal income tax and land rental fees in 2026, easing cash-flow pressures for businesses and household enterprises.

The coordinated implementation of tax and fee measures has received broad support from both the business community and the public, helping lower input costs, support production and business activities, create jobs, contain inflation and maintain macroeconomic stability.

According to data from the Tax Department under the Ministry of Finance, total tax reductions reached approximately $2.21 billion in the first six months of 2026.

Specifically, reducing the VAT rate from 10 per cent to 8 per cent allowed businesses to retain approximately $875.6 million. More importantly, operating cost pressures were substantially eased after the environmental protection tax on petrol and oil was reduced to zero per litre, providing support equivalent to approximately $1.07 billion.

In addition, the application of a zero per cent SCT on petrol reduced costs by a further $148 million, while the abolition of the business licence fee from the beginning of 2026 enabled small businesses and household enterprises to save approximately $116 million.

These figures underscore the effectiveness of the government's policy approach, which contributed to GDP growth of 8.18 per cent in the first half of 2026.

They also reflect the government's strategy of accepting lower short-term budget revenues to foster stronger long-term revenue generation.

Mac Quoc Anh, vice chairman and secretary general of the Hanoi Small and Medium-sized Enterprises (SMEs) Association, said Vietnam has introduced a series of tax measures in recent years to support SMEs, a key segment of the private sector that makes a significant contribution to economic growth and employment.

"Revised tax laws provide preferential tax rates for SMEs, particularly micro-enterprises and household businesses," said Quoc Anh, "Tax exemptions, reductions, and payment deferrals have helped businesses maintain liquidity, secure cash flow for wages and raw materials, and support a return to growth."

"They also encourage companies to invest in machinery, improve production processes, and move towards meeting environmental, social, and governance standards and advancing the green transition," he added. "These are essential conditions for SMEs to scale up rapidly, develop sustainably, and integrate into global value chains."

Bui Manh Toan, chairman and CEO of Vietnox JSC, said tax incentives are among the most important tools for helping SMEs accelerate growth while pursuing long-term sustainability.

"When tax burdens are reduced, businesses have greater resources to invest in production, technological innovation, product quality improvements, and market expansion," he said. "However, tax and fee incentives should be complemented by broader support measures, including improved access to finance and stronger corporate governance capabilities. Such a comprehensive policy framework will help SMEs achieve stable and sustainable long-term growth."

VIR