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Tax deferral policy must be longer to benefit firms

Update: June, 13/2020 - 08:52

 

The Government's support policy to aid firms after the COVID-19 pandemic should focus on hard-hit sectors, including aviation and tourism. — Photo nld.com.vn

HÀ NỘI — The Government’s policy of giving  a five-month postponement of tax and land-use fee payments to support businesses to overcome the difficult time caused by COVID-19 pandemic should be extended to allow more companies to get back on their feet.

Vũ Tiến Lộc, Chairman of the Việt Nam Chamber of Commerce and Industry (VCCI), said it was vital to prolong the postponement of such fees as firms were still faced with a lot of difficulties.

The Government’s support policy, he said, was like medicine and companies “may not need much but it must be enough.”

VCCI recently proposed the Government give 12-month postponement of tax payment instead of five as five months was not long enough for firms to recover, according to VCCI.

Many businesses agreed.

Phạm Văn Việt, Chairman of Việt Thắng Jean Company Ltd said the impact of the pandemic could take up to16 months to begin to ease and it would take at least a further six months for businesses to get back to normal, adding that a 12-month tax deferral should be considered, and even extended further.

CEO of Sun Group Bùi Thị Thanh Hương said Government’s support policies were very practical. However, it would take more than five months for the tourism industry to be back on its feet, especially in the context of complicated development of the virus globally. Hương said tourism, which contributed 9.2 per cent to the country’s gross domestic product, would need a 12-month tax deferral or even longer.

Nguyễn Văn Bình, chairman of Thăng Long Art Article Export Import Company said his business was struggling because of the virus situation in countries they export too.

He said: “Time flies. Five-month deferral is not enough for hard-hit companies.”

Việt Nam Young Entrepreneurs Association said the tax deferral policies regulated in the Government’s Decree 41 to support businesses should be extended to June 2021. 

According to Nguyễn Ngọc Quang from Việt Nam Institute of Chartered Accountants, the time for tax deferral should depend on each sector, given the difference in the business circles of as well as how serious the virus affected each industry.

Quang added that five-month tax deferral could be enough for some but not for many others.

Sharing the same viewpoint, Nguyễn Minh Thảo, Head of the Business Environment and Competitiveness Department under the Central Institute for Economic Management (CIEM), said it was necessary to have different tax deferral policies for different sectors.

Trần Du Lịch, a member of the Prime Minister’s economic advisory group, added that not only small and medium – sized enterprises but also big ones needed enough time to get back to normal. Lịch said that support policies should be extended, at least to the end of this year.

The deferral is a way to lend businesses money at zero interest as added resources for the recovery, he said.

According to Nguyễn Đình Cung, CIEM’s former Director said the time for the support policies in effect should be prolonged by up to three years. Cung pointed out that many support policies needed detailed instructions to ensure that firms benefited.

The Government’s support remained modest in comparison with the damages of businesses and other countries’ support, Cung said.

With limited resources, the support policies should focus on hit-hard sectors like aviation and tourism, Cung said, adding that if support was providing to a wide range of sectors it would not be very efficient.

He also said that the Government should adjust indicators about budget deficit this year to raise appropriate policies.

Figures from the General Statistics Office showed the number of new firms in the first four months of this year saw the first decline in the past five years, by 13 per cent to 37,500. The registered capital into the economy also fell by 20 per cent in the period due to worries over the COVID-19 pandemic.

According to Andrew Harker, an associate director for Economic Indices at IHS Market, Việt Nam’s success in controlling the virus allowed the economy to start to recover quicker but, he said, there would be a long road ahead.

The recovery would be gradual with the modest support from the foreign markets, at least in the near future when the pandemic continued to affect many regions globally, he added.

Deputy Minister of Finance Vũ Thị Mai said at a Government’s meeting on June 2 the ministry would report the proposal of extending the tax deferral policy to 12 months to the National Assembly for consideration because a 12-month deferral would affect budget revenue this year while the five-month deferral would not. — VNS

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