A proposal to reduce corporate income taxes was raised during a discussion about amendments in the Corporate Income Tax Law on March 18.Currently, a flat 25 percent income tax rate is applied to businesses of all types.
The NA Finance and Budget Committee suggested that there be a tax reduction schedule through the year 2020 in order to attract investment. According to the proposal from the Ministry of Finance, from 2014-2015, the corporate income tax rate will be reduced from 25 percent to 23 percent. For businesses with less than 200 full-time employees and yearly revenues of less than VND20 billion (USD958,000), the rates would be even lower, at 20 percent, while struggling businesses located in remote areas would pay only 15 percent. Deputy Minister of Finance, Vu Thi Mai, pointed out that the state budget would be cut by VND12 trillion in 2014 if the reductions were put into place. However, Chair of the NA, Nguyen Sinh Hung, said the increased number of successful businesses who would pay taxes must be taken into account. “If i were the minister of finance I would bring taxes down to 20 percent immediately,” he commented. He added that the impact of the policy on the entire economy must be taken into account in calculating how tax breaks would affect the budget. Hung promised to follow up on the issue and work to create more favourable conditions for businesses.