Dr. Nguyễn Văn Thân, Chairman of Vinasme: The 15-17% preferential tax rate fails to truly support small and micro enterprises
- 17
- Enterprise
- 16:15 30/10/2024
DNHN - Dr. Nguyễn Văn Thân, Chairman of Vinasme, argues that the proposed 15% tax rate for micro enterprises and 17% for small enterprises lacks sufficient appeal.
Commenting on the draft Corporate Income Tax Law submitted to the National Assembly for consideration during the eighth session of the XV National Assembly, Dr. Nguyễn Văn Thân pointed out that the proposal of a 15% tax rate for micro enterprises and 17% for small enterprises is not particularly attractive.
Since 2013, small enterprises have benefited from a preferential corporate income tax (CIT) rate of 20%, below the standard rate of 22% at the time. However, with the standard rate dropping to 20% in 2016, small businesses are now taxed on par with large corporations. While Vietnam's standard tax rate is not high compared to regional peers, the incentive policy for small and micro enterprises appears to have fallen short of expectations.
The 2018 Law on Supporting Small and Medium Enterprises mandates a lower CIT rate for these businesses, yet with the standard 20% rate in effect since 2016, small and micro enterprises no longer receive substantial incentives.
In the current draft of the amended CIT Law, two preferential tax rates are proposed: 15% for micro enterprises with annual revenue not exceeding VND 3 billion, and 17% for small enterprises with revenue between VND 3 billion and VND 50 billion, excluding subsidiaries or affiliates of large corporations.
Dr. Thân suggests that, to determine the appropriate preferential tax rates, the drafting committee must provide specific impact assessments, including the number of businesses benefiting, the extent of budget savings, potential new business formations, and job creation. Only then will the National Assembly have sufficient grounds to consider feasible, appropriate tax levels.
According to Dr. Nguyễn Văn Thân, the proposed 15% rate for micro enterprises and 17% for small enterprises by the Ministry of Finance is merely encouraging but insufficient to genuinely support and drive growth in this sector. He notes that Vietnam's incentives remain relatively uncompetitive compared to neighboring countries. For example, China applies a 25% standard CIT rate, but small enterprises enjoy a 20% rate, a 5% difference. In Vietnam, small enterprises are only granted a 3% reduction from the 20% standard rate.
The small and micro enterprise community expects stronger incentives, given their role in generating employment and income, particularly for informal workers and uncredentialed individuals, which contributes significantly to social security. Therefore, tax policy should go beyond encouragement and offer substantial reductions, including deeper tax cuts.
While the Law on Supporting Small and Medium Enterprises aims to encourage households to convert into enterprises, nearly seven years have passed with limited progress. Many households and individuals still choose to operate as family businesses due to the lower fixed tax rates. Currently, fixed tax rates are 1.5% of revenue for distribution and goods provision activities; 7% for services and construction excluding material provision; 4.5% for production, transport, and services including material provision; and 3% for other services.
"I believe that if we introduce genuinely attractive preferential tax rates, a large number of households and individual businesses will establish enterprises because the preferential rates would be lower than fixed taxes.
High revenue does not necessarily indicate large profits. In a highly competitive market, businesses must often lower prices, offer discounts, after-sales services, promotions, and marketing to attract customers, so revenue alone does not reflect a company’s performance.
Therefore, rather than taxing revenue, we should consider taxable income (revenue minus allowable expenses). Many countries base tax incentives on taxable income, allowing for either a single tax rate or a progressive tax," Dr. Thân emphasized.
An Thao
Related news
#SMEs
Removing the bottleneck of capital shortage for small and medium-sized enterprises
“Although the economy shows signs of recovery, operations still face many challenges, with uneven recovery across sectors in terms of orders, legal barriers, and difficulties in accessing capital to maintain and expand production and business."
Opportunities and challenges for Vietnamese SMEs in the context of international integration
The challenges and opportunities for Vietnamese small and medium-sized enterprises (SMEs) in the context of international integration are increasing, requiring sensitivity and creativity.
Enhancing knowledge for Vietnamese Small and Medium Enterprises
On June 11 in Hanoi, a Memorandum of Understanding was signed to launch the online training project “Enhancing Knowledge for Vietnamese SMEs" between the Ministry of Planning and Investment and the Vietnam Association of Small and Medium Enterprises.
Developing an ecosystem to support sustainable business for SMEs
A new draft circular from the Ministry of Finance is designed to promote sustainable business activities in the private sector.
CEO Lê Nguyên Hòa – LHLEGAL Law Firm honored to present opinions to General Secretary Tô Lâm
On the afternoon of August 22, at the Presidential Palace, Lawyer Lê Nguyên Hòa – Executive Director of LHLEGAL Law Firm, along with the delegation of the VINASME, had the honor to meet with General Secretary and President Tô Lâm.
The Vietnam Association of Small and Medium Enterprises honors an audience with the General Secretary and President Tô Lâm
On the afternoon of August 22, the VINASME will have the honor of meeting with the General Secretary and President Tô Lâm to report on the results of their activities. This significant event is organized by the Business and Integration Magazine.
Đọc thêm Enterprise
Increasing taxes on pick-up trucks: The need to hear public opinion
The proposed tax increase on pick-up trucks is sparking debate. Many representatives argue that this decision could impact workers, businesses, and the domestic automotive market.
"The Vietnam-Korea Investment Cooperation Forum 2024 is a testament to the spirit of innovation and sustainable collaboration."
For Mr. Kim Ki-mun, Chairman of KBIZ, the Vietnam-Korea Investment Cooperation Forum 2024, scheduled for November 21, is not merely an event but also a testament to the spirit of innovation and sustainable collaboration between nations.
KBIZ's 60-year journey in building a solid foundation for South Korea's small and medium enterprise community
With over 60 years of establishment and development, the Korea Federation of SMEs (KBIZ) has emerged as a pioneering force in supporting the small and medium-sized enterprise (SME) community in South Korea.
What categories are included in the additional audit subjects?
On the morning of November 7, the National Assembly discussed the draft amendment of several articles across seven laws, with a particular focus on adding new audit subjects.
Institutional obstacles "tie up" enterprises and challenge economic growth
During a session discussing the 2024 socio-economic development plan, National Assembly deputies emphasized that institutional barriers remain a significant "obstacle" for businesses.
More than 1,000 new real estate businesses established in Ho Chi Minh City, transactions grow
In the first nine months of 2024, Ho Chi Minh City's real estate market witnessed the establishment of over 1,000 new businesses and recorded 1,600 property transactions, signaling a positive recovery trend.
Foxconn expands investment with additional $80 million for chip production in Bắc Giang
Shunsin Vietnam Technology Co., Ltd., a subsidiary of Foxconn, will invest an additional $80 million in Quang Chau Industrial Park in Bắc Giang Province to manufacture chips.
Developing an ecosystem to support sustainable business for SMEs
A new draft circular from the Ministry of Finance is designed to promote sustainable business activities in the private sector.
Vietnam emerges as a new hub in the global semiconductor industry
Amid the backdrop of the Fourth Industrial Revolution, Vietnam is rising as a new semiconductor industry hub.
Numerous policies supporting businesses in opening shipping routes through Nghi Sơn Seaport
Nghi Sơn Seaport is capable of handling vessels with a capacity of up to 100,000 tons and can manage hundreds of millions of tons of cargo annually. It features numerous general-purpose docks, specialized berths, and a well-planned logistics system.