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About 700,000 firms to benefit from cut in corporate income tax

About 700,000 enterprises are expected to enjoy a cut in corporate income tax (CIT) to between 15-17 percent from July 1 this year, down from the current rate of 20 percent.

This is one proposal by the Ministry of Finance to be submitted to the National Assembly in the May meeting to implement the CIT incentive scheme for micro and small enterprises from July 1, six months earlier than the initial roadmap of January 1, 2021, to alleviate business difficulties amid the COVID-19 pandemic.

The tax rate for micro and small enterprises is 15-17 percent depending on the revenue and the number of employees of the business.

At the same time, new enterprises who transform from business households will enjoy an income tax exemption for two consecutive years from the time they first make a profit.

“In the case of implementing from July, the policy will assist 700,000 businesses, accounting for 93 percent of the total enterprises nationwide, reducing their tax obligation by about 7.8 trillion VND in 2020,” said Minister of Finance Dinh Tien Dung.

It is estimated that the State budget will lose about 15.6 trillion VND (669.5 million USD) in revenue every year.

In addition, to further support new enterprises, the ministry is proposing to slash business-related fees by between 50 percent and 70 percent, worth an estimated 500 billion VND (21.5 million USD) this year.

The cut includes 70 percent of the enterprise registration fee; 67 percent of charges for providing information about enterprises; 50-70 percent of the fee for assessment, amendment and supplementation of postal operation licences.

The ministry is also revising its circular on licence tax. It is expected that in the second quarter, micro and small business converted from business households will be exempt from the licence tax.

The tax exemption period is three years from the issuing date of the first business registration certificate.

Earlier, the Ministry of Finance issued a circular slashing fees for nine service groups and offering six service groups free in the field of securities applied at the stock exchanges and depository centre./.