(VOVworld) - The 1.4 billion USD bailout package authorized by the Vietnamese Government to support enterprises is attracting the public’s attention. Although the Government still needs to finalize some necessary procedures for submitting the package to the National Assembly for approval, both domestic businessmen and economists agree that the most diverse package ever of tax policy solutions targets the right beneficiaries. VOV’s Minh Ha and Lan Anh report.
It’s hoped that the Government Office’s announcement of a bailout package of tax deferment and reductions will help iron out snags in Vietnam’s businesses. Nguyen Thi Loan, a member of the Board of Directors of Thang Long Construction Joint Stock Company, says as soon as the policy is implemented, the tax reductions will give enterprises more capital to invest in production and trade. The Thang Long Company has signed two contracts worth 1.44 million USD for the first half of this year. It can save 26,400 USD with a 30% reduction of corporate income tax. Loan explains further ‘this is a lot of money to supplement the company’s capital and help the company overcome its current financial hardship. The general corporate income tax rate of 25% is too high. The tax reduction means enterprises will have money to re-invest in their businesses. The reduction of the value added tax will also give us more capital for investment’.
According to the Vietnamese business community, the bailout package comes at a crucial time. Danh Quy, Director in charge of Planning and Investment of the Ho Chi Minh City Cooperative Union shares his view ‘we see that help is on the way and acknowledge the Government’s support for us. We appreciate the Government’s effort to reduce or defer tax payments for businesses as well as its plan to reduce by 50% of land lease rates for trading and service companies. This is good news for us’.
Under the Finance Ministry’s proposal, all enterprises will enjoy a six-month payment extension for value-added taxes of the second quarter, a 50% reduction of land rent, and a 30% reduction of corporate taxes for small and medium-sized enterprises. Nguyen Thi Cuc, a financial consultant, says this year’s measures target a wider range of beneficiaries and cover different tax policies. She elaborates ‘There will be more companies benefiting from the Finance Ministry’s bailout package, which will also be more feasible than the solutions implemented in 2011. Moreover, taxes for last year which enterprises haven’t been able to pay yet will continue to be extended. This is a great concession by the Finance Ministry as the State budget faces difficulties’.
Deputy Finance Minister Vu Thi Mai says the package worth 1.3 billion USD, will base tax relief on each company’s current circumstances. She says ‘enterprises which are suffering are mainly small and medium-sized companies, and those in real estate, production, electricity production, agro-forestry and fisheries, food, and beverages. By reducing or deferring tax payments, the bail package will benefit not only profitable companies but businesses in various industries’.
The latest report published by the Ministry of Finance shows that in the first four months of 2012, nearly 18,000 enterprises went bankrupt or suspended operations, up 10% more than last year.