Easing Burdens for Businesses

11:35:32 AM | 25/3/2020

Anticipating that the Covid-19 pandemic will evolve complicatedly and unpredictably, the Prime Minister has requested relevant agencies to remove hardships and create favorable conditions for enterprises to access capital, credit, finance, tax, trade and electronic payment. In particular, credit institutions pledged to launch a credit support package of VND250 trillion (US$10.8 billion) to finance their production and business activities, shorten the time to consider borrowing applications, reschedule loan repayment terms, consider rate cuts and exemptions, and reduce fees. The support package of VND30 trillion (US$1.3 billion) will focus on tax and fee exemption and reduction.

Support for various industries

The Prime Minister demanded reviewing and reducing administrative procedures and costs for businesses such as reducing administrative procedures, maritime logistics, aviation, road, inland waterway and railway costs; not performing regular inspection in tax and customs in 2020 in businesses without any sign of violation; not adjusting State-fixed prices of goods used as inputs for production in the first quarter and second quarter of 2020.

For the tourism and aviation industries, the Prime Minister urgently requested policies to revitalize these industries like launching national tourism promotion activities, stimulating domestic tourism demand, and introducing new products to international tourists.

He also asked relevant agencies to review and improve electronic visa procedures, propose travel visa-waiver for certain tourists till the end of 2020, first of all the regions and countries unaffected by the epidemic. Difficulties in the aviation industry will be resolved by cutting prices, fees, charges and costs.

The Prime Minister also asked to accelerate implementation, disburse investment capital and improve business environment. Particularly, relevant ministries and agencies must study the conversion from public-private partnership (PPP) investment to public investment in key projects, such as My Thuan - Can Tho Expressway, some sections on Eastern North-South Expressway in 2017-2020.

Tax payment relaxed for affected businesses

On March 10, the Ministry of Finance published a draft decree to extend tax and land rents to support companies, households and business individuals directly and severely affected by the Covid-19 pandemic. Accordingly, the ministry proposed a 5-month extension of value-added tax (VAT) payment from March to June for companies and business individuals. The total amount of deferred tax was estimated at VND30 trillion. The deadline for paying these two taxes is prior to December 15.

Entities to be supported are engaged in agriculture, forestry and fishery, food, textile, apparel, footwear, rubber, electronics, computer, automobile (except for manufacturing and assembling cars with nine seats or fewer), rail, road, water and air transportation, warehousing and transport support, accommodation service, catering service, travel agency, tour and support services, and tour promotion.

In addition, small and micro enterprises are also entitled to a 5-month extension of VAT.

According to the draft decree, the Ministry of Finance recommends a 5-month extension for VAT payable in March, April, May and June this year from the end of the current regulatory payment deadline.

The deadline for paying VAT in March is September 20 instead of April 20. The payment deadline for April, May and June VAT is October 20, November and December 20, respectively.

Entities that register to pay VAT on a quarterly basis are entitled to extend this tax incurred in the first and second quarters of this year. The extended deadline will be September 30 and December 30 for the first quarter and the second quarter tax.

According to regulations, business entities shall declare tax monthly if the total revenue of the preceding year's goods and services is VND50 billion or more and make quarterly tax declaration if the value is less than VND50 billion.

The Ministry of Finance also recommended that enterprises and organizations eligible for VAT extension only need to submit monthly and quarterly VAT declarations according to current regulations. And, VAT is not required for immediate payment but in a five-month time.

With the 5-month extension of the VAT payment deadline from March to June, the ministry estimated that the budget revenue will decrease by about VND22.6 trillion (nearly US$1 billion), of which VND11.7 trillion will be for big companies and VND10.9 trillion for small and micro enterprises. But, in the end, the budget revenue in 2020 will not decrease because delayed tax must be settled before December 31.

Individuals and households doing business in the above sectors will be also entitled to the VAT and personal income tax payment extension. The value was estimated at VND3 trillion.

By Quynh Chi, Vietnam Business Forum