Vietnam is considering to reduce VAT by 30 percent to boost economic recovery
The government is considering a VND21.3 trillion ($932.66 million) tax break, including value-added and corporate income tax, to boost economic recovery after the fourth Covid-19 wave.
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The National Assembly is considering the government’s proposal to reduce VAT by 30 percent in the last three months this year.
Sectors set to be eligible for the tax break include transportation, accommodation, food and beverage, publishing, filmmaking, music production, entertainment and sports.
Vietnam applies a VAT of 10 percent on the price of most goods, and 15 percent on luxury items.
Government revenue is set to fall by VND5 trillion because of this tax break.
Minister of Finance Ho Duc Phoc said the tax break would benefit consumers as it reduces the amount of money they have to pay for goods and therefore could boost sales.
The government has also proposed a 30 percent tax break on corporate income tax if the business’ revenue this year is under VND200 billion and the figure had dropped from last year.
The second condition is given to ensure that businesses who are eligible for the tax break are truly impacted by Covid-19, Phoc said.
Vietnam applies a corporate income tax of 20-22 percent on annual revenue.
This tax break is set to reduce government revenue by VND2.2 trillion.
The government also proposed that individual and household businesses be eligible for zero personal income tax, VAT and other taxes in the third and fourth quarter this year.
This is set to reduce government revenue by VND8.8 trillion.
The government also wanted to scrap collecting fines in delays from paying taxes and land fees from businesses that had reported losses last year.
This is set to reduce government revenue by VND5.3 trillion.
Together these proposals are set to bring down government revenue by VND21.3 trillion.
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