The Ministry of Finance (MoF) during the cabinet meeting last month submitted a range of tax solutions to the Government, designed to remove difficulties and help promote development of enterprises.
Guiding businesses to carry out tax settlements at Ho Chi Minh City Department of Taxation.
The implementation of such solutions is expected to reduce State budget collection at first, but in the current difficult context, it is necessary for the State to share difficulties with the business community and the people. Deputy Minister of Finance Do Hoang Anh Tuan has confirmed this in an interview with Nhan Dan newspaper.
Q: There are a lot of tax solutions available to help enterprises overcome difficulties and boost production and business. So, why did the MoF continue to submit to the Government a variety of additional tax solutions?
A: In recent years, due to the impact of the global economic crisis,
Prime Minister Nguyen Tan Dung issued Directive No. 11/CT-TTg dated
Under the instructions of the PM, plus the synthesis of proposals from the business community, the MoF has drafted a number of solutions and sent them to related ministries, agencies and localities for comments.
To meet international integration requirements and gradually increase national competitiveness, the Government and PM have issued a range of other documents including the Government Resolution No. 19/NQ-CP on tasks and solutions to improve the business environment and improve national competitiveness, the PM’s Directive No. 24/CT-TTg on enhancing the management and reform of administrative procedures in the fields of taxation and customs. Following such guidance, the MoF has submitted to the Government solutions focusing on simplifying the tax system.
Q: Among the submitted solutions, the business community is particularly concerned about those dealing with corporate income tax (CIT). Could you provide more information about these tax incentives?
A: In recent years, policies on CIT have been repeatedly amended and supplemented towards creating more favourable conditions for business operation, improving the investment environment and contributing to an enhanced competitiveness for enterprises. At present, to continue removing difficulties for enterprises and improving economic competitiveness, the Party and State always attach great importance to innovation in tax policies in general and CIT in particular. Since the beginning of 2014, the CIT rate reduced to 22% instead of 25% as previously, following the implementation of the 2013 Law on Corporate Income Tax. Meanwhile, the tax rate of 20% has been applied for enterprises with revenue of not exceeding VND20 billion (US$940,000) since
So far, the auxiliary industry has been not covered by CIT incentives. The current ones are only applied in some import tax preferences and access to credit, while incentives on income tax, land rent and land use fees are not enough to encourage enterprises to expand investment in business development, as in the auxiliary industry mentioned above.
As for integration requirements, it is necessary to develop and supplement additional policies to development priorities as they are important solutions to help the domestic manufacturing sector take the initiative in seeking raw input materials, spare parts, components and accessories. They also help manufacturers actively select suppliers, thus reducing manufacturing costs, increasing competitiveness, and especially avoiding dependence on foreign sources of supply. Therefore, the MoF has suggested the Government apply tax incentives at a high level for the auxiliary industry.
At the same time, there have been amended and supplemented provisions on CIT incentives for particular fields of investment, but the implementation of such regulations is still causing difficulties and obstacles for businesses and even tax authorities and bodies responsible for issuing investment certificates.
To create an open investment environment and to facilitate and ensure policies are synchronised with the applicable provisions of the Law on Investment, the MoF suggested the Government provide additional principles applied whenever the State may amend and supplement CIT incentives as followed: If enterprises receive less incentives as prescribed by the new policies in comparison with the old ones, they will continue to benefit from incentives stated in the investment certificate.
To be consistent with market economy mechanisms, additional regulations allowing businesses to deduct the cost of expenses for employee welfare from taxable income would be issued, as proposed by the business community.
In addition, there are many other incentives for businesses.
Q: How does the implementation of this tax-solution package take effect, as well as affect the State budget collection task in 2014 and the following years?
A: The implementation of such solutions aims to solve difficulties for businesses and is an important factor in investment attraction, which currently is tending to shift dramatically from other countries in the region into
This may result in reduced State budget revenue, but the MoF supposes that in the current conditions the State should share difficulties with the business community and the people. When businesses can handle their difficulties, there would be favourable conditions for promoting production and business operation, thereby promoting economic growth and contributing to increased revenue for the State budget.
Q: Thank you very much!
Nhan Dan
