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May 30, 2020 / 14:49

Vietnam gov’t waives taxes to boost economic recovery

More efforts are being made to speed up the economic recovery process while many countries are struggling with the Covid-19 pandemic.

The Vietnamese government has approved new bold measures to support businesses and individuals, including waiving of taxes instead of deferrals as before, to help them overcome pandemic damages.

 Vietnamese government decided to waives taxes to boost economic recovery. 

The move is part of the government’s resolution No.84/2020 recently signed by Prime Minister Nguyen Xuan Phuc, aiming to accelerate the economic recovery process.

Notably, enterprises, organizations, household businesses and individuals forced to stop operations due to the Covid-19 pandemic are now entitled to 15% reduction of rental fees of state-owned land and properties.

The government also decided to waive fees related to outstanding government-guaranteed loans as of December 31, 2019 for local airlines, and reduce 50% of take-off and landing charges, as well as air navigation service fees for domestic flights from March to September.

Additionally, airlines are given permission to offer price of zero for air transportation services not included in the list of services under state management from March to September.

The resolution stipulated a reduction of 2% in interest rates for direct and indirect borrowings for small and medium enterprises (SMEs); a reduction of 50% of the registration fee for domestically-produced cars to boost domestic consumption.

Meanwhile, the deadline for payment of excise taxes for domestically-produced/assembled cars hax been delayed until late 2020. The government said it would consider adjustments to the current excise tax policy to support domestic production.

The Vietnamese government also agreed to pilot implementation of mobile money which allows users to transfer money through cellphone accounts instead of a bank account, for products and services with low value.

Foreign experts, engineers, investors, among others, are now allowed to enter Vietnam to ensure smooth resumption of businesses of foreign-invested firms.

The government expects to cut at least 70% of expenses for holding conferences and overseas working trips of government agencies, along with an addition of 10% savings in regular spending from the state budget.

Taxes reduction instead of deferrals

The government is set to propose to the National Assembly (NA) a cut of 30% of the current environmental protection tax rate until the end of 2020.

Small and micro-sized enterprises, which account for a majority of total enterprises in Vietnam, could benefit from a 30% cut in corporate tax this year.

The government suggested the NA change the financing format of a number of sub-projects under the Eastern North-South expressway project form public private partnership (PPP) to public investment.

The government’s resolution also proposed waiving requirements for construction license for projects having their design approved by competent authorities.

To date, the government has rolled out supporting programs such as a credit aid package worth VND300 trillion (US$12.87 billion), a VND180-trillion (US$7.63 billion) fiscal stimulus package in forms of delay of payment of value-added tax, corporate tax and income tax, and a financial support package for vulnerable people worth VND62 trillion (US$2.7 billion).

The government aims to grow its economy by 4-5% this year, higher than a 2.7% growth rate estimated by the International Monetary Fund.