Vietnamese Government Removing Business Constraints

3:49:31 PM | 9/5/2014

Presently, constraints in the economy are adversely affecting activities of Vietnamese businesses. Due to loss-making, a series of businesses have closed down while others are slowing down. In order to assist businesses, Prime Minister Nguyen Tan Dung recently signed and issued a resolution with measures to reduce taxes and expand business freedom.
Disentanglement on taxation
Within the competence of the government, the Prime Minister will prolong the time-limit for paying taxes 60 days for added value of imported machines and equipment for fixed property of investment projects from VND100 billion upwards. Ministry of Finance sets a maximum delay of 5 working days upon submitting complete document for tax return.
Businesses can exempt expenses with full receipt spent directly for welfare of the workers, with a total no more than the average monthly salary.
For real estate transfer, related persons can either pay 25 percent of the tax upon income each time or 2 percent of the price of each transfer. Regarding stock exchanges, related person can pay 20 percent of annual income and completing by the year end or pay 0.1 percent of the sale price for each transfer without year end payment.
Household businesses paying taxes on contracts and individuals acting as agents for insurance, lotteries, multi-level sales with income tax covered by agencies are free from paying taxes.
Tax payers with business income less than VND50 billion a year shall pay added value tax each quarter.
To remove difficulties for businesses and promote businesses under the competence of the National Assembly, investment projects from VND200 billion upward and disbursement no longer than five years upon receipt of permit can have preferential tax rate of 10 percent in 15 years, tax exempt for 4 years and tax reduction of 50 percent in 9 following years for businesses engaging in production (except those engage in special consumption products or mining).
In special case of investment, preferential treatment of 10 percent tax rates can be prolonged but not more than 15 years.
Tax rate of 20 percent in 2014 and 2015 is applied to agricultural businesses employing over 300 workers and ensuring consumption of products not in especially difficult areas. From January 1, 2016, tax rate of 17 percent will be applied to those above-mentioned businesses.
The government decides not to collect tax on natural water used for agriculture, forestry, fisheries and salt production. To encourage the development of animal husbandry and fisheries, the Prime Minister endorsed the proposal of Finance Ministry to transfer industrialized animal feed of 5 percent added value tax rate to added value tax exempt.
Expanding business freedom
“Reviewing and ending professions and businesses that should be prohibited; reducing unnecessary businesses and simplifying administrative formalities”... Those are instructions of the Prime Minister on reviewing the list of prohibited, limited and conditional businesses and the list of priority in investment law (amended).
Regarding list of conditional professions and businesses, the Prime Minister asked concerned ministries and agencies to review and re-evaluate the management and the list so as to expand business freedom in conformity with international integration in investment and trade, reducing unnecessary businesses and simplifying administrative formalities.
Periodically, the government will review list of conditional businesses for unified application.
Concerning businesses and areas of preferential treatment, the Prime Minister asked related authorities to evaluate and readjust existing regulations in conformity with practical conditions so as to attract investments, generate more jobs, especially in rural and disadvantaged regions, and increase competitiveness meeting the demand of sustainable socio-economic development.
The Ministry of Planning and Investment will coordinate with related ministries to review and improve the list of preferential treatment without priority for mining, exploiting of natural resources and businesses of special consumption taxes.
Concerned ministries should complete the list of above-mentioned businesses and report to the Prime Minister for consideration in order to be included in the Investment Law (amended) presented to the National Assembly at its 8th Session in October 2014.
Dinh Thanh