VietNamNet Bridge - Many commercial banks, which have or plan to make merger and acquisition (M&A) deals in their restructuring process, have asked for the state’s financial support, saying that tax reductions will help them overcome difficulties.

The Sai Gon Ha Noi Commercial Bank (SHB) has asked for corporate income tax exemption and reduction for five years after the bank admits Vinaconex Viettel (VVF), a financial company which is described as ‘having many health problems’.

The bank has also asked to be exempted from corporate income tax it has to pay in 2013-2015, the three years during which it has to assume responsibility for Habubank, which was on the verge of bankruptcy when SHB took over.

The Military Bank (MB) also mentioned proposals for tax preferences at the meeting with shareholders to discuss the admission of Song Da Finance Company (SDFC).

MB wants the corporate income tax exemption and reduction for the first five years after the merger. Besides, it wants the 20 percent tax reduction for the holding bank for the first three years. It is estimated that if the proposal is approved, the two banks would save VND2 trillion from the tax remission.

Most of the commercial banks which join the restructuring of the banking system through M&A mentioned tax incentives in their restructuring plans. 

PetroVietnam Finance Corporation (PVFC), when merging with Western Bank to create PVcomBank now, also asked for 3-year corporate income tax exemption and 2-year tax reduction of 50 percent. 

PVFC said the tax preferences would help it accumulate capital after the restructuring.

When making claims, banks argued that they deserved the tax incentives, citing Decision No 254 which says that the Ministry of Finance (MOF) and relevant ministries will create policies on tax exemption and reduction relating to bad debt trade and bank restructuring.

The president of one of the banks affirmed that the State Bank has approved proposals on tax remission in principle. However, taxation bodies, the government and the National Assembly will make final decisions.

However, Deputy Minister of Finance Do Hoang Anh Tuan said tax incentives will not be given to the banks and finance companies.

Tuan said there is no reason to offer tax incentives in these cases, affirming that both the Vietnamese laws and international practice do not allow this.

“Taking over other companies or merging with others is a normal bank operation, which cannot enjoy tax incentives for any reason,” Tuan said. 

Meanwhile, the government has submitted to the National Assembly the plan to free some state-owned enterprises from their tax debts to help speed up state-owned enterprise restructuring. An MOF official said if the proposal is approved, VND1.3 trillion worth of debts will be forgiven.

VNE