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Vietnam: Government Offers Tax Relief Measures

(Feb. 27, 2013) On January 7, 2013, Vietnam’s government issued a resolution giving tax-related benefits to businesses and individuals. Resolution No. 02/NQ-CP was formulated in response to the economic difficulties in the country. It allows businesses a six-month extension on tax payments for the first quarter of the year and three-month extensions for the next two quarters. (Government Offers Tax Incentives to Businesses, INTELLASIA.NET (Feb. 22, 2013); KPMG Ltd., Tax Alert on Resolution 02-2013, BRITISH BUSINESS GROUP VIETNAM (Jan. 15, 2013).)

The businesses that are eligible for the extension are small and medium-sized, with fewer than 200 full-time workers and annual earnings of under VND20 billion (about US$958,000). In addition, some larger enterprises, with over 300 workers in specific fields, including outsourcing, food processing, the garment and footwear industries, electronic parts, and infrastructure construction, may be able to take advantage of the extensions. (Government Offers Tax Incentives to Businesses, supra.)

The Resolution also provides for the following measures, which have already been adopted:

  • a six-month extension for small and medium-sized enterprises in payment of the value-added taxes (VAT) due from January through March 2013;
  • up to 50% reduction in rental fees for land in 2013 and 2014, applicable to certain tax payers facing rents that have more than doubled since 2010;
  • the possibility of delaying for up to 24 months payments of land use fees that are tied to sales payments what are sales payments, for investors whose projects have been allocated land by the state and who show that they are experiencing financial difficulties;
  • a refund of the environmental protection taxes paid on plastic bags from January 1 to November 14, 2012; and
  • a holiday from collection of personal-use vehicle fees and a reduction of the registration fees for automobiles that seat fewer than ten people. (KPMG Ltd., Favourable Tax Measures for Difficult Times, TAX ALERT (Jan. 2013); Government Offers Tax Incentives to Businesses, supra.)

The National Assembly is also considering three other steps, including reducing the VAT to 50%, effective July 1, 2013, to June 30, 2014, for some real estate companies; adopting corporate income tax rates of 10-20% for some enterprises; and introducing tax incentives for investment expansion as of July 1, 2013. (Favourable Tax Measures for Difficult Times, supra.) The corporate tax rate at present is 25% for most businesses and 32% to 50%, depending on the project, for enterprises in the oil, gas, and other natural resources sectors. (Vietnam Highlights 2013, DELOITTE (2013).)