Small businesses may get reduced corporate income tax rates

11/03/2023 07:03 Nhat Linh Print article

ANTD.VN - The Ministry of Finance has proposed to consider allowing small and micro enterprises to apply corporate income tax rates of 17% and 15%, respectively.

In the draft Proposal for the revised Law on Corporate Income Tax (CIT), the Ministry of Finance proposed to amend and supplement a number of regulations on CIT rates.

Notably, the proposal to add regulations to apply lower corporate income tax rates to small-scale enterprises is noteworthy.

According to the Ministry of Finance, in our country, currently, the number of small-scale enterprises, mainly small and micro enterprises, accounts for the majority of the total number of operating enterprises and holds a particularly important position in economic development as well as social stability.

Through international experience, it is shown that most countries apply a lower corporate income tax rate than the general tax rate for small-scale enterprises, with distinction based on the scale of revenue and taxable income. Accordingly, the Ministry of Finance believes that it is necessary to study and supplement the Corporate Income Tax Law with regulations on applying a lower tax rate for small and medium-sized enterprises.

Small and micro enterprises may get reduced corporate income tax rates

However, according to the Ministry of Finance, the proposal to apply support policies for small-scale enterprises must be based on the principle of providing the right support to the right target to achieve the highest economic and social benefits, avoiding spreading and reducing the effectiveness of incentive and support policies, especially in the context of the continued restructuring of the state budget.

Currently, the number of small and micro enterprises (according to the criteria defined by the law on supporting small and medium enterprises) accounts for 93% of the total number of enterprises in Vietnam and if the number of medium-sized enterprises is included, the group of micro, small and medium enterprises accounts for over 97% of the total number of enterprises.

The Ministry of Finance believes that if support policies are applied to the entire group of micro, small and medium enterprises, almost all enterprises in Vietnam will enjoy incentives and it will not have much meaning in terms of prioritizing development. At the same time, it can lead to unequal competition between medium enterprises and small and micro enterprises while the group of medium enterprises already has more advantages (capital, revenue, market, labor, technology, etc.).

Therefore, to ensure that the support policy is correct and targeted to the subjects in need of support, avoid spreading, be consistent with the Law on Support for Small and Medium Enterprises and the actual application of corporate income tax support policies for small-scale enterprises that have been implemented in the past, as well as ensure simplicity and convenience in implementation, the Ministry of Finance proposes to consider allowing small and micro-enterprises to apply corporate income tax rates of 17% and 15%, respectively.

These tax rates ensure incentives and support equivalent to the preferential tax rates prescribed by the Law on Corporate Income Tax currently applied to new investment projects in areas with difficult socio-economic conditions, in the fields of agricultural and aquatic product processing, and have a higher incentive level than the tax rates applied in the period 2013-2016.

The criteria for determining small and micro enterprises are determined based on the revenue of the previous year as implemented in the previous period. In the case of newly established enterprises, the Government shall specify the total revenue as the basis for application.

In addition, to ensure strictness and limit the exploitation of policies, it is necessary to simultaneously stipulate that the above preferential tax rates do not apply to subsidiaries or affiliated companies where the affiliated enterprises do not meet the conditions for applying preferential tax rates according to regulations.

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