The Ministry of Finance (MOF) has suggested reducing the corporate income tax and extending the VAT payment deadline in an effort to rescue businesses. The package is expected to cost 25 trillion dong.
Tuoi tre newspaper has quoted its source as saying that MOF has suggested cutting the corporate income tax by 30 percent in 2012 for small and medium enterprises, the labour intensive enterprises in the fields of forestry and agriculture, seafood, footwear and garment.
It has also suggested extending the VAT payment for six months. Enterprises still declare the VAT sums they have to pay, but they would only have to pay April’s VAT in October. Similarly, the VAT for May and June would be paid in November and December. It is estimated that the solution would help businesses have 4 trillion dong worth of capital a month, while they do not have to pay interest rates for the capital.
MOF has also proposed to cut the land leasing fee by 50 percent for travel, service and trade enterprises, extend the corporate income tax payment for two months at maximum for the enterprises with financial difficulties.
It is estimated that if all the suggested solutions are implemented, the sum of money to be collected for the state budget would decrease by 25 trillion dong. However, Ngo Huu Loi, director of the Tax Policy Department under MOF, has affirmed that the tax exemption, reduction and payment extension prove to be an unavoidable solution for now.
The newspaper has also quoted Pham Van Huyen, former deputy general director of the general Department of Taxation, as saying that the first thing the government needs to do is to help manufacturers boost sales and clear the stocks. In order to do that, it’s necessary to reduce the VAT.
In principle, VAT is imposed on consumers, which means that manufacturers would see no benefit from the VAT cut. However, this would help reduce the sales prices, thus allowing to boost sales. If consumers can get benefits from the lower sales prices, they would buy more goods. This would help businesses sell goods to get money to pay tax to the State.
The government only has the right to extend VAT payment. Therefore, the government should propose the National Assembly to exempt or reduce VAT. Responding to the warning that the VAT remission would lead to the tax collection to the State budget, since VAT makes up 20 percent of the total tax collection to the budget every year, Huyen said that the taxation body should decide what business fields would enjoy the tax incentives.
Huyen also thinks that the government should consider exempting the personal income tax on the income from wages and salaries. Employees are now facing big difficulties, since all kinds of goods and services have increased in prices after the petrol price hike of 2000 dong per litre.
Some days ago, minister of Finance Vuong Dinh Hue, in a meeting with the press, promised that his ministry would finish building up the tax policies to rescue businesses by the end of April.
“Our principle is to gather all the possible strength to give finance and capital support to businesses. However, the support needs to go to the right addresses,” Hue said on VnExpress.
Local newspapers have quoted the figures released by the general Statistical Office as reporting that businesses continue to face big difficulties. The industrial production index in April increased only by 1.5 percent over March. The index only increased by 4.3 percent in comparison with the same period of the last year, while the manufacturing sector saw the modest growth rate of 3.5 percent.