Tax exemption and reduction policies are necessary for businesses at this time

Nguyen Thi Cuc, President of the Vietnam Tax Consultants’ Association

The Government has submitted Report No. 289/TTr-CP to the National Assembly Standing Committee on the draft Resolution of the National Assembly Standing Committee promulgating several solutions on tax exemption and reduction to support enterprises and people affected by the Covid-19 pandemic. What do you think about this issue?

The reality showed that enterprises in Vietnam are facing more and more difficulties due to the complex developments of Covid-19 pandemic. For example, difficulties in maintaining production and business, limit ed income while all wages are paid to employees, or expenses for depreciation of machinery, equipment, rent of premises, businesses still have to pay.

If any firm previously had financial resources, it could be able to hold on. However, most businesses not only did not generate profits but also suffered heavy losses. Therefore, to help businesses overcome difficulties caused by the pandemic, the Government needed to implement solution packages, besides deadline extension of tax payment solution as done before. Tax reduction for enterprises in the current context was very necessary and urgent, helping businesses overcome difficulties, maintain stability during the outbreak of Covid-19 and recover after the pandemic is over.

The policy of tax exemption and reduction in this draft Resolution was very necessary for businesses at this time. Instead of just extending deadlines for tax payment, which was only delayed and they still had to pay tax, enterprises were now exempt.

In your opinion, how will the support developed by the Ministry of Finance in the draft Resolution help businesses at this time?

The reduction of corporate income tax by 30% has been implemented from previous support packages. However, this policy only works for profitable businesses but enterprises that faced difficulties still have to pay value added tax when they have revenue.

Therefore, when a proposal to reduce value added tax was presented for businesses, business households, and individuals in almost every field, I felt quite happy. Specifically, reducing 50% of personal income tax, value added tax and other payable taxes arising from business activities in the 3rd and 4th quarters of 2021 for business households, and individuals in all fields, geographical areas, forms and methods of tax declaration and payment. At the same time, reducing the tax rate by 30%, the percentage of value added tax for business activities in fields that were heavily affected by the Covid-19 pandemic such as tourism; transportation; hospitality; sports, entertainment; composing, art; press, television; libraries, museums and other cultural activities.

It clearly showed that the reduction of value-added tax was very important for businesses. I thought that the reduction of value added tax, whether at 30% or 50%, was very useful for businesses, because even though the business had made no profit, every revenue from the operation had to pay tax. So by reducing value-added tax, the target audience would be appreciated.

Currently, businesses are looking forward to this support coming into effect. So after the draft Resolution is issued, what needs to be done so that businesses can enjoy these tax exemption and reduction policies?

As soon as the Resolution is promulgated, the authorities should issue a document to guide businesses in carrying out tax exemption and reduction procedures. Regarding procedures, it is recommended to continue to inherit the provisions of Decree 41/2020/ND-CP and Decree 52/2021/ND-CP to simplify procedures.

In particular, it only need to make a single request for tax reduction to receive a reduction in corporate income tax and value added tax. When the guidance documents are issued, they should be widely disseminated and sent to taxpayers by email, zalo, or through tax agents to advise and support businesses, so that support policies could reach taxpayers in the fastest and most effective way, meeting the objective set by the Government.

On the business side, they also needed to rearrange production, grasp tax support policies, and procedures for extending the deadline of tax payment and land rent to enjoy tax incentives.