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How are companies eligible for tax reductions defined   2008-12-11 - Viet Nam News

Deputy director of the General Department of Taxation Pham Van Huyen spoke to Tin Tuc 'The News' newspaper about the decision to lower taxes and delay tax payments for enterprises from now through 2009.

What criteria define enterprises that are facing difficulties and therefore eligible for tax reductions or delayed tax payments?

For small- and medium-sized enterprises (SMEs), the authorities will lower corporate income tax as much as 30 per cent for the fourth quarter this year and the whole of 2009.

The Ministry of Finance is still studying and drafting specific criteria. For small- and medium-sized enterprises (SMEs), the authorities will lower corporate income tax as much as 30 per cent for the fourth quarter this year and the whole of 2009.

Under current regulations, there are two criteria to determine SMEs. These companies must have registered capital of under VND10 billion (US$595,000) and have less than 300 employees.

Companies operating in other sectors will also be able to enjoy tax incentives. The Government will decide how many companies and which sectors qualify.

Some people worry about corruption occurring during procedures to determine enterprises that qualify. What do you think?

The tax sector is determined to carry out transparent administrative procedures. Therefore, while drafting the criteria, we will focus on simplifying procedures and will publicise the criteria in the media so that enterprises can easily confirm if they qualify - and people can check on tax officials to prevent corruption.

We are well aware that supporting enterprises efficiently in this time is an important measure to nurture the State budget. If we fail to help companies overcome difficulties in a timely manner, it will hard to increase the State budget collection.

Leaders of the Ministry of Finance have asked the tax sector to closely supervise tax officials to see just how well they do their jobs.

What other measures are being considered to assist struggling enterprises?

We will streamline procedures and shorten the time for tax refunds to reach enterprises, especially export companies.

Specifically, we have asked tax authorities to make refunds within 15 days to companies that satisfy conditions. Particularly, export firms, if guaranteed by banks, can receive up to 90 per cent of taxes paid.

Home businesses will have to pay personal income tax instead of corporate tax. Will this reduce the State collection?

Lowering taxes is meant to tackle difficulties faced by companies, but it’s also a challenge for the tax sector because it still has to achieve the amounts set by the National Assembly. The estimated amount that will be lost under the new measures is tens of trillions of dong.

Currently, there are 1.7 million home businesses. Previously, they had to pay taxes at fixed rates because they did not have invoices. When they have to pay personal income tax, it will be lower because of deductions for dependants.

What do you think of the suggestion by some Government officials to postpone the implementation of personal income tax?

To some extent, their concern is reasonable when taking into account some income sources subject to the tax, such as profits from securities investment. During the gloom of the stock market, many investors did not earn profit. If we levy a fixed income tariff rate, it means that they will have to pay additional tax.

However, the National Assembly will make a final decision on whether the implementation of tax will be delayed or not.

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