Government mulls 30 pct tax break for small businesses

By Anh Minh June 10, 2020 | 11:11 pm PT

Chairs are piled up in a restaurant in District 1, Ho Chi Minh City that was closed on March 14, 2020 following authorities' orders to contain the novel coronavirus. Photo by VnExpress/Quynh Tran.

The Vietnamese government plans to cut corporate income tax for small businesses by 30 percent this year to mitigate the damage wreaked by the coronavirus pandemic.

The reduction from 20 percent to 14 percent will benefit businesses with revenues of less than VND50 billion ($2.1 million) this year and have fewer than 100 employees, according to a proposal it has made to the National Assembly.

If approved, this will reduce the government’s revenues by VND15.8 trillion ($680 million).

Minister of Finance Dinh Tien Dung said medium-sized businesses are not included since it would make the scope too broad as 97 percent of companies in Vietnam are either small or medium sized.

Government revenues will shrink by another VND22.4 trillion ($964 million), or 41 percent, if medium-sized businesses are included, he added.

Nguyen Duc Hai, chairman of the house’ Finance and Budget Committee, supported the proposal, saying small businesses have faced the greatest challenges due to a lack of access to funds and limited technologies.

The tax break would help them overcome the difficulties and reboot production, while the loss of revenue would not create much pressure on the government’s finances, he assured.

Lawmakers are set to discuss the proposal Thursday.

Many businesses had to shut down in March and April as the country toiled to contain the Covid-19 pandemic.

GDP growth in the first quarter fell to a 10-year low of 3.82 percent. It was 7.02 last year.