Deputy Prime Minister: Vietnam’s corporate income tax is low in ASEAN

The draft Law on Corporate Income Tax (amended) still maintains the current common tax rate of 20%, with lower rates (10%, 15%, 17%) applicable to small, micro and other enterprises. other incentives.

Commenting at the discussion on the morning of November 28, Ms. Nguyen Thi Le – Chairwoman of Ho Chi Minh City People’s Council – said the tax rate is currently on par with countries such as Thailand, Laos, and Cambodia but higher than some countries in the ASEAN region, such as Singapore (17 %), Brunei (18.5%).

She proposed reducing the corporate income tax rate to 19%. This is to encourage and create a favorable business environment for businesses to recover after Covid-19.

When examining this draft law previously, Mr. Le Quang Manh – Chairman of the Finance and Budget Committee – said that some opinions of this agency suggested considering the possibility of reducing the common tax rate from 20% to 18%. %. The preferential tax rate is reduced to a general rate of 15%. This is to ensure fairness and avoid having many different levels of incentives and too much discrimination between groups as in the bill.

However, when explaining, the Deputy Prime Minister said “Vietnam’s corporate income tax is low compared to Southeast Asian countries”.

According to him, the current income tax rate in the Philippines is 30%, Malaysia 24% and some other countries in the region 25%. Mr. Phoc said that it is impossible to compare Vietnam’s taxes with Singapore’s when this country has an average income per capita of about 90,000 USD a year, which is more than 20 times higher than Vietnam’s (nearly 4,300 USD as of the end of last year).

“All income must be taxed, including production, business and other income. This is to ensure fair and reasonable tax collection for development. Priority areas that need budget support must also be monitored.” , avoid opening up too much and losing control,” the Deputy Prime Minister said.

He added that currently taxes are the main source of budget revenue. The annual budget deficit is about 400,000 billion VND. Public debt is about 37% of GDP. However, these indicators may increase in the near future when Vietnam accelerates the construction of many key national projects.

Besides, the world trend is to tighten fiscal policy and increase tax rates to ensure strong public finances. However, Vietnam still maintains an expansionary fiscal policy because it has just gone through a pandemic and businesses need support to recover.

Also according to the draft law, foreign businesses providing goods and services in Vietnam through e-commerce platforms and digital platforms must pay taxes on revenues generated in Vietnam. The bill also adds regulations on permanent establishments of foreign businesses including e-commerce and digital technology platforms through which they provide goods and services in Vietnam.

Mr. Pham Van Hoa (representative of Thanh Hoa province) said that in recent times, not collecting taxes from these subjects has caused budget losses. This also leads to “unfairness with domestic production and business establishments whose products are similar to foreign organizations”.

Collecting corporate taxes on e-commerce platforms and digital platforms according to Mr. Hoa is appropriate. However, the draft law does not provide specific regulations on how to collect taxes on digital exchanges and platforms that do not have permanent establishments in Vietnam.

In this aspect, Mr. Nguyen Tam Hung, Member of the Executive Committee of Ba Ria – Vung Tau province requested the drafting agency to consider and clarify the criteria for determining taxable income arising in cases where the enterprise does not have permanent establishment in Vietnam.

The government also needs to supplement instructions on how to declare and pay taxes to ensure feasibility and transparency, especially for cross-border businesses. “This helps limit tax revenue loss and create a fair competitive environment,” he said.

Currently, about 102 foreign suppliers such as Meta (Facebook), Google, Tiktok, Netflix, Google… have declared and paid taxes through the industry’s electronic portal. Cumulatively since March 2022 – when the information portal for foreign suppliers operates, foreign businesses have paid over VND 18,600 billion. In addition, the amount of tax deducted by Vietnam and paid on behalf of the supplier since the port’s operation was about VND 4,050 billion.

Deputy Prime Minister Ho Duc Phoc said that when developing tax laws, it must ensure correctness, suitability, fairness and promotion of development.

“Foreign businesses that do not have a permanent residence in Vietnam but generate income must pay corporate income tax. Recently, we have collected e-commerce platforms, online purchases and sales of businesses with headquarters from abroad,” he said.

Government leaders said that the tax industry has applied many measures to prevent tax loss in e-commerce. New artificial intelligence (AI) tools have been applied by tax authorities to control revenue and purchases on e-commerce platforms.

Regarding the delegates’ proposal to increase tax incentives for the press, Mr. Phoc said the Government would accept and review. Accordingly, other types of newspapers (electronic, television) will be subject to the same tax rate of 10%, instead of 15%, like printed newspapers.