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Tuesday, June 18, 2024

Corporate income tax reduction for all firms proposed

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HCMC – The Private Economic Development Research Board under the Government’s Advisory Council for Administrative Procedure Reform has suggested applying a 30% corporate income tax reduction for all enterprises in 2020, instead of only firms with their total revenue less than VND200 billion.

Since the second wave of the Covid-19 pandemic broke out at the end of July, the board conducted a survey of over 400 enterprises and 15 associations to learn about their difficulties. The results indicated that 20% of companies ceased operations, 76% failed to maintain a balance between revenue and spending, 2% were dissolved and 2% had yet to be impacted by the pandemic.

As for the biggest challenges now and in the coming months, 81% said they had no clients and orders and 72% stated that they failed to fulfill wage payments, social, health and unemployment insurance premiums and other fees. Some 53% said they could not service their bank loans, 45% were challenged by input material costs and 42% were worried about their warehouse, factory, office and equipment leasing fees.

Some associations have also raised concerns over skyrocketing land rents in 2020 due to revisions in policies and calculations, creating a huge burden on enterprises active in the fields of warehousing, factory leasing and the hotel business.

The Covid-19 pandemic has disrupted several supply chains, pushing many businesses into insolvency or facing slow payments. This has affected the cash flow of businesses in the manufacturing, supply and service sectors.

According to the survey, over 47% of enterprises had to fire workers, of which over 50% had to cut one-third of their staff. The Vietnam Tourism Association saw 20% of its member enterprises halting operations and 10% filing for bankruptcy.

The board has proposed a 50% cut in social, health and unemployment insurance for 2020 and 2021. All firms should also be subject to an insurance fee payment deferral.

To stimulate consumption, the board has suggested cutting value added tax from 10% to 5% and offering some favorable credit policies for local enterprises.

According to an August report of the General Statistics Office, the recovery of the industrial sector came to a standstill due to the complicated development of the pandemic. Between January and August, the nation’s industrial production index advanced just 2.2% compared with 9.5% in the same period last year.

Meanwhile, the total retail sales of goods and services fell 2.7% compared to the previous month. The figure dropped a slight 0.02% in January-August.

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