Proposal to reduce income tax for micro-enterprises.

The Ministry of Finance has recently sought feedback on a draft law amending several tax laws. Accordingly, the ministry proposes reducing corporate income tax for small and medium-sized enterprises (SMEs).

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

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

At that time, the Ministry of Finance calculated that if the tax rate were reduced to 17%, the budget would lose approximately 1,500 billion VND per year (if the criteria for small and medium-sized enterprises with revenue not exceeding 100 billion VND per year were applied) or only about 473 billion VND (if the criteria for small and medium-sized enterprises with revenue not exceeding 20 billion VND per year were applied).

According to statistics from the Vietnam Association of Small and Medium Enterprises, currently only about 30% of small and medium-sized enterprises (SMEs) are profitable (equivalent to 200,000 enterprises), while the rest are operating at a loss or at a reduced capacity.

According to Tien Phong Newspaper