Hundreds of thousands of businesses have started to benefit from the government’s tax relief package after a circular guiding the implementation of the policy officially took effect on Wednesday.
The circular was issued to help struggling firms and households overcome financial difficulties. It detailed a series of tax deferrals, reductions and exemptions mainly for small- and medium-sized enterprises (SMEs) and businesses that use a high number of labourers.
According to the new regulations, a six-month extension for value added tax (VAT) payments for this year’s second quarter has been granted to SMEs. This excludes lottery and stocks, as well as financial, banking and insurance businesses under major corporations. Businesses that use a high number of workers for production and processing of agriculture, aquaculture, textiles, footwear, infrastructure and electrical equipment are also excluded from the extension.
Regarding the VAT deferral, director of the Institute of Financial Strategies and Policies Vu Thang estimated that roughly 400,000 enterprises would enjoy the tax breaks.
The Ministry of Finance has also calculated that some 4.1 trillion dong (US$195.2 million) of VAT will be delayed every month so companies will have more working capital for their business performance.
The new circular also mentioned a reduction of land rental payments in 2012 by 50 per cent for service businesses. A 12-month extension for land lease fee payment will be also included in the circular.
In addition, the circular has guided a nine-month extension for corporate income taxes (CIT) backdated to 2011 for SMEs and tSTC with a high number of workers in the production and processing of agriculture, aquaculture, textiles, footwear, infrastructure and electrical equipment.
If CIT payments are not made on time from April 1 to December 31 of this year, the firms will not be fined as the deadline will now be January 2 of next year.
Fishing households will also be exempted from paying taxes on business licences this year; tSTC already having paid the tax will be refunded.