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The Ministry of Finance (MoF) has submitted a range of tax solutions to the Government in order to remove difficulties and help promote development of enterprises.

Deputy Minister of Finance Do Hoang Anh Tuan in an interview with the Nhan Dan newspaper said that the implementation of tax incentive package could lead to reduce State budget collection at first, but in the current difficult context, it was necessary for the State to share difficulties with the business community and the people.

* 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 new tax solutions?

In recent years, due to the impact of the global economic crisis, Vietnam’s economy and the business community have faced many difficulties and challenges. With support measures for enterprises being deployed during the last months of 2013 and the first six months of this year, the economy recorded some positive signs of revival but was still in turmoil. For that reason, it is essential to have more measures to support business development.

Prime Minister Nguyen Tan Dung issued Directive No. 11/CT-TTg dated May 21, 2014 on resolving difficulties and promoting the development of businesses towards successfully accomplishing the national socio-economic development tasks by 2015, in which he assigned the MoF to devise taxation and financial solutions for businesses.

Under the instructions of the PM, plus 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 has 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 on simplifying the tax system.

* Among the proposed solutions, the business community is particularly concerned about corporate income tax (CIT). Could you provide more information about these tax incentives?

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 percent instead of 25 percent as previously, following the implementation of the 2013 Law on Corporate Income Tax. Meanwhile, the tax rate of 20 percent has been applied for enterprises with revenue of not exceeding 20 billion VND (940,000 USD) since July 1, 2013.

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 the auxiliary industry.

As for integration requirements, it is necessary to develop and supplement additional policies to help the domestic manufacturing sector take initiatives 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 too dependence on a particular foreign supplier.

Therefore, the MoF has proposed special tax incentives 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 proposed that 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.

* 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?

The implementation of tax-solution package 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 Vietnam. Thereby, it also helps bring more resources for businesses and create more decent jobs and income for a large amount of domestic labour force.

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.

Source: VNA