Ho Chi Minh City: Proposals to reduce many taxes for businesses to restore production

HCM City proposed to deeply reduce tax rates for businesses affected by the pandemic

Continuously support import and export procedures

In the document on the draft Decree stipulating some solutions to support enterprises and people affected by the Covid-19 pandemic, the People's Committee of HCM City has contributed some opinions on the reduction of some taxes for businesses, and recommended some contents related to import and export procedures.

Regarding import and export procedures, the People's Committee of HCM City proposed to allow delayed payment of Value Added Tax (VAT) for production materials and imported goods for three months; allow late payment of import tax on raw materials for the production of goods for export for three months; and refund export VAT to enterprises one month after enterprises complete tax refund procedures.

Apply a tax grace period of 30 days, excluding late payment 0.03%/day from the date of customs clearance, provided that there is a guarantee from a commercial bank, regardless of whether domestic enterprises or foreign-invested enterprises are importing goods that are raw materials and supplies for the production of goods for domestic consumption.

Regarding the tax calculation price consultation, the Ministry of Finance is requested to approve all cases of doubting the taxable price so that sub-departments of customs can temporarily approve the declared price of enterprises, and prepare and send a dossier to the post-clearance inspection sub-department to collect more information on post-clearance inspection in accordance with regulations in the last six months of 2022.

Simultaneously, the People's Committee of HCM City proposed not to impose administrative sanctions on cases of overdue customs procedures due to the pandemic; violations of time to carry out customs procedures arising during social distancing according to Directive 16/CT-TTg and regulations of the Provincial People's Committee, the Government will be considered force majeure and be exempt from administrative liability.

Not sanctioning and having clear instructions on administrative violations on delays caused by the impact of the social distancing directives; including: time for customs procedures, customs clearance, temporary import for re-export, goods at the bonded warehouse, presenting specialized inspection results (due to the enterprise's inability to move or the fault of the specialized management agency); and late submission of other customs documents.

Simultaneously, continuously apply the existing solutions to support businesses such as accepting documents using digital signatures in customs documents sent through the system, physical inspection of goods with scanners if they are in the red channel and in case of authorization inspection. At the same time, it is requested that specialized inspection agencies that have not yet registered and returned specialized inspection results through the National Single Window System must urgently complete them.

HCM City also proposed to continuously apply a specific mechanism on receiving and clearing goods procedures for Covid-19 pandemic prevention and control; soon promulgate a circular stipulating the submission of documents in the customs dossier for exported and imported goods, and customs supervision for imported goods transferred from border gates in case imported goods are congested at seaports. In case the circular has not been issued, in 2022, continue to implement Official Dispatch 3847/TCHQ-GSQL of the General Department of Customs to solve the congestion of goods at Cat Lai port during the pandemic outbreak in HCM City - Binh Duong - Dong Nai.

Proposal to deeply reduce tax rates

In addition to proposing support import and export, the People's Committee of HCM City suggested to reduce corporate income tax (CIT), Value Added Tax (VAT), land rent; extension of tax payment deadlines; and interest rate support.

Specifically, HCM City proposed to reduce 50% of CIT in 2021, continue to cut 30% of CIT in 2022 and 2023 for businesses with annual revenue of less than VND200 billion, allow all costs related to pandemic prevention and control of enterprises, such as costs for Covid-19 testing and medical treatment (if any), food and living expenses, personal protective equipment, including masks, face shields, and disinfectants, and hotel costs for isolation, to be deducted from the expenses of corporation tax.

Regarding taxes for business households and business individuals, the city proposed that they are exempt from personal income tax, value-added tax, special consumption tax, tax on natural resources, and environmental protection tax arising from production and business activities in the third and fourth quarters of 2021, in 2022, and 2023. At the same time, it proposed to exempt the personal income tax for laborers with incomes from wages and salaries subject to tax payment of levels 1 and 2.

HCMC also asked to reduce the value-added tax rate by 50% (or the percentage rate) of the last three months of 2021 and the years 2022 and 2023. Simultaneously, it suggested extending the tax payment deadline until the end of the second quarter of 2022 and slapping no penalties for late tax filing in 2021 due to the impact of social distancing following Directive No.16 of the Prime Minister. Local tax authorities actively carry out within their power and do not require taxpayers to make an application.

As for land rent, HCMC put forward to lower land rent by 50% in 2021 for all businesses. As for those in the tourism and tourism-related industries, land rent in 2021 will be cut by 100% percent.

Regarding interest rate support for businesses, contributing to reducing difficulties for firms due to the Covid-19 pandemic, the People's Committee of HCM City proposed the Prime Minister and the Minister of Finance to add clauses assigning the State Bank of Vietnam to cut the lending interest rates for businesses in the direction that the lending interest rate is not 2% higher than that of the deposit interest rate; have policies to support loans for refinancing, working capital for production and business activities, guarantee payment for raw material purchase and sale contracts at 0% interest rate for businesses affected by the Covid-19 pandemic.