Proposal to reduce income tax for micro enterprises

The Ministry of Finance has just solicited opinions on the Draft Law amending a number of tax laws. Accordingly, the Ministry proposes to reduce corporate income tax for small and medium-sized enterprises.

Specifically, micro enterprises (total annual revenue under 3 billion VND) will be subject to a corporate income tax rate of 15% (a 5% reduction compared to current); small and medium enterprises (less than 200 employees, annual revenue from 3 to 50 billion VND) will be subject to a corporate income tax rate of 17% (a 3% reduction compared to current).

Previously, in mid-2016, the Ministry of Finance also proposed reducing corporate income tax for small and medium enterprises to 15% or 17%, but the preferential tax rate would only apply until 2020.

At that time, the Ministry of Finance calculated that if the tax rate was reduced to 17%, the budget would reduce revenue by about 1,500 billion VND/year (if applying the criteria of small and medium enterprises with revenue of no more than 100 billion VND/year) or the budget would only reduce revenue by about 473 billion VND (if applying the criteria of small and medium enterprises with revenue of no more than 20 billion VND/year).

According to statistics from the Vietnam Association of Small and Medium Enterprises, currently only about 30% of small and medium enterprises are profitable (equivalent to 200,000 enterprises), the rest are operating at a loss and production is at a standstill.

According to Tien Phong Newspaper