The National Financial Supervisory Committee has proposed cuts to corporate income tax for small-and-medium sized enterprises to promote their development. (Source: VNA) Hanoi (VNS/VNA) - Corporate income taxlevied on small and medium–sized enterprises (SMEs) should be reduced topromote the business development, a solution together with broadening tax baseto increase budget revenue from business and production.
This was a highlighted in the January-Septemberfiscal and budget report by the National Financial Supervisory Committee(NFSC) published last week which said that the tax cut would help restructurebudget revenue in a sustainable direction.
The NFSC said that Vietnam ran the lowest budgetdeficit in three years as of September 30 at 26.7 trillion VND (1.16 billionUSD), compared to 61.5 trillion VND (2.63 billion USD) during the same periodin 2017 and 152.2 billion VND (6.51 billion USD) in 2016.
However, budget collection lacked sustainability,the NFSC said.
The committee pointed out in the report that budgetcollection was still largely dependent on unsustainable sources such as crudeoil. In the short term, budget collection from crude oil was affected byfluctuations of global prices and output while in the long term, budgetcollection from crude oil also lacked sustainability due to limited reserves.
In addition, increases in domestic budget collectionmainly came from taxes on land and houses while collection from businesses wasmuch lower than estimated.
The report cited statistics that said as of the endof September, collection from land and houses had reached 104.4 percent ofestimate but only 65.3 percent from SOEs, 58.8 percent from the foreign directinvestment (FDI) sector and 68.7 percent from the private sector.
Budget collection in many provinces and citiesremained heavily dependent on sales of public assets, especially land userights.
The NFSC’s report also pointed out that disbursementof investment in capital construction was lower than estimated at only 50.2 percent.
Another report by the State Audit of Vietnam showedthat budget collection was estimated to total nearly VNĐ1.36 quadrillion forthe full year, 3 percent higher than expected and 5.5 percent higher than in2017.
The State Audit of Vietnam, however, said in thereport that the excess amounts mainly came from land, houses and crude oil.Collection from land and houses increased by 35.9 percent and from crude oil by53.2 percent.
Collection from the SOE, FDI and private sectors allsaw declines of 2.9 percent, 15.1 percent and 2.2 percent.
According to the NFSC, it was necessary tostrengthen measures to support businesses to boost their development to increasebudget revenue from business and production and reduce reliance on unstablesources.
The committee said that lowering corporate incometax for SMEs could be a solution, together with broadening the tax base.
In addition, the NFSC said that the equitisation andcapital divestment at SOEs must be accelerated to increase their efficiency.
At the Greater Mekong Subregion Business Summit,Prime Minister Nguyen Xuan Phuc said that the Vietnamese Government intended tocut corporate income tax from the current 20-22 percent to 15-17 percent tocreate an attractive investment environment for Vietnam.
In August 2017, the Ministry of Finance alsoproposed a tax rate of 15 percent on micro-businesses (those with an annualrevenue of less than 3 billion VND) and 17 percent for SMEs (those with lessthan 200 employees and annual revenue from 3 billion VND to 50 billion VND).
According to To Hoai Nam, Deputy Chairman of the Vietnam Association ofSMEs, the tax cuts for businesses were good but not enough. In the long term,policies should focus on improving the competitiveness of enterprises and theiroperational efficiency. He said that tax policies must betransparent.
According to the General Department of Taxation, it was necessary toreview tax policies comprehensively to increase the sustainability of budgetrevenue in terms of scale and structure.
Policies would be reviewed on the basis that the tax base would beexpanded, the tax authority said.
For SMEs, reasonable tax rates would be proposed to increase competitivenessbut ensure compliance with the Law on Supporting SMEs.-VNS/VNA
VNA
