Lawmakers Wednesday amended tax laws to sharply cut the rates for small and medium-sized businesses and developers of low-cost housing with effect from July 1.
The corporate tax, now 25 percent, will be cut by five percentage points for businesses earning profits of up to VND20 billion (US$952,380) a year.
It will be cut by a steep 15 percentage points for developers of houses and apartments of less than 70 square meters and costing less than VND15 million ($713) a square meter.
Officials said SMEs and real estate are the most troubled sectors, and so get preferential treatment.
The corporate tax will be reduced to 22 percent next year and 20 percent in 2016, with the proposals being passed this week in the National Assembly, the country's top legislative unit, with more than 90 percent of members approving.
Some members suggested the reduction to 20 percent should be done earlier, but the idea was rejected due to government revenue concerns.
The lower taxes translate into a VND43 trillion ($2 billion) hit to revenues, and members said the time frame is adequate to keep companies competitive.
For certain other sectors like education, healthcare, culture, sports, environment, and the print media, the corporate tax was cut to just 10 percent with effect from next year.
Investment in disadvantaged areas and high-tech zones will be taxed at 10 percent tax for 15 years starting in 2014.
Low-cost housing will also benefit from the new Value-Added Tax Law, which halves the tax to 5 percent for one year starting next month.
The inventory of low-cost apartments has ballooned to more than 10,000, and officials said the VAT reduction would benefit low-income people without good housing as well as developers.
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