HA NOI – The Ministry of Finance will likely recommend a proposal to slash the value added tax (VAT) by 50 per cent in a move to support businesses during the economic slowdown, said finance minister Vuong Dinh Hue.
|A promotion of the Ha Noi Trade Corporation attracts customers in Quoc Oai District, Ha Noi. Value added tax would likely be cut by 50 per cent, aimed at supporting businesses during the economic slowdown. — VNA/VNS Photo Tran Viet
Hue said that the ministry was investigating the difficulties facing enterprises in order to accurately assess businesses' health. The ministry will then consider whether it should ask the Government to enact more financial measures, such as the VAT reduction, at the annual meeting early next month.
Hue admitted that the economic slowdown had caused firms major challenges. According to a report from the Government, between January 1 and March 21 at least 2,217 enterprises closed and 9,726 enterprises halted operations ahead of schedule, an increase of 6 per cent compared with the same period last year. In previous years, the country saw roughly 5,000 firms on average shut their doors.
Domestic industrial production has also faced many problems. According to the General Statistic Office, as of March 1 the inventory index of processing and manufacturing industries was up 34.9 per cent over the same period in 2011. However, the consumption index increased only 0.5 per cent over the same period last year.
Some sectors, including production of fertiliser, iron and steel, tobacco products, cement, and lime and plaster saw high inventory indices from 55 per cent to 87.2 per cent.
The Government has already tried strategies to help companies survive the prolonged economic crisis, including allowing businesses to pay their corporate income tax in increments and reducing interest rates.
Director of the Viet Nam Economics Institute Tran Dinh Thien said that the Government should adopt policies that provide incentives for businesses, like reducing the corporate tax from the current 25 per cent to 20 per cent, reducing or exempting them from material import taxes and waiving fees.
The Government should also be cutting lending interest rates to make it easier for enterprises to access credit, Thien said. – VNS