Vietnam to cut taxes by 30% for millions of small businesses

Vietnam's Minister of Finance, Ngô Văn Tuấn, announced that 2.69 million business households and over 865,000 enterprises with revenues below 10 billion VND will benefit from a 30% reduction in personal and corporate income taxes. The proposal was discussed in the National Assembly on August 22.

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One business with revenue of 9.9 billion VND receives the reduction, while a business with revenue of 10.1 billion VND does not. The scale of operation is almost the same, but the tax obligation can change quite a lot.

However, some lawmakers expressed concerns about the revenue threshold. Delegate Nguyễn Duy Thanh from Cà Mau pointed out that businesses just above the 10 billion VND mark would not receive the reduction, potentially creating disincentives for growth or encouraging practices like splitting revenue or legal entities to remain within the threshold. Delegate Nguyễn Thị Yến Nhi from Vĩnh Long echoed these concerns, questioning the fairness of the 10 billion VND criterion across different industries with varying profit margins and emphasizing the need to prevent artificial revenue manipulation.

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The scale of a business plays a very important role in economic growth.

Minister Tuấn defended the policy, highlighting the importance of business scale for economic growth, citing Japan's experience where firm size contributed significantly to its high growth rate. He explained that the 10 billion VND threshold was chosen because it covers 99.98% of business households and 81.1% of enterprises nationwide, ensuring broad support for small and micro-enterprises currently facing hardship. The minister also clarified that a 30% reduction on an average monthly tax payment for a business at the threshold would amount to a saving of over 4 million VND.

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Thus, the 10 billion VND threshold ensures that the policy covers and supports the vast majority of business households and small, micro-enterprises that are genuinely facing difficulties.