The Ministry of Finance (MOF) has recently proposed reducing corporate income tax (CIT) rates for small- and medium-sized enterprises (SMEs) to 15-17 percent from the current 20 percent.
The proposal is introduced in a draft National Assembly resolution which aims to promote the development of SMEs and encourage business households and individuals to transform into enterprises.
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| Classifying cashew nuts at Viet Hung Company Ltd. in Binh Dinh province__Photo: VNA |
As per the draft, the CIT rate of 15 percent would apply to businesses that earn an annual revenue of under VND 3 billion (approximately USD 129.000) and have at most 10 social insurance-covered employees. Meanwhile, businesses with an annual revenue of between VND 3 billion and under VND 50 billion (approximately USD 2.150.000) and less than 100 social insurance-covered employees would be entitled to the tax rate of 17 percent.
Meanwhile, enterprises newly established by business households or individuals would enjoy CIT exemption for two years after generating taxable income. Past the tax exemption period, these enterprises would be entitled to CIT incentives if they have investment projects in the fields or areas on the list of those eligible for tax incentives.
However, these tax incentive policies would not apply to subsidiary companies and affiliated companies of enterprises other than those prescribed above. Enterprises earning income from transfer of capital or capital contribution rights, real estate (except social houses), investment projects or rights to participate in investment projects, or rights to explore and exploit minerals; from overseas production and business activities, from search, exploration and exploitation of petroleum and other precious natural resources; or from mineral mining would be also ineligible for tax incentives.- (VLLF)
