8 April 2019
VIETNAM: Corporate Income Tax Cut Mooted in Bid to Boost SME Sector
A move to cut Corporate Income Tax (CIT) from 20% to 15-17% for small and medium-sized enterprises (SMEs) has been mooted by the Finance Ministry. If implemented, businesses with an annual revenue of less than VND3 billion (US$128,136) and employing less than 10 regular employees will be entitled to a 5% CIT cut. Those earning between VND 3 billion and VND 50 billion (US$2.13 million) annually and employing less than 100 regular workers, meanwhile, will pay CIT at the 17% rate.
The proposed move is aimed at boosting the development of the country’s SME sector and increasing its numbers from 600,000 at present to one million by 2020. It also comes as part of a government bid to encourage the country’s small-scale businesses (mainly family-owned), to register as SMEs and join the formal tax regime. Accordingly, full CIT exemption has been proposed for all such businesses for the first two years following their formal SME registration.
These reduced CIT rates, however, will not be offered to any subsidiaries of larger enterprises, even in instances where they qualify as SMEs based on their annual revenue or number of workers. A formal implementation date has yet to be announced for the proposed measures, which are now open for public consultation.