The proposal is in response to Government's Resolution 35 on supporting and developing enterprises until 2020. This esolution signed by the Prime Minister Nguyen Xuan Phuc on May 16, 2016 aims that by 2020, Vietnam will have at least one million enterprises, which are competitive and sustainable. The private sector is to contribute as much as 49 percent of GDP and a third of enterprises have innovative activities each year. In order to achieve these targets, the government plans to do actions including financial and legal actions to further provide a favorable conditions for SMEs.
The MoF will propose two levels of corporate income tax - 17 percent and 15 percent - which will be imposed on SMEs from January 1, 2016, to 2020. The current level is 20 percent.
Start-up companies, projects in disadvantaged, rural and remote areas, will be exempt from tax in the first four years and will have to pay corporate income tax of 10 percent in 15 years.
According to the MoF, the reduction of corporate income tax will likely have a negative impact on the State budget collection in the period, but the ministry expects that the budget will be offset by the increase in indirect tax and personal income tax as enterprises will have more financial sources to re-invest and expand production.
In addition, the MoF was taking drastic measures to reform administrative procedures related to tax and land to facilitate enterprises in accordance with Government's Resolution 19 on measures to improve national business climate and competitiveness between now and 2017 with a vision to 2020.
Mr. Ngo Huu Loi, Head of the Ministry's Department of Legal Affairs, said that the measures were aimed at reducing business costs incurred by enterprises.
Resolution 19 aims to put Vietnam on par with the average performance of ASEAN's top four countries in the implementation of tax procedures and tax compliance by 2020.
Specific targets of Resolution 19 include 90 percent of businesses must use an online tax service; 65 percent of businesses must register and make their tax payments online; and 80 percent of tax payers should be satisfied with the services provided by their tax authorities.
At a recent workshop on improving the business environment through tax reform, Ms. Nguyen Thi Cuc, Chairwoman of the Tax Consultancy Association, recognised the tax sector's efforts to reform tax procedures. However, she said taxpayers were still facing many problems in observing tax laws, partly due to the failure of infrastructure and database to catch up with the rapid reform of policy. In particular, SMEs have yet to gain timely access to favourable revised tax policies.
Mr. Ngo Huu Loi said the authority was striving to simplify tax procedures so that time spent in paying tax would be a maximum of 110 hours per year. Regulations on land as well as financial obligation in the field were under scrutiny so that the MoF could propose solutions to cut charges for leasing of land or for changes in land use purposes.
The MoF was working with the Ministry of Natural Resources and Environment on plans to allow enterprises access to land in industrial zones and complexes and to allow them to pay land lease in a flexible manner.
