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Vietnam slashes business license fee to spur economic growth
The new adjustment is revealed at recently released Circular No.47 of the MoF, prescribing the rates of charges for provision of enterprise information and fees for enterprise registration and charge and fee collection, remittance, management and use.Following the new circular, fees of other services for enterprises will be sharply cut compared to the existing levels, including the fee for the issuance of business certificate for enterprises’ branch and representative offices from VND100,000 (US$4.3) to VND50,000 (US$2.15). Fee related to the annoucement of contents of enterprise registration would be cut by three-fold from the current VND300,000 (US$12.89) to VND100,000 (US$4.3).Additionally, in five cases enterprises would be exempted from these charges, such as those providing additional information in business certificate; declaring suspension of operation of the company or a branch; applying for business certificate online; and business households transforming into formalized businesses.
Previously, the MoF has also proposed 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 in order to be 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.
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, in the long term, the regulation would 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 enforcing the tax laws and preventing tax losses.