Vietnam is considering reducing corporate and income taxes in the next five years to boost economic development, according to a new government resolution.
The resolution asked the Finance Ministry to study measures to reduce the tax burden on businesses, possibly starting with a corporate tax cut this year for small and medium-sized enterprises (SMEs).
Vietnam’s current corporate income tax rate is 25 percent. Coupled with other taxes and fees, the high rate has been criticized as unbearable to many SMEs.
SMEs account for 95 percent of all businesses operating in Vietnam and contribute to nearly 40 percent of the national gross domestic product.
Economists have criticized the government for providing inadequate assistance to this group and favoring large state-owned enterprises. They said SMEs can actually do much more for the economy with the right support and treatment.
Small firms in agriculture and industry are those with capital of less than VND20 billion, and in the services sector, less than VND10 billion. Medium-sized businesses’ capital is less than VND100 billion.
The ministry is also asked to consider a 50 percent income tax cut for people working high-technology jobs, including those using high-tech applications in farming and seafood processing.
The resolution urges simplifications of tax, customs and other procedures as it aims to raise the contribution of the private sector to around half of the country’s GDP by 2020.
Vietnam's economy is expected to grow by more than 6.3 percent this year, one of the highest rates in the region.