The Ministry of Finance Tuesday announced a plan to slash corporate income tax to 22 percent from the current 25 percent starting next year.
It will reduce the tax from January 1 next year and plans to bring it down further to 20 percent in the 2016-2020 period.
However, the new rate of 22 percent will apply earlier to small and medium sized enterprises from this July as they are most vulnerable in the depressed economy, Finance Minister Vu Thi Mai said.
The ministry has also announced a 30-50 percent cut in value added tax for affordable housing developers this July, she said, as they play an important role in helping low-income buyers and bringing in greater liquidity to the property market.
The preferential tax policy is expected to lead to a VND2.647 trillion (US$126.6 million) reduction in this year's tax revenues.
However, Phung Quoc Hien, head of the National Assembly (NA)'s Financial and Budget Committee, said he is worried that the tax break is too small to help the targeted enterprises.
NA Chairman Nguyen Sinh Hung and other parliamentarians have asked the government to apply the new corporate tax to all enterprises this July.
The Finance Minister, however, said such a move would squeeze the budget much more, given that tax revenues last quarter grew very slowly, making up just 20.6 percent of the annual target, about 5-7 percentage point less than usual.
If the new tax is imposed on all Vietnamese enterprises in July itself, the state budget would lose VND9 trillion ($430.56 million) this year, she said.
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