Vietnamnet.vn
Podcast
VietNamNet Bridge – Businesses complain that the currently applied ceiling of
the spending on marketing and advertisement has become “out of date,” which
makes it impossible to run marketing campaigns to introduce new products to
consumers.
 |
|
|
Economists have urged MOF’s compilation committee to amend some unreasonable provisions in the currently applied Decree No 124, so as to create the most favorable conditions for the business community, especially the regulations on lawful, reasonable expenses.
Dr Nguyen Thi Lien from the Finance Academy, said that under the current regulations, except the vehicles used to carry passengers, tourism and hotel, the enterprises in other business fields, when buying cars with less than 9 seats and the value of more than 1.6 billion dong, cannot make depreciation for fixed assets. This means that the expenses on the vehicles must not be considered as legal expenses when defining taxable incomes.
Lien has pointed out that the regulation clearly doest not fit the reality in the automobile market and does not come in line with the MOF’s decision to increase the car ownership registration tax.
In fact, enterprises can easily “play tricks” to evade tax, according to Lien. “The only foundation to define the purpose of using vehicles is the business registration certificate. Therefore, in order to be able to make amortization, businesses just need to declare that the vehicles are used for general purposes. If so, nobody can pick holes,” she explained
Nguyen Thi Cuc, Chair of the Tax Consultancy Association, former Deputy General Director, also said that it is necessary to set up a cap on the car value for amortization, but it is necessary to raise the cap to 2-3 billion dong from the current 1.6 billion dong.
“The 1.6 billion dong threshold is only suitable to the enterprises which belong to the State, or the enterprises, where the State holds more than 51 percent of stakes,” she said.
“The threshold can be adjusted in accordance with the real situation, because this is within the jurisdiction of the Ministry of Finance,” she added.
Under the current regulations, the expenses on advertisement, marketing, sale promotion campaigns and events must not be higher than 10 percent of the lawful expenses (the 15 percent level is applied to the first three years of enterprises’ operation).
However, businesses complain that the ceiling is too low, and that with such modest expenses they will not be able to introduce new products to consumers. Especially, a lot of businesses have proposed to remove the cap, saying that businesses must have the right to decide how much to spend and for what to spend money. Some economists have supported the viewpoint, saying that such a mechanism should not exist in the market economy.
“In the market economy, spending on advertisements, marketing and sale promotion campaigns is a very important thing for businesses to survive and develop. The expenses for these must be recognized as the legal expenses when calculating corporate income tax,” said Dr Vuong Thi Thu Hien from the Finance Academy.
Telecom and banking are the two sectors that spend most money on advertisement and marketing. Therefore, the representatives from the two sectors have expressed their dissatisfaction when MOF still insists on setting up a cap on this kind of spending.
MOF believes that it is necessary to set up a cap in order to prevent businesses from declaring wrong expenses to evade tax.
Source: TBKTVN
.svg){kind=icon}
