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Vietnam may reduce CIT to 20 percent by 2012 or 2013
According to the Ministry of Planning and Investment, the total receipt of the state budget may reach 612 trillion dong in 2011, or 16.7 percent higher than the 2010’s estimates. The figure has surprised the public, because the tax collection increases in the time which is considered the most difficult period for businesses.
Phung Quoc Hien, Chair of the National Assembly’s Finance and Budget Committee, explains this to Saigon Tiep thi.
Why does the receipt from the tax collection still increase in 2011, a very difficult period for businesses?
The state budget receipt is higher than the plan this year, while the increases mostly come from domestic collection, especially from land, the tax collection from non-state owned enterprises and the import-export tax collection.
Experts believe that the collection would also be high in 2012, when Vietnam plans to obtain the economic growth rate of 6-6.5 percent. However, according to the National Assembly’s Finance and Budget Committee, Vietnam may collect more tax from some fields, including land.
The State still fails to collect tax from a lot of subjects in the real estate sector, and from non-state businesses. In many cases, we still collect fixed tax sums, while we should tax based on the actual business result. Besides, we also need to reinforce the tax collection from the mining activities.
However, 2011 is really a very difficult year for enterprises, especially small and medium ones. Why does the State still set up such a high targeted level for the tax collection, when difficulties still continue in 2012? Do you think that it is necessary to reduce tax to ease the burden on businesses?
Avoiding loss of revenue and heavy taxation are the two different issues. In fact, our tax rates have been on the decrease. In the past, businesses were imposed the corporate income tax (CIT) of 32 percent, but the tax rate was reduced to 28 percent and then to 25 percent now. Meanwhile, the National Assembly’s Finance and Budget Committee has proposed to reduce CIT further to 20 percent, a very low level if compared with other regional countries.
I have to say that we are trying to fight against the loss in tax collection and smuggling, while we are not imposing higher tax on businesses.
When will the CIT reduction to 20 percent be implemented?
We think CIT adjustment would be made by 2012 or 2013. If only one provision of the law is amended, it may get the ratification of the National Assembly just after one National Assembly’s session, not two sessions.
How about other kinds of tax?
We think that we can set up a single VAT rate to make it suitable to the international practice. As for the personal income tax, it would be better not to fix the family allowances, but let the sums be adjusted in accordance with the basic wages to be set up at different periods.
Do you think that the National Assembly should consider applying the CIT reductions and exemption in a larger scale in 2012 than in 2011, in case the CIT reduction still cannot be implemented in the year?
The mechanism on tax exemption and reduction in 2011 does not bring the big impacts as expected. Businesses can delay the payment of the tax of 6 trillion dong and enjoy the tax reduction of 4 trillion dong only. While difficulties still exist, the tax collection still increases. This means that the policy on tax exemption and reduction partially has brought some efficiency.
In 2012, the investment capital of the society is expected to decrease from 42 percent of GDP to 34-35 percent, but the government has vowed to take drastic measures to increase the investment efficiency.
vietnamnet, SGTT
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