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Circular ends security company tax incentives
Securities companies and investment fund management companies will not be able to enjoy the corporate income tax (CIT) incentives after the new CIT circular is ratified.
The Ministry of Finance (MOF) is drafting the new circular, expected to replace the two current CIT laws. The draft stipulates that securities and investment fund management companies that receive business registration certificates after October 25, 2006 (the date when Decree 108 came into effect) will not enjoy CIT incentives. Meanwhile, the legal entities that were established prior to October 25, 2006 will still receive tax incentives.
According to Pham Duy Khuong, Deputy Director General of the General Department of Taxation, the getting rid of tax incentives for securities and fund management companies is in line with current Investment Law.
“Decree 108 does not list securities as a business eligible for investment incentives. Therefore, securities companies cannot enjoy tax preferences,” said Mr Khuong.
Under current regulations, securities and investment fund management companies receive tax exemptions for two years, and 50% tax reduction for the two years after that.
The circular draft says that equitised companies will also not be given CIT incentives if they register for business after October 25, 2006. Currently, these enterprises are also eligible for the same tax incentives.
The tax policy cost the state budget a total of VND4tril ($250mil) by the end of 2006.
In 2007, it is estimated that the state budget will suffer a loss of VND3tril ($187.5mil)as a result of incentives provided to the 26 biggest equitised enterprises. In response, the Ministry of Finance has persuaded the Government to remove the incentives on equitised enterprises.
ĐTCK
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