The finance ministry has suggested lowering the corporate income tax rate from 20% to 15-17% for micro and small enterprises with annual revenues of less than VND50 billion (US$1.99 million).

An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy 

The tax cut, included in the draft Law on Corporate Income Tax (amended), is expected to be presented to the National Assembly for first review in October 2024 and for approval in May 2025.

Meanwhile, the Ministry of Finance has been gathering feedback on the draft law from governmental agencies and the public. It said one of the drafting committee’s key objectives was to create a more favourable tax regime for micro and small enterprises.

According to the draft law, a 15% tax rate is proposed for businesses with annual revenues not greater than VND3 billion, and a 17% tax rate is proposed for businesses with annual revenues higher than VND3 billion and lower than VND50 billion.

The ministry said that out of the 900,000 businesses currently operating, micro and small businesses account for nearly 94% and have been earmarked for preferential policies to help them develop production and long-term revenue.

According to the Law on Supporting Small and Medium Enterprises, a business is classified as small or medium if it employs an average of 200 workers and meets one of the following two criteria – total capital not exceeding VND100 billion or total revenue in the preceding year not exceeding VND300 billion.

Based on these criteria, micro and small businesses currently account for nearly 94% of all businesses in the country, and if medium-sized businesses are included, the group of micro, small and medium-sized enterprises accounts for over 97%. If these criteria were used to determine eligibility for preferential tax rates, almost all businesses in the country would qualify.

VNA (Source: e.vnexpress.net)