Ministry of Finance proposes exempting license fees for subjects

If the proposal of exempting license fees is approved, the State budget will lose VND 200 billion.

In the draft, the Ministry of Finance proposed the Government exempt fees for newly established business establishments; exempt license fees for three years from the date of being granted the first business registration certificate and exempt license fees for public education and training institutions.

The exemption of license fees has reduced cost and time for carrying out procedures for businesses. According to current regulations, organisations, individuals, individual groups, households that are doing business or are newly established, granted tax registration and tax code, enterprise code within the first six months of the year, shall pay the license fees for the whole year. If they are established, granted tax registrations and tax codes, enterprise code within the last six months, shall pay 50 percent of the license fees for the whole year.

On the basis of the Prime Minister’s approval, the Ministry of Finance proposes the Government supplement regulations on fee exemption for newly established and operating establishments. Accordingly, cases subject to fee exemption will include “Organisations, individuals, individual groups, households that start production and business activities or newly establish production and business establishments in the first year (from January 1 to December 31 of year).”

The Ministry of Finance proposes to exempt license fees within three years from the issuing date of the first business registration certificate. This is in accordance with the Law on Support for Small and Medium-sized Enterprises to support these enterprises and business households that have become enterprises.

Regarding the exemption of license fees for public education and training institutions, the drafting agency said that public education units are invested in material facilities by the State (land, houses) and operate by State fund and partly from the revenue through tuition as prescribed to provide educational services.

Educational services provided by public non-business units apply prices set by State agencies without cost as prescribed in Government Decree No.16/2015/ND stipulating the autonomy mechanism of public non-business units.

In fact, localities have not yet implemented fee collection, so the Ministry of Finance proposed the Government exempt license fees for high schools, junior high schools, primary schools and kindergartens (including public and non-public).

These proposals are aimed at at improving the Entrepreneurship index, enhancing rankings in international rankings on business environment, competitiveness and contributing to the sharp increase in the number of newbusinesses.

The exemption of license fees will cut input costs for businesses and people; ensure the rationality, feasibility, create favourable conditions for implementation and application in reality.

The Ministry of Finance estimates that if the number of organisations, individuals and households starting business in 2019 is equivalent to that in 2018, State revenue from license fees will reduce VND 200 billion when the regulation on license fee exemption for organisations starting business activities or newly established business establishments for the first year is applied.

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Recently, the Ministry of Finance has not only simplified administrative reforms but also taken measures to support tax and fees for small and medium-sized enterprises, micro-enterprises, as well as enterprises that newly transformed from the households. With this proposal, although the State budget revenue has reduced, it has a great impact on people and businesses. The exemption of license fees both reduces costs and time to carry out procedures for businesses.

Moreover, the Government's Resolution No.02/NQ-CP of 2019 sets goals on improving the business environment, striving to raise the ranking of Entrepreneurship index to 20-25 ranks, in 2019, it must increase at least five spots. According to the Doing Business Report 2019, Vietnam Entrepreneurship procedure ranked 104 out of 190 economies, including 8 procedures processed within 17 days, including procedures for paying license fees. Therefore, exemption of license fees for some businesses will help improve this index.