Support exemption of late tax payment for loss-making businesses

Exemption of 2,500 billion VND in late tax payment fines

The draft resolution exempts late payment fees arising in 2022 and 2023 for tax debts, land use fees, and land rents for enterprises and organizations (including dependent units and business locations) that incur losses in the 2022 tax period.

Ủng hộ miễn tiền chậm nộp thuế cho doanh nghiệp bị lỗ - Ảnh 1. — Exemption of late tax payment will help support businesses facing difficulties at present.

According to the Ministry of Finance, the current Tax Administration Law stipulates that taxpayers are charged a late payment fee of 0.03% per day on the total tax debt, increasing the financial burden. Many businesses, despite facing many difficulties, have tried to pay the full principal amount of tax, land use fees, and land rent.

Previously, in October 2021, the National Assembly Standing Committee issued Resolution No. 406/NQ-UBTVQH15 on a number of solutions to support businesses and people affected by the Covid-19 pandemic. This includes exempting late payment fees arising in 2020 and 2021 for tax debts, land use fees, and land rents for businesses and organizations (including dependent units and business locations) that incurred losses in 2020. Implementing this solution, by the end of 2022, the tax authority had exempted VND 2,116 billion in late payment fees arising in 2020 and 2021 for businesses that incurred losses in 2020.

Proposal to exempt late tax payment for loss-making enterprises in 2022

The above solution has truly supported the right people at the right time (taxpayers facing financial difficulties due to business losses), helping taxpayers overcome difficulties and focus resources to continue maintaining and restoring business activities after the pandemic. Therefore, the Government proposes a similar solution as implemented in 2020 and 2021.

Regarding the expected impact on the budget, the implementation of this proposal could reduce the state budget revenue by about VND 2,500 billion. The Ministry of Finance emphasized: this is the amount of late payment of enterprises that are losing money and are unable to pay the budget on time, so it does not greatly affect the reduction of budget revenue, but it does reduce the financial burden for enterprises and organizations so that they can rest assured and soon recover production and business activities. Because in the 3 years of 2020 - 2022, the impact of the Covid-19 epidemic and the impact of international economic and political issues have seriously affected the socio-economic development of the country, the production and business activities of enterprises and the lives of people. Difficulties and challenges for the economy and business activities are increasing, creating great pressure on macroeconomic stability, affecting the recovery and development of many industries and fields.

Recently, the State Bank has tightened monetary policy, causing market liquidity to shrink and interest rates to increase rapidly, limiting the ability of many businesses to access credit. In this context, many companies in the fields of seafood, footwear, textiles, steel, and wood are having difficulty finding orders for 2023, and even more difficulty in ensuring cash flow to pay off due debts and ensure business capital.

Consider further cost reductions

Associate Professor, Dr. Dinh Trong Thinh (Academy of Finance) assessed that the proposal of the Ministry of Finance and the Government to exempt late tax payment fees shows solidarity with businesses. This is also a suitable and practical solution in the current difficult context, because businesses that are losing money will delay tax payment. This also helps businesses have more motivation to try to stabilize production and recover business. When businesses operate well, they will contribute to the budget to join hands to promote economic development.

According to the Ministry of Finance, as of the end of December 2022, the total tax debt under management by the tax sector was VND 134,967 billion (including debt being processed and debt being appealed), accounting for 9.2% of the total state budget revenue in 2022. The tax debt in 2022 tends to increase compared to previous years, mainly due to the consequences of the Covid-19 pandemic still having a negative impact on the economy, affecting people and businesses. On the other hand, the price of oil and input materials has many fluctuations affecting most economic sectors and industries, leading to taxpayers facing many difficulties in production and business, resulting in business losses, making it impossible for taxpayers to pay tax debts to the budget on time, increasing tax debts.

Agreeing, Mr. Dau Anh Tuan, Deputy General Secretary, Head of the Legal Department of the Vietnam Chamber of Commerce and Industry (VCCI), welcomed the Government's solution to exempt late tax payment fees for loss-making enterprises. In fact, the losses of many companies in the past year were mainly due to the objective context when the world market fluctuated strongly, the impact of the military conflict between Russia and Ukraine caused orders to plummet.

Not to mention, the sudden increase in domestic interest rates has caused many businesses to fall into a state of liquidity shortage. Up to now, most companies are still facing a series of difficulties. Therefore, in addition to the above solutions, Mr. Tuan suggested that the Ministry of Finance and the Government should review and consider more solutions to support businesses, aiming to reduce costs for the business community.

For example, in addition to continuing to promote the reduction of lending interest rates, there are many types of fees related to borrowing capital, the State Bank should also review and require banks to cut them. Many businesses also propose that in the context of extreme difficulties, they can consider reducing union fees, social insurance; and cutting down on periodic business inspections. Or, the fire prevention and fighting standards are too high, causing businesses to have to spend a lot of money to comply. Mr. Tuan said that there was a business that said they spent 100 billion VND to build a factory, but now to meet fire prevention and fighting standards, they need to spend an additional 20-25 billion VND, which is too high a fee.

"The government has had a number of solutions to defer taxes, reduce value-added tax, land rent, etc. to support businesses during this difficult period. Each ministry and sector also needs to review and propose exemptions and reductions of more fees in their areas of responsibility. This spirit needs to be proactively and consistently implemented in all areas," Mr. Dau Anh Tuan suggested.

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