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Vietnam’s finance ministry proposes waiving corporate tax for micro firms
The Hanoitimes – The tax exemption could reduce the state budget revenue by VND9.2 trillion (US$396 million) per year, but lay a foundation for micro and small enterprises to develop in the long term.
Vietnam’s Ministry of Finance (MoF) is proposing a regulation that exempts the corporate income tax for micro and small enterprises in two years after they have sufficient income subject to taxation.
The regulation is also applicable to formalized home businesses, paving the way to meet the target of having one million enterprises by 2020 by promoting the development of the business community and household businesses to become formalized.
Formalized household businesses qualified for tax exemption are required to have operated for 12 months since the issuance of the business registration certificate. In case of enterprises, the owner must not be involved in other businesses.
Additionally, the MoF expects to apply a corporate income tax rate of 15% to micro enterprises with annual revenue of less than VND3 billion (US$129,000) and a labor force of not more than 10.
A higher tax rate of 17% would be applicable to small enterprises with annual revenue of less than VND50 billion (US$2.15 million) and employing less than 100 workers.
According to the MoF’s calculation, the tax exemption could reduce the state budget revenue by VND9.2 trillion (US$396 million) per year, putting more pressure on the government’s coffers in the short term.
However, the regulation is expected to support the development of small and micro enterprises, creating a favorable and transparent environment for them to succeed and later contributing to the state budget.
To cover the impact of the regulation in the short term, the MoF is expected to work with other government agencies in implementing the tax laws and preventing tax losses.
Source: http://www.hanoitimes.vn/economy/2019/07/81E0D9B3/vietnam-s-finance-ministry-proposes-waiving-corporate-tax-for-micro-firms/