Government to Extend Additional Support to Businesses and People

9:23:26 AM | 8/13/2021

In the context that the business community and the public are seriously affected by the health crisis, the government is about to offer more effective remedies to help enterprises and labourers to stay afloat.


At the press conference by the government on August 11, Deputy Minister of Finance said that, regarding upcoming pro-business policies as per the National Assembly’s resolutions and directions on supporting enterprises, organisations, and individuals exposed to difficulties caused by the COVID-19 pandemic, it is expected that the total money used to assist enterprises, organisations, and individuals during this year will reach as much as VND118 trillion (US$5.13 billion) in the form of extensions for payment of taxes and land rental, and exemptions and reductions of fees and charges.

In addition, the Ministry of Finance (MoF) has also proposed that authorised agencies consider and determine a number of other solutions to support businesses and individuals.

“Specifically, corporate income tax will continue to be reduced for small-sized household businesses with annual revenue expected to be under VND200 billion (US$8.7 million), while there will also likely be a 50% reduction of assorted taxes for production and business activities of shops and inns under different forms of tax payment,” Chi said.

In addition, there will also be a reduction of value-added tax (VAT) for business activities in the sectors the most vulnerable to the pandemic such as transport, hotel, and tourism. Taxpayers with difficulties who cannot pay their taxes on time will also be exempted from tax payment.

Furthermore, there will also be a reduction in land rental within 2021 for those in difficulties, with the total value of the next support package being more than VND20 trillion (US$870,000) that the MoF is proposing.

“As for the implementation of these new support solutions, we are seeking and gathering ideas and comments before reporting to related ministries and sectors, and then reporting to the government, ensuring that in the upcoming second session of the 15th National Assembly the government will submit the solutions to the National Assembly Standing Committee for consideration,” Chi said.

Recently the government also promulgated a social security support package worth VND26 trillion (US$1.13 billion) for workers and businesses. The MoF has also proposed to delay the implementation of Circular 40 on taxation until January 1, 2022.

Circular No.40/2021/TT-BTC was released in June 2021, offering guidelines on VAT, personal income tax (PIT) and tax administration for business households. It was due to take effect on August 1, 2021.

Specifically, a VAT rate of 5% and a PIT rate of 2% shall be applied to saunas, massage parlours, karaoke bars, nightclubs, billiard halls, internet and gaming cafes, tailoring and laundry services, hairdressing, other repair services including that of computers and household appliances, legal consulting, financial consulting, accounting, auditing, and services of implementation of administrative procedures related to tax and customs.

Since the second quarter of 2020, the government has also been deploying some drastic measures to support businesses. For instance, the SBV has been deploying a package worth VND180 trillion (US$7.82 billion) for businesses and households in the form of debt payment deferral and preferential loans.

Most recently, on April 19, the government signed and issued Decree No.52/2021/ND-CP on the extension of time limits for payment of VAT, CIT, personal income tax and land rental in 2021. The total package was estimated at VND115 trillion (US$5 billion).

Difficulties surging

“The business community and people’s lives are now bogged down in massive difficulties caused by COVID-19,” Prime Minister Pham Minh Chinh stated at the government of the 15th tenure’s first meeting attended by leaders of ministries, sectors, agencies and localities, both online and offline.

“Regarding solutions and tasks in the coming time, the first and foremost task is to focus on fighting the pandemic, because success in this can help us boost socioeconomic development and stabilise people’s lives and help enterprises out of difficulties,” PM Chinh said.

According to the General Statistics Office (GSO), in the first seven months of 2021, the pandemic forced about 79,900 enterprises, both local and foreign ones, to halt performance and complete procedures for dissolution, up 25.5% year-on-year. On average, nearly 11,400 enterprises left the market each month.

The number of unemployed people of working age in the second quarter of 2021 hit nearly 1.2 million, up by just over 87,000 people over the first quarter of this year.

In the first seven months of 2021, Vietnam saw about 75,800 enterprises newly established, with total registered capital of VND1.06 quadrillion (US$46 billion) and employing 555,500 new labourers, up 0.8% in the number of enterprises, and 13.8% in registered capital, but down 7.2% in the number of labourers.

According to the Ministry of Labour, Invalids, and Social Affairs (MoLISA), Vietnam’s unemployment rate is now at 2.52%. Since early this year, the growth of many sectors in the economy has declined year-on-year, such as tourism (down 54.8%), hotels (down 2.7%), and transport (down 0.7%).

“The pandemic has hit IZs and export processing zones, which are important economic pillars employing millions of labourers,” said MoLISA Minister Dao Ngoc Dung. “Some IZs have had to halt operations, such as Bac Giang closing operations of four IZs affecting 322 enterprises employing a total of 150,000 labourers, and Bac Ninh witnessing 42,000 labourers become unemployed. The fate of other tens of millions of labourers has become similar in Hanoi, Vinh Phuc, Da Nang, and Ho Chi Minh City.”

In another case, the pandemic has forced 150 factories in Binh Duong Province to halt its three-on-spot operation because the enterprises have failed to ensure sufficient food and materials, while their employees were concerned over infection cases on the site.

Urge for remedies

At the recent first session of the 15th National Assembly, supporting enterprises and people out of difficulties was also high on agenda, with deputies asking the government to issue timely solutions.

For example, deputy Doan Thi Le An, representing Cao Bang Province, said that hundreds of thousands of people in Cao Bang have become unemployed due to COVID-19. This has caused greater difficulties for local inhabitants. Cross-border trading activities have almost halted entirely, with many workers coming back home with empty hands.

Meanwhile deputy Nguyen Thị Viet Nga, representing Hai Duong Province, said that the pandemic has sabotaged almost all activities relating to the living, working, and studying of individuals and businesses who have been facing lockdowns, social distancing, and isolation in many localities across the country.

“Simple demands in the normal life previously have become a luxury now. Many people and companies have had to applied online activities, which are not totally effective,” Nga said.

Meanwhile, deputy Vu Tien Loc, representing Thai Binh Province, also noted that “Businesses are encountering massive woes more than ever, especially small and medium-sized enterprises (SMEs).”

Vietnam currently has 870,000 operational businesses, of which about 97% are SMEs, according to the Ministry of Planning and Investment.

“In the service sector, in addition to financial, banking, and insurance services, many other kinds of services are also suffering great difficulties. A lot of businesses operating in the industries of aviation, tourism, hotels, restaurants, and transport are dying off,” said Loc, who is also chairman of the Vietnam Chamber of Commerce and Industry representing the interests of the local business community.

Source: NDO