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Land leasing fee escalate, local authorities dodge the laws
The business community has voiced the complaint about the overly high new land leasing fees which would put a heavy burden on businesses. Meanwhile, local authorities have tried to dodge the laws to save local businesses before the government saves them.
Just within one month, the Ministry of Finance released two different decisions: the first one on tax exemption and reductions aims to ease the burden on businesses, while the second one on raising the land leasing fee for production premises is believed to burden businesses.
Tax rates down, land leasing fee up
On July 21, at the ongoing National Assembly’s session, Minister of Finance Vu Van Ninh officially proposed to reduce the corporate income tax (CIT) by 30 percent applied to small and medium enterprises, reduce 50 percent of VAT, CIT and personal income tax (PIT) applied to some subjects, saying that the tax reductions would help ease the difficulties now burdening enterprises
Meanwhile, just one week before, the Ministry of Finance decided to raise the land leasing fee, the decision which the business community says will make the burden on their shoulders become heavier.
With the new regulation, the sums of money businesses will have to pay for leasing land would be 3-10 times higher than the sums of money they have to pay now.
The Vietnam Chamber of Commerce and Industry VCCI has organized a dialogue between the policy makers and businesses, where businesses shouted for help, saying that they find it too difficult to maintain production.
Deputy Minister of Finance Do Hoang Anh Tuan, who attended the meeting, promised to collect opinions from businesses to report to the government and to discuss the solutions to the problem. The words by Tuan have brought hope to hundreds of businesses which attended the meeting.
The report released by the Ministry of Finance at the National Assembly’s session shows that in the first six months of 2011, the sum of money collected to the state budget from land use fee reached 21,800 billion dong, while the sum of money collected from land leasing fee was 1550 billion dong, increasing by 11 and 4.6 percent over the same period of 2010.
Meanwhile, the figures assigned by the National Assembly to the Ministry of Finance earlier this year were 30 trillion dong and 2744 billion dong, respectively.
With the new regulations set higher land leasing fee, it is expected that the sums of money would increase towards the end of the year. However, the problem is that the high land leasing fee would kill many businesses.
Local authorities try to dodge the laws
Local authorities and businesses have been trying to persuade policy makers to change the tax rates. They have also got the promise from the Ministry of Finance that the ministry would consider applying necessary measures to help businesses ease the burden.
However, they still believe that they need to take actions themselves before the policy makers find the solutions to the problem. Nghe An province has found a new way.
The provincial authorities have decided to lower the land use fee for non-agricultural land that serves production and business by 50 percent, and to reduce the coefficient to calculate tax from two to 1.56.
The measure applied by Nghe An province is believed to help businesses overcome difficulties in the immediate time, because the sums of money for land leasing enterprises have to pay will be the same or increase slightly.
This seems to be a simple method to dodge the laws, because in principle, provincial authorities have the right to define the land prices and the coefficient.
However, what will happen if other provinces follow Nghe An’s move? It is clear that the State will fail to increase the tax collection.
vietnamet, TBKTVN
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