Tax relief- temporary but effective measure for businesses

(VOVworld) – The National Assembly has just approved a resolution on tax reduction and exemption for businesses. The move is considered a temporary but effective measure in the wake of Vietnam’s stagnating economy in the first quarter of this year.

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The resolution sets out two ways to ease tax burden for business. The first way is that liable corporate tax for this year will be reduced by 30% for small and medium sized enterprises (SMEs) and enterprises classified as A, which belong to economic groups or corporations. Companies that employ a large number of workers for production and processing of agro-forestry-fishery products, garments, textiles and spare parts and construction companies can also enjoy tax reduction. The second way is that value added tax, income tax and corporate tax for this year will be exempt for those renting workers’ houses if they maintian the same renting prices as late last year.

It is estimated that all tax-related package will cost the government nearly 1.5 billion USD, including 800 million USD from tax deferment. Do Van Ve, a National Assembly deputy of Thai Binh province, remarks: “I think the 1.5 billion USD package is a correct decision and will be a remedy for ailing companies. On the other hand, companies themselves should try to boost production, consumption and exports.”

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Once tax incentives are implemented, state budget collection for this year will decline by about 450 million USD. Tran Ngoc Vinh, a National Assembly deputy from Hai Phong city, says: “Companies are facing difficulties and tax relief measures will affect the State budget. So it’s necessary to make clear those who will enjoy tax incentives to ensure transparency and effectiveness.”

Many deputies say companies’ difficulties are high interest rates and inventories, highlighting the need of the government’s bailout package. But they propose that in the long run the State should outline development guidelines to facilitate businesses’ sustainable development. According to experts, in addition to supportive measures, the Government needs to improve and renew the business environment.

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