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Lower corporate income tax proposed for SMEs
The Saigon Times Daily
Friday,  Apr 6, 2018,14:29 (GMT+7)

Lower corporate income tax proposed for SMEs

The Saigon Times Daily

HCMC – Corporate income tax will be slashed to 15-17% from the current 20% for small and medium enterprises (SMEs), Thanh Nien newspaper cited Prime Minister Nguyen Xuan Phuc’s statement at the sixth Greater Mekong Sub-region Summit on March 30 as saying.

Deputy Minister of Finance Vu Thi Mai said the ministry had earlier proposed a tax reduction under the direction of the Government.

SMEs account for some 95% of the total number of firms nationwide. The tax reduction will give much-needed support for such enterprises to grow business and improve their competitiveness at home and abroad.

The proposal to cut corporate income tax will be submitted to the National Assembly at a session in May, Mai said.

According to the proposal, enterprises with annual revenue of less than VND3 billion (US$130,000) will enjoy a 15% tax while those with no more than 200 workers covered by social insurance a year and total annual revenue of VND3-50 billion will be taxed 17%.

According to the Ministry of Finance, the tax reduction may decrease State budget revenue by trillions of Vietnam dong. However, economic expert Luu Bich Ho said the policy would support startups and SMEs and the budget revenue fall is too small compared to the total State budget revenue.

Some other experts even proposed the Ministry of Finance cut the tax to 10-15% to support domestic enterprises in competing with foreign rivals.

China, for example, levies a corporate income tax of 25% but small businesses are offered a tax of 10-20%. In the 2015-2017 period, companies whose taxable revenue is less than CNY200,000 (over US$31,700) will enjoy a corporate income tax of only 10%.

Thailand also offers lower corporate income tax rate for SMEs while the tax rate for firms with taxable revenue of more than three million baht (over US$96,000) is 20%. Enterprises with taxable revenue of 300,000 baht and less will be exempted from the tax and the remaining firms are imposed a tax rate of 15%.

The same policy is also seen in Indonesia. Companies which annually earn less than 4.8 billion rupiah (US$348.6 million) have to pay corporate income tax of only 1%. Enterprises with revenue from 4.8 to 50 billion rupiah are subject to a tax rate of 12.5%, much lower than the common rate of 25%.

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