The latest draft of Corporate Income Law, amended by the Ministry of Finance, has been submitted to the Standing Committee of the National Assembly. In the conference organized by Vietnam Chamber of Commerce and Industry (VCCI) to collect suggestions from enterprises and specialists, Phung Quoc Hien, Director of Committee of Finance and Budget of the National Assembly, was interviewed by correspondents about the main contents in the draft.
From your perspective as part of the investigating body for the Corporate Income Law amendment projects, what is your assessment of the tax rates in this draft?
The tax rate from 2005 to 2010 framed by the National Assembly and the Government must meet three main purposes: lower tax rate, increasing number of tax imposers and foster production and investment for the national budget guaranty. Therefore, the tax cut on corporate income from 28 percent to 25 percent in the draft will lay the background for investment attraction, production development and financial accumulation for enterprises, leading to increasing the national budget. On the other hand, the tax cut is a necessity in compatibility with the world trend.
What do you think about the short amendment of the Corporate Income Law which will make enforcement and guideline more difficult for functional bodies?
In my opinion, this is a drawback not only of the Corporate Income Law but also of other current laws. After the sanctions in this law, there need other procedures such as the Decree of the government and the Circular and explanation of the Ministries, which take considerable time after the law comes into force. Therefore, for its full function as a law document, this draft should be suitably adjusted.
The tax ate of 25 percent is still higher than in some regional countries, such as Singapore at 19 percent. Will the new tax rate be in existence long, or changed in the coming time?
This requires a step-by-step itinerary. Like other countries, our tax rate has been decreased in phases: from 32 percent to 28 percent, and now to 25 percent. In my opinion, this tax cut is reasonable and effective for the guaranty of the national budget, economic growth and social security. Therefore, the laws depend on the economic growth. It took 9 years for the tax to be cut from 32 percent to 28 percent; and it is necessary to have a reasonable deadline for the next tax reduction.
In your opinion, does the draft encourage the development of any particular industries, apart from the guaranty of the national budget?
For any country, tax policies function not only to ensure the national budget but also to accelerate the growth of industries. The amended Corporate Income Tax Draft owes part of its effectiveness to tax collection policies and the technology development fund, contributed from 10 percent of the corporate income before tax. Moreover, the new tax law is aimed to encourage other resources, and utilize those in the right place.
Is this the reason the new tax should not be imposed on agriculture?
Yes, it is. In global integration, agriculture bears severe pressure; therefore, it is necessary to make it a top priority for development. I support the idea that the new tax should not be imposed on agriculture.
B.T
Vietnamese
