Vietnam house speaker wants corporate tax slashed by a fifth

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National Assembly Chairman Nguyen Sinh Hung has said that the corporate income tax should be reduced to 20 percent by next year.

Even if it cannot be cut to 20 percent immediately, then a road map should be drawn up to reach the rate by 2016, he said.

The Ministry of Finance announced late last year that it plans to cut the tax to 23 percent by earlier next year from the current 25 percent.

Deputy minister of Finance Vu Thi Mai said 23 percent is a common and reasonable rate, the same as in Thailand and lower than in some other countries like China, Indonesia, Malaysia, and the Philippines.

The ministry plans to tax small and medium-sized enterprises with no more than 200 workers and annual revenues of less than VND20 billion (US$955,628) at 20 percent, said revealed.

If the tax is reduced by 1 percentage point, revenues would fall by VND6 trillion a year, she said.

"The ministry will consider the chairman's suggestion and come up to a decision," she added.

Phung Quoc Hien, head of the National Assembly's Financial and Budget Committee, said if the tax is reduced to 20 percent as soon as next year, it would be a great advantage for Vietnam in competing with other countries in attracting foreign investment since the tax is under 20 percent in Taiwan, Japan, and South Korea.

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"The country will then need only one corporate tax rate and there will be no need to distinguish between large or small companies."

The Vietnam Chamber of Commerce and Industry and businesses pleaded last October to cut the rate to 20 percent as soon possible to help them survive the economic slump.

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