Tax policies offer enterprises helping hand
This year is expected to remain challenging for the domestic economy. Minister of Finance Vuong Dinh Hue spoke to the Vietnam News Agency about measures to assist enterprises and fulfill the nation's economic reform and development plans.
| Vuong Dinh Hue
What policies will the Ministry of Finance carry out in 2013 to help enterprises deal with difficulties, besides continuing measures guided by the Government?
As the economy is likely to continue to face many challenges this year, we have presented a range of policies to the Government to be applied from the beginning of the year. The solutions are to support small- and medium-sized enterprises and businesses that employ more than 300 workers in manufacturing and processing areas involved in farm, forest and aquatic products; garments and textile;, footwear; electronic components; socio-economic infrastructure construction; and property and building material producers and dealers.
Specifically, we extended the deadline for corporate income tax payments by six months for payments due in the first quarter, and three months for amounts due in the second and third quarters of this year. We also extended the deadline for VAT payments due in the first quarter by 6 months for SMEs, firms in the above-mentioned areas, and producers and traders dealing in iron, steel, cement, bricks and tiles.
We also proposed financial policies to back tax measures such as improving efficiency in the use of public investment and official development assistance (ODA), attracting more foreign direct investment (FDI), boosting development of the domestic bond market, restructuring the stock market, restructuring public organisations, and intensifying market and price management.
We will continue to closely observe practical developments and assess the effectiveness of support measures to advise the Government and the National Assembly with suitable solutions.
This year is a key year for implementing the nation's socio-economic development plan and restructuring the economy, especially reorganising State-owned enterprises (SOEs). What will the ministry do to help this process reach the best outcomes?
Restructuring SOEs is part of the country's five-year socio-economic development plan and development strategy.
We are co-operating with other ministries and sectors to build the project "Restructuring SOEs with State-run corporations and economic groups being a focus over 2011-15″, approved by Prime Minister Nguyen Tan Dung last July. The scheme requires wholly SOEs to be classified into three groups –enterprises in which the State holds entire equity, joint-stock companies in which the State holds over 50 per cent equity, and firms which suffer prolonged losses and can't be restored – and has detailed measures to apply for each. SOEs will have to withdraw capital from non-core lines of business before December 31, 2015 following market rules. We issued a dispatch to provide guidelines for the implementation of the scheme last August.
|A worker of the Hoang Thach Cement Co in Bac Ninh Province stacks cement bricks. State-owned enterprises will be required to divest from non-core lines of business before December 31, 2015. — VNA/VNS Photo Huy Hung
By the end of last November, 52 centrally managed SOEs had submitted restructuring plans to ministries and the Government for consideration and 24 were approved. Twenty-three local SOEs had also presented restructuring plans to governing bodies, and 21 have been adopted.
The challenge of renewing SOEs is extremely tough in the context that the country is expanding international economic integration, but if it is implemented well, firms will be able to enhance their competitiveness and help increase the nation's gross domestic product (GDP) growth.
Streamlining SOEs is not only necessary for this sector itself, but also important for restructuring the economy and changing economic growth models. This will be a long process and an open policy, and the restructuring project should be implemented neither hastily nor tardily. It should be done flexibly with well-researched measures in order to assure the nation's financial safety.
Mobilising investment resources from home and abroad for socio-economic development is extremely important for Viet Nam's developing economy. This requires both scientific calculation and flexible management of the finance sector in order to ease tax pressure on people and enterprises, and at the same time ensuring stable State budget revenues for development and social welfare. Could you point out major directions to achieve these goals?
For Viet Nam's developing economy, demand for investment capital to build socio-economic infrastructure and improve production and competition capacities is enormous. We also have to take care of social issues such as education, healthcare and improving people's living standards. Distributing resources between economic development and social welfare, between saving and spending or between key economic regions and remote areas, will continue to be a thorny puzzle that requires flexible policies in different periods.
In the coming years, in order to enhance public investment efficiency and improve wages and social welfare, we will have to continue to rearrange State budget spending, specifically reduce the proportion for development and increase the proportion for people. We will have to raise more investment from both domestic and foreign economic sectors to facilitate economic growth. Tax and fee policies will continue to be reviewed to gradually reduce mobilisation from businesses and people. This year, the amended Law on Personal Income Tax will be implemented and the Law on Corporate Income Tax is expected to be submitted to the National Assembly for adoption.
We will also introduce tax cuts to conform with international integration commitments, which will also affect State budget revenues and spending.
The tax policy adjustment is just part of a macro-level policy operation. It must be accompanied by other policies which aim to help solve difficulties for people and businesses, improve the investment environment and enhance competition capacity. Above all, the important thing is how to apply these policies in practice and unsure that they are effective.
The economy is forecast to struggle in 2013. What measures will the finance sector take to fulfil its tasks?
This year, the sector aims to rationalise the State budget and tightly manage national finance resources to ensure financial safety, maintain economic stability, prevent high inflation and foster economic growth.
It will have to stick within a total budget revenue of VND816 trillion (US$38.86 billion) and a total budget spending value of VND978 trillion ($46.57 billion), which means a budget overspending ratio of 4.8 per cent of the GDP. It needs to assure that fiscal measures are comprehensive and consistent with monetary and other macro-level policies.
The sector will intensify measures to collect and inspect taxes to prevent budget losses and co-operate with relevant bodies to implement the Price Law, which will boost transparency in goods and service price adjustment. It will assist struggling manufacturing industries, low-income people and the poor, besides studying and carrying out suitable measures to help restructure SOEs, facilitate debt trading activities and solve bad debts.
I believe that the economy will gradually return to growth with more sustainable macro-level balances in the coming years as economic restructuring and growth model innovation are drastically and comprehensively carried out by the nation. — VNS