The Ho Chi Minh City Real Estate Association (HoREA) has submitted recommendations to the Ministry of Finance to improve the Draft Law on Corporate Income Tax (Draft Law), creating a more favorable environment for businesses, especially small and medium-sized enterprises.
HoREA proposes to add a “deductible expense for determining taxable income” for “support and sponsorship in the fields of healthcare, education, disaster prevention, and flood relief as stipulated by the Government” to the end of point a, clause 1, Article 9 of the Draft Law to ensure fairness for philanthropic businesses.
“Besides investment, production, and business activities aimed at profit, Vietnam’s business community also has a tradition of engaging in social and philanthropic endeavors, helping those in need,” said Mr. Le Hoang Chau, Chairman of HoREA, explaining the rationale behind this proposal.
Ho Chi Minh City’s people and businesses actively support flood-affected people in the North. Photo TL
Additionally, HoREA suggests including businesses with an annual turnover of over VND 50 billion to less than VND 300 billion as eligible for an 18% tax rate or lower, ensuring consistency with existing laws supporting small and medium-sized enterprises and aligning with practical considerations.
According to HoREA, out of approximately 920,000 businesses in Vietnam, small and medium-sized enterprises hold a significant position in the economy, accounting for 98% of the total number of enterprises. These businesses contribute about 40% to GDP, provide around 30% of the state budget revenue, and employ over 50% of the workforce. As a result, the National Assembly enacted the Law on Supporting Small and Medium-sized Enterprises in 2017, and the Government issued Decree 39/2018/ND-CP detailing the mechanism to support these enterprises.
HoREA also recommends specifying in the Draft Law that businesses “investing in the renovation and reconstruction of apartment buildings” be subject to a 10% tax rate and that businesses “investing in the construction of social housing for rent only” benefit from a 6% Corporate Income Tax rate, a 70% reduction compared to the standard rate, to materialize tax incentives for investors in social housing projects for rent, instead of the current 50% reduction.
Furthermore, HoREA proposes to include a policy allowing a 50% reduction in payable tax for a maximum of five consecutive years for the subjects specified in Clause 4, Article 15 of the Draft Law.
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