A decree has been published to guide the implementation of a National Assembly resolution offering firms a 30 per cut corporate income tax (CIT) cut.
Firms with revenue of less than 200 billion VND this year would be eligible for 30-percent reduction on corporate income tax (Photo: taichinhdoisong.vn)
The draft is up for comment, while the resolution came into effect on August 3.
Under the draft, the tax cut would be given to enterprises with total revenue of less than 200 billion VND (8.62 million USD) in 2020 – those considered the most vulnerable to the COVID-19 pandemic’s negative impacts.
In case firms were just founded in 2020 and did not operate for the full 12 months of this year, their revenue would be calculated based on the number of months they actually operated. Specifically, the revenue would be divided by the number of months they operated then multiped by 12 to determine their eligibility for the support policy.
According to the Vietnam Chamber of Commerce and Industry, the draft decree still lacks a way to calculate revenue of firms which temporarily halted operations.
To Hoai Nam, deputy president of the Vietnam Association of Small and Medium-Sized Enterprises, said that it was not necessary to have a specific regulation for firms which temporarily halted operations.
Nam said the pandemic was heavily affecting businesses and it would be difficult for SMEs, which account for about 97 percent of the total number of firms in Vietnam, to achieve revenue of 200 billion VND this year.
Nam stressed the decree should not erect any barriers which caused difficulties for firms in accessing the support.
Statistics of the Ministry of Finance showed that as of the end of 2019, Vietnam had a total of 760,000 firms in operation. The ministry estimated the tax cut would cause a reduction of around 23 trillion VND to State revenues this year.
However, the policy was necessary amid the pandemic to help firms to overcome difficulties and recover.
According to the Ministry of Planning and Investment, nearly 63,500 firms withdrew from the market in the first seven months of this year, up 11 percent against the same period last year.
Among them, 33,000 firms temporarily halted operation, up 40 percent, while 21,800 registered for dissolution procedures and 8,940 completed dissolution./.VNS
The new proposal on tax cuts for local firms should focus on changes of earnings, not personnel, so it benefits the worst-hit companies during COVID-19, National Assembly (NA) deputies said on Thursday.
The Ministry of Planning and Investment has asked for corporate income tax (CIT) to be cut for small and medium-sized enterprises (SMEs) by half this year in an effort to boost growth when the COVID-19 pandemic eases.