Vietnamese Parliament Passes Tax Incentives

by Mary Swire, Tax-News,com, Hong Kong

11 August 2011

At its closing session on August 6, Vietnam’s parliament passed several resolutions giving tax incentives, particularly to small and medium-sized enterprises (SMEs) and individuals on lower incomes.

Accordingly, there will be a 30% reduction in corporate income tax (CIT) to be paid in 2011 by SMEs, except for taxes payable by real estate, securities, banking and insurance companies, and income from the production and trading of goods and services subject to excise tax. The reduction will also not be available for subsidiaries, where a larger parent company holds more than 50% of the equity.

In addition, a similar reduction in CIT will be given to labour-intensive companies, such as agricultural and forestry, food processing, fishery, textiles and garments, electronic and infrastructural businesses.

The parliament also decided to grant a personal income tax (PIT) exemption for employed individuals earning less than VMD9m (USD430) per month, from August 1 to the end of this year.

Over the same period, there will be a temporary PIT exemption on dividends received from listed companies from August 1, 2011 to December 31, 2012, except those received from banks or investment funds, while PIT will be halved on capital gains made from the transfer of securities during the same period.

Finally, the parliament has provided for a 50% reduction in value-added tax, PIT and CIT for the remainder of 2011 for individuals or businesses that rent accommodation to workers or students, or that provide meals for shift workers, on condition that the rooms or food are provided at the stabilized rental rates and prices ruling at the end of last year.

Recommended