Businesses long to benefit from land rent reduction

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Businesses need to include exemptions and reductions in their business plans. Photo: Illustration

Solve directly cash flow demands for businesses

According to a report on the impact of the Covid-19 pandemic on Vietnamese businesses conducted earlier this year by the Vietnam Chamber of Commerce and Industry (VCCI) and the World Bank (WB), the most seriously affected enterprises are in the fields of real estate (76%), mining (80%), and agriculture (84%), including those who use land to carry out production and business activities and are the beneficiaries of this tax reduction policy.

Regarding the usefulness of policies, also in the above report, there are three most appreciated policies including VAT payment extension, corporate income tax payment extension and land rent payment extension.

According to Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management (CIEM), the Covid-19 pandemic has interrupted and delayed business activities which caused financial exhaustion and restricted revenue and cash flow. Therefore, businesses always are in need of a financial resource to sustain and maintain production at a minimum and right now relief to cover their expenses, so that when the pandemic passes, they can mount a comeback. Therefore, the direct support on tax reduction and land rent has solved the above problems.

From a business perspective, a representative of Thai Duong Rubber Technology Joint Stock Company said that in 2020, under the impact of the Covid-19 pandemic, the company faced a working capital shortage. However, thanks to the extension of tax and land rent under Decree 41/2020/ND-CP, the business has saved nearly VND500 million for importing more production materials, maintaining jobs for nearly 100 employees. Therefore, the representative of this company said that they are looking forward to the implementation of the next policy on land rent, because the Covid-19 pandemic is still prolonged and more complicated in 2021.

Recently, the Vietnam Association of Road Traffic Construction Investors (VARSI) also said that due to social distancing in many locations, many other road infrastructure projects under construction are unable to move personnel, machinery, equipment and materials to the construction site to meet the schedule; some projects even have to stop construction. Therefore, one of VARSI's recommendations to the Government is to reduce the land rental price for land areas used for warehouses and workshops for construction and production.

Grasping and sharing the aspirations of businesses, the Ministry of Finance is currently collecting comments on the draft Decision on reducing land rent in 2021 for those affected by the Covid-19 pandemic, with 30% reduction in land rent in 2021.

This decision plays an important part in lifting difficulties for the business community. VCCI's assessment of the draft has showed that, compared with Decision No. 22/2020/QD-TTg dated August 10, 2020 of the Prime Minister on the reduction of land rent in 2020 for pandemic-hit firms, the draft Decision has adjusted a number of regulations in the direction of supporting and facilitating beneficiaries.

Need to include this exemption into business orientation

Obviously, reducing costs and adding cash flow for businesses in the current context are very beneficial for businesses. Therefore, more than ever, businesses are expecting this policy to be put into practice soon and the implementation must be real, because this is one of the "lifesavers" of the business.

According to the data of the centralized tax management system (TMS), by August 6, there were 137,118 applications for extension. In which, 118,143 businesses, organizations and 18,975 individuals were accepted to be extended with the total tax and land rent being extended at VND67,194 billion (lower than the original calculation of the Ministry of Finance).

With the above amount, the business community also believes that this is not only a relief, but also an interest-free loan of the State, helping enterprises to create a cash flow structure and to endure more existing capacity to overcome the suspension of production. This is also considered a financial resource enabling businesses to increase resources in the future. Therefore, according to Mr. Phan Duc Hieu, businesses need to carefully determine the use of exempted expenses and consider this as part of their business strategy.

At the Government's regular press conference in July 2021, Deputy Minister of Finance Nguyen Duc Chi said that, according to calculations, the ongoing implementation of proposals on tax exemption and reduction, land rent for pandemic-hit people and businesses has reduced budget revenue by about VND20,000 billion. However, the Government's agencies are still actively studying to perfect it and will submit it to the National Assembly Standing Committee at the earliest meeting.