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Tax changes to save firms money
The General Department of Taxation (GDT) is mulling a tax reform programme that will help small- and medium-sized enterprises (SMEs) pay dues more easily while saving time and money by reducing the amount of paper work required.
Under the programme, the GDT will set a tax threshold. Firms whose revenue turnover is below the stated threshold will be exempted from paying value-added tax.
The taxes levied, which include value-added and special consumption taxes, will be declared and paid every quarter instead of once a month, as is the case now.
Businesses whose earnings are above the exemption level but below the VAT threshold, will have two ways of calculating the tax owed.
They will be able to declare value-added and income taxes on a defined percentage of their revenue or they will be allowed to pay a fixed rate for the entire year.
The GDT expects to submit the new tax procedures to the Government and Ministry of Finance for approval next year as part of a general tax reform administrative programme.
If approved, the new policies will directly affect more than 290,000 companies, 1.8 million family-run businesses and millions of workers who pay income tax, while helping to save about VND600 billion (US$30.7 million) per year.
According to the GDT, SMEs have a total turnover of less than VND300 billion ($15.4 million) each. SMEs account for 92 per cent of all Vietnamese companies, but pay just 24 per cent of the total corporate income tax amount.
The GDT has simplified 271 out of 330 administrative tax procedures, which has helped to save VND1.9 trillion per year ($97.4 million). One of the most significant changes was to allow companies to print and use their own invoices, which alone helped to save VND400 billion ($20.5 million) per year.
Corporate income tax
Meanwhile, the GDT is modifying 24 new draft amendments and supplements to Circular 130 relating to corporate income tax.
The GDT said that under the current Corporate Income Tax Law, companies were allowed to deduct losses caused by natural disasters, epidemics and force majeure from their tax bills if they do not receive compensation.
The new draft circular requires businesses who lose property to contact the tax office directly about losses incurred. Companies must state their property's value and the value of the goods lost according to the valuation council.
They must also state what insurance compensation they had received or were likely to receive and the insurance companies used.
Those records must be certified by commune-level police or the ward or commune people's committee chairman.
The draft states that a firm must state what losses have been incurred from fines or breach of contract. These costs will be tax deductible.
vietnamnews
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