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Tax breaks, debt relief for problematic firms in Vietnam proposed
Publication Date : 19-07-2014
Vietnam's Ministry of Finance (MOF) has proposed to erase tax dues, associated interests and overdue charges worth 6.53 trillion dong(US$297 million) of struggling enterprises in an attempt to boost slow business recovery, Tuoi Tre (Youth) newspaper reported.
"Tax debt eradication now is understandable because many enterprises have financial constraints, due to which they are unable to pay primary debts. Moreover, the overdue charge rate of 0.05 per cent per day, or 18 per cent per year, is too high," said Do Hoang Anh Tuan, Deputy Minister of finance, cited by the newspaper.
"However, it is the National Assembly which will decide on the issue," Tuan said.
If the government approves, MoF will submit the proposal to the National Assembly for consideration.
In the first half of 2014, about 50,263 enterprises shut shop and 18,271 others were dissolved, which saw tax debts rising nationwide.
Debt-to-tax collection ratio was 6.3 per cent in 2011, 8.1 per cent in 2012, and 15 per cent in H1 2013.
The overdue charge for bad tax debts was an estimated 3 trillion dong ($136 million) in Hanoi and 3.14 trillion dong ($143 million) in HCM City.
The ministry reported that on an average, the overdue charge had increased by 2 trillion dong ($90 million) every year since 2009.
Non-State enterprises pay 62 per cent of the total overdue charge, equivalent to 5.1 trillion dong ($233 million)/
In a similar attempt to support the business community, the Ministry of Finance has also proposed to the government that enterprises which launch investment projects in industrial zones in rural areas be exempted from corporate income tax (CIT) for the first two years, and then get a 50 per cent reduction in the following four years.
The ministry proposed that enterprises should be given two months to pay value added tax, instead of immediate payment, for a minimal 100 billion dong ($4.5 million) purchase and import of equipment.