Finance ministry to cut 30% of corporate income tax

Local businesses are set to enjoy corporate income tax (CIT) cut by 30% for this year, which is expected to help them relieve part of the hardship during the current Covid-19 outbreak.

Nguyen Quoc Hung, director of the Tax Policy Department under the Ministry of Finance (MoF) revealed the plan as part of the ministry’s draft resolution on measures to support businesses and people affected by the Covid-19 pandemic.

Production at New Wing Company, Bac Giang Province. Photo: Minh Linh

Along with a CIT cut, the MoF would reduce 50% of tax payment for business households in the third and fourth quarter in all fields, and 30% in value-added tax for certain service sectors.

“Tax authorities are expected to waive the penalty for tax arrears in 2020 and 2021 for enterprises suffering consecutive losses in the 2018-2020 period,” Hung added.

"The new support measures would lead to an estimated decline of VND20 trillion ($870 million) in State budget revenue."

According to Hung, the finance ministry is also planning for a further cut in land rental fees in 2021.

Since early 2021, the MoF has issued measures to support enterprises and people worth VND138 trillion ($6 billion), of which the amount in taxes and fees cut totals VND118 trillion ($5.13 billion).

“While the foregone amount in budget revenue may put pressure on the budget balance, it would have greater significance in showing the support of the Government to the public during this difficult economic environment and contributing to the recovery process afterward,” he said.

The 15th National Assembly in its first session last week issued a resolution urging the Government to carry out drastic measures against the pandemic, including fiscal supports for the economy.

Deputy Prime Minister Le Minh Khai also requested the MoF to draft new support policies for businesses and people on August 10 at the latest.

According to the MoF, business activities are seen as the vein for the economy but have been severely impacted by the pandemic following the last two outbreaks, especially those in the fields of transportation, hospitality, entertainment, and tourism.