The Hanoitimes - The Ministry of Finance has recommended to the Government a support package worth roughly 29 trillion VND (1.38 billion USD) to help enterprises revitalise production in the current economic climate.
Vu Nhu Thang, director of the ministry's Financial Strategy and Policy Institute said the proposed measures not only focus on tax relief but also on public spending, price management and administrative procedures.
Within the package, public spending solutions amounted to nearly 3.6 trillion VND (171 million USD) that could be used to finance urgent ODA projects, irrigation and infrastructure for rural areas.
Thang said this injection of funds would boost demand in construction and other industries.
In addition, a tax break proposal worth 25 trillion VND (1.2 billion USD) included a six-month deferment of the value-added tax (VAT) and a 30 percent corporate income tax reduction for enterprises and labour-intensive firms in the agricultural, textile and garment, and footwear industries.
The ministry estimated the total value of the VAT deferment at 12.3 trillion VND (585 million USD).
The package also proposes cutting land use fees by 50 percent for businesses in the tourism and service sectors and sustaining last year's lowered fees for businesses in the production sector.
The ministry asked to exempt fisheries and salt production enterprises from the business license tax, and to exempt low-income earners and students from the VAT, the individual income tax and the corporate income tax.
The ministry is also considering subsidising electricity and petrol for off-shore fishermen and households in agricultural production if the prices continue to fluctuate.
Thang said that the proposed support package aimed to stabilise the economy, control inflation and create a favourable investment environment.
Economist Le Dang Doanh said the package would serve as an important remedy in this difficult time and should be realised as soon as possible. However, it would be necessary for the Government and relevant agencies to ensure transparency and accountability throughout its implementation, otherwise enterprises would be negatively affected. Moreover, the procedures of tax reduction and exemption should be simplified so that enterprises could save time and avoid paying unreasonable fees, he said.
Vo Quoc Thang, deputy chairman of Vietnam Construction Ceramic Association, objected that a 30 percent corporate income tax reduction for SMEs would have little effect.
Instead, he said they needed increased access to bank loans.
According to Thang, the proposed package would be only a short-term solution and that the current structure should be maintained while a more long-term solution was sought.
Doanh said enterprises should actively seek out their own effective solutions to cut down their production costs, restructure their products and improve their management.
Statistics from the Ministry of Planning and Investment show that more than 15,000 enterprises have failed since the beginning of the year.