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Businesses are skeptical about tax cut
Many businesses and experts say the recently issued 30 percent cut on corporate income tax for small-and-medium-sized enterprises this year may not be of much help.
On November 4, the Prime Minister issued Decree No.109, providing tax relief for certain taxpayers including a 30 percent cut in corporate income tax for SMEs.
The cut is not applicable to income derived from securities and real estate trading, finance, banking, or insurance activities, and manufacturing or services subject to special consumption tax.
Newswire Vietnam Economic Forum quoted Dr. Nguyen Nam, Deputy Head of the Hanoi Business Association’s Institute for Business Development, as saying that around 50 percent of SMEs nationwide were suffering from high inflation.
He said many businesses had expected to see low incomes or losses this year and the tax relief thus wouldn’t help. “Those [businesses] operating with losses would understandably not have enough income to pay tax, and thus would not need the cut,” Nam said.
Meanwhile, other businesses said the incentive was “not powerful enough to help them get out of the economic woes.”
Vu Dinh Long, Director of Hanoi-based Dai Duong Xanh Co., Ltd., said small businesses such as his company had annual profits of only hundreds of millions of dong and had to pay corporate income tax of less than VND100 million (US$4,800). “So the 30 percent cut will help us to save around VND20-30 million, which will be too small given our current difficulties,” Long said.
Many businesses are thus calling for stronger support such as tax exempting or a cut in rent.
Vu Ngoc Binh, CEO of Hanoi-based Phuong Lan Co., Ltd., said while the land leasing fee at the Lien Phuong Industrial Cluster last year was only VND36 million, the figure this year soared to VND464 million. “We are badly in need of a land fee cut, which will enable us to reduce production costs and increase competitiveness,” Binh said.
Vu Quoc Tuan, Chairman of the Vietnam Association of Craft Villages, also said SMEs had hardly been offered any incentive from the government in recent years.
He said rent for SMEs was twice or three times higher than rent for state-owned and FDI companies. “An incentive on rent is essential for SMEs,” Tuan said.
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