Vietnam Introduces Tax Incentives for SMEs
Jul. 7 – Last April, Vietnam’s Prime Minister executed a tax extension for small and medium-sized enterprises (SMEs) for 2010 corporate income taxes with the total amount of around VND7 trillion. The eligible enterprises for this incentive are about 200,000 of the total 360,000 small and medium enterprises currently operating in Vietnam.
In the government’s regular meeting in May, the government has asked the Ministry of Finance (MoF) to consider tax exemption options for SMEs in June. This would assist the SMEs to overcome the hard time to stabilize and boost production.
According to the tax exemption scheme submitted to the Prime Minister by the Ministry of Finance, there will be more business objects that can get the preference of tax payment extension for one year from the deadline of CIT payment in 2011.
Enterprises engage in activities of processing, manufacturing, processing of forest-agricultural and marine products, garment and textile, and footwear would be covered in the tax incentive eligible objects. The total amount for this time of tax payment extension and exemption is about VND10 trillion to VND13 trillion.
Apart from the above incentive, the ministry has also proposed to the government to reduce 30 percent more on the tax that SMEs need to pay for 2010. It is estimated that the amount for this reduction is around VND2.5 trillion to VND3.7 trillion.
According to the Ministry of Finance, in the first five months of the year, state budget revenues have increased due to the difference in exchange rate and export activities. Therefore, tax extensions and exemptions for businesses will not greatly affect the state budget.
In addition, the Ministry also proposed a 50 percent tax rate for households providing houses for lease for workers, students, pupils, and households providing baby sitter services. Total amount for this exemption is VND1 trillion.
If this tax exemption scheme is approved, it is estimated that the government will submit this to Congress during the next session next July.
In 2009, in order to deal with inflation and recession, the government had implemented the corporate income tax extension for some commodities and services. Total estimated tax for that was about VND10 trillion.
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