VCCI Proposes Tax and Land Rent Payment Delay for Businesses

9:35:50 AM | 3/15/2023

The Vietnam Chamber of Commerce and Industry (VCCI) recently sent to the Ministry of Finance a report on recommendations for the draft decree on time extension for payment of value-added tax, corporate income tax, personal income tax and land rent in 2023.

Accordingly, the VCCI believed that the business community completely agrees with the proposals of the Ministry of Finance on extending the deadline for tax and land rent payments in 2023 so that businesses and people can focus their capital on their business development.

The submitted document stated that this policy has been implemented for three years and brought many very positive impacts on the Vietnamese economy. This late payment of tax and land rent acts as a cheap short-term loan from the state for businesses. According to VCCI, Decree 41/2020/ND-CP, Decree 52/2021/ND-CP and Decree 34/2022/ND-CP of the Government allow enterprises to delay tax payment from the first half of the year to the second half of the year, but they will still have to complete all tax obligations by December 2023.

But as reflected by businesses that have implemented this policy for three years, the accumulated fulfillment of all tax obligations at the end of the year, focused on December, causes many difficulties in cash flow for businesses. Companies usually have high demand for short-term working capital for their orders for Tet or Lunar New Year and Tet bonuses for employees. In addition, commercial banks often do not want to lend short-term loans during this time and require customers to mature their borrowings before December 31 because lenders must comply with regulations on credit growth limits. These factors make December 31 a "bottleneck" in short-term capital flows of the whole economy when the demand for working capital is high but the supply is low.

Also, according to VCCI's forecast, 2023 is expected to be another difficult year for businesses in terms of capital flows, due to macroeconomic fluctuations in Vietnam and in the world. Therefore, if this “unemployed” money is used to provide short-term capital for the economy at the year-end period, it will help to remove the imbalance in public and private cash flows and contribute for enterprises to boost business and give Tet bonuses to employees.

The draft still provides that the deadline for tax payment is December 31, 2023. This deadline is to ensure the realization of the annual budget. If the tax payment time is allowed to go to the following year, it may lead to budget failure as of December 31. However, this tax amount will not be lost and companies are still obliged to fulfill their payment to the State Budget. The delay in tax payment deadline is only meant to help regulate cash flows for the economy and avoid cash flow imbalance at some times in the year.

Therefore, VCCI proposed the Ministry of Finance study and report to the Government and the National Assembly for solutions to this matter. If possible, a six-month extension of the filing date and payment date should be allowed for all tax returns and payments in 2023.

By Le Hien, Vietnam Business Forum