Supporting business startups: Reduced taxes- Creating Motivation

Productive enterprise need to be prioritized tax. Photo: Thuy Linh

The amount of expected tax is 17% or 15%

The Ministry of Finance has recently reported to the Government a new taxation plan to support startup firms, this plan will be applied to startup companies that do not meet the requirements for tax incentives, or are not part of a sector where investment is encouraged in the current situation. Whereby, ordinary tax rates expected to apply in these cases will be at 17% or 15%.

According to the Ministry of Finance, the criteria to determine a startup business is that it needs to be a newly founded enterprise and operate based on exploiting intellectual property, technology and a new business model to produces goods and services with innovation and practical applications for application in daily life. Additionally, it needs to generate total revenue that does not exceed 20 billion vnd per year.

In reality, the enterprise income tax policy already has many provisions for new startups firm like: 10% export tax for 15 years, exemption tax for 4 years and reduction of 50% of tax needed to be paid in the following 9 years, with newly invested startup business projects in areas with special difficulties, in economic zones or belonging to fields of investment attracting incentives such as scientific and technological research, production of software products and production of composite materials...

However, recent policy has not yet caught up with the majority of businesses due to the fact that many have not meet the criteria. Hence, to expand the scope of startup enterprise subjects that can have tax incentives it is necessary to support start-up businesses .

The need to extend for the beneficiaries

The reduced tax policy is desirable and expected by many enterprises, but many businesses have complained that regulations on preferential treatment are too narrow, meaning the majority of startup businesses could not access the benefits of the policy.

Mr Ho Dai Loi, the Manager of Dong Hung Production Limited Liability Company (specialized in producing and exporting ceramics products) said, with the standard that the Ministry of Finance have given there will only be a small number of business that can receive this benefit. Management agencies need to delve further so that the criteria can benefit more businesses through the policy.

Another enterprise representative shared a similar opinion, in parallel with the tax reduction, to have administrative, spending reform. This is even more important to support the business community. The representative thinks that: “Policy is always moral, towards good benefit, but when put it in practice it is another story. Tax offices need to enhance further the use to guide enterprises in performing procedures such as electronic declaration and electronic tax payments that are more convenient for businesses, to avoid traveling to solve many complicated procedures".

Further commenting on this policy, Mr.Luu Vu Truong, the Manager of WT Investment Consultants Joint Stock Company also said, the reduced tax is the right thing to do, is necessary, but more importantly has the amount of tax that businesses pay reduced compared to the old tax rate or not, because in reality tax rates in recent years have somewhat diminished, but the amount that businesses have to pay has not decreased, even increased for many enterprises, Some expenditures are deducted before calculating tax now.

“Along with tax relief, what is also needed is to reconsider the amount of deductibles so that businesses can actually beneficial from the policy."