Vietnam’s government has announced a plan to cut corporate taxes as nearly 18,000 companies shut down or suspended operations in the first four months of the year.
A tax relief package worth VND29 trillion (US$1.4 billion) will be proposed to the National Assembly, including a 30 percent cut in 2012 corporate income tax for small and medium companies, and labor-intensive businesses, said Vu Duc Dam, chairman of the government office.
Businesses will also be allowed to delay value-added tax payments for April, May and June by six months, Dam told a press briefing in Hanoi on Friday.
He also tried to assuage fears that the new rescue package would cause inflation to speed up.
“The government is managing the economy in a very active manner with supportive measures, and there is no stimulus package that can fuel inflation,” he said.
The relief package plan is expected to be submitted to the National Assembly, Vietnam’s legislative body, later this month.
Deputy Finance Minister Vu Thi Mai said while the tax concessions are valued at VND29 trilllion, they will end up costing the government budget VND9 trillion only, because much of the full figure is made up of payment extensions.
According to the Ministry of Planning and Investment, 17,735 businesses shut down or halted operations in the first four months, up 9.5 percent from the same period last year. More than 5,000 of these companies were wholesalers or retailers, the ministry said.
The State Bank of Vietnam also announced Friday that it will cap lending rates at 15 percent for exporters, agricultural businesses, and small and medium-sized enterprises, starting on May 8.
Nguyen Dong Tien, deputy central bank governor, said even that though the cap is only a temporary measure, it can help ease the difficulties that local businesses are facing.