Proposal to reduce income tax by 30% for small and micro enterprises

Report No. 93 / TTr-BTC of the Ministry of Finance
The Ministry of Finance has just submitted a report No. 93 / TTr-BTC to the Government on a draft resolution of the National Assembly on a 30% reduction of corporate income tax (CIT) payable by 2020 for small and micro enterprises.
According to the Ministry of Finance, by the end of 2019, Vietnam has about 760,000 operating enterprises, of which micro-enterprises account for more than 63%, small-scale enterprises account for more than 30% and medium-sized enterprises. accounting for nearly 4%. The total number of micro and small enterprises accounts for more than 93% of enterprises in Vietnam and these enterprises play an important role in economic development and social stability. In order for small and micro enterprises to satisfy the tax reduction conditions, the Ministry of Finance shall specify that micro enterprises have a turnover of no more than VND 3 billion by 2020, and the number of employees must not exceed 10; Small enterprises whose revenue in 2020 is not more than VND 50 billion, the number of employees will not exceed 100 people.

According to the Ministry of Finance, if this proposal is approved, the state budget in 2020 will reduce revenue by 15,840 billion dong / year.
However, the reduction in revenues resulting from the support of small and microenterprises will be offset from indirect taxes and other budget revenues as the reduced tax amount will be used for consumption and investment. In addition, the current tax reduction for businesses will contribute to increasing corporate income tax revenue in the next period because they have the conditions to re-invest and develop production and business. The Ministry of Finance proposes a resolution to reduce corporate income tax payable by 2020 for small and micro enterprises and be applied right in 2020. Criteria to identify the combination of the Law on SME Support and the current Law on Corporate Income Tax ensure compliance with the reality and capacity of the state budget as well as international practice. The Ministry of Finance also said that the downside of tax reductions for small and micro enterprises may cause the abuse of the policy to avoid taxes by keeping criteria to be identified as small businesses, very small to enjoy tax incentives.

Summary
Therefore, in order to overcome and offset the impact on state budget revenue in the short term as well as to ensure the initiative in operating state budget estimates, the Ministry of Finance will coordinate with other ministries and agencies. related areas and localities to attach importance to directing the implementation and effective implementation of tax laws, intensifying the inspection against tax loss. (According to VOV)