Ministry proposes range of tax cuts

The Ministry of Finance has drafted a tax break proposal which includes a range of corporate and personal income tax exemptions and deductions.

The tax break proposal targets creating incentives for enterprises to develop their business and provide financial support to their employees.

If approved, the draft would extend the 2011 tax payment by one year for enterprises operating in important sectors as defined by the Prime Minister, such as agriculture, fisheries and textiles as well as firms with more than 300 workers.

A 30 per cent tax reduction was also proposed for enterprises which qualify for the extension. Value added tax and personal income tax for the third and fourth quarters this year would also be reduced for land lords and people who offer childcare and lunch to workers and who are committed to maintaining prices at current levels without lowering quality.

Another section of the draft calls to exempt individuals from paying personal income tax from August 1 to the end of this year on dividends gained from stock market investments in an aim to stabilise the stock market and encourage investment in production.

As part of the Law on Personal Income Tax 2007, individuals with a total monthly income of VND5 million (US$250) are currently required to pay personal income tax measured at the first level of the progressive tariff (5 per cent).

An exemption was proposed in the draft to exempt this starting point to help mitigate the difficulties of rising inflation.

Total tax exemptions would reach up to VND20 trillion (US$1billion), of which the personal income tax exemption would account for 15 per cent.

“The ministry’s tax break proposal is reasonable under current economic conditions and high inflation rates,” said General Secretary of Viet Nam Tax Consultants’ Association, Do Thi Thin.

The extension of tax payments and reductions will have a positive impact on enterprise production, Thin added.

According to the Director of the Ministry of Planning and Investment’s National Centre for Socio–Economic Information and Forecasting, Le Dinh An, an exemption of personal income tax for employees is necessary.

In addition, tax policies in the field of stock markets also need adjusting due to continuous ups and downs in the stock market, he added.

The ministry plans to submit the tax break proposal to the Prime Minister and the National Assembly next month. — VNS

Tags: Vietnam Tax