TO INCREASE VALUED ADDED TAX , DECREASE ENTERPRISE INCOME TAX
The Prime Minister, Mr. Nguyen Tan Dung issued the Decision No. 732/QD-TTg dated May 17, 2011 approving the tax system reform strategy for the 2011-2020 period.
The Prime Minister has policy on making amendments and additions toward reducing the groups of goods and services not subject to value added tax; to reduce the group of goods and services liable to the 5% tax rate; to add regulations to correctly determine the collection regime applicable to goods and services emerging in the developing market economy; to study and basically apply by 2020 a single tax rate (excluding the 0% tax rate applicable to exported goods and- services); to further improve tax calculation methods, striving to basically apply the credit method; to set a turnover threshold for applying forms of value-added tax declarations suitable to the market economy mechanism under the state management and in line with international practices;
To enterprise income tax (EIT): to reduce the common tax rate according to a suitable roadmap in order to attract investment and create conditions for enterprises to increase financial resources and savings for stepping up development investment and raising their competitiveness; to simplify preferential tax policies toward reducing preferential fields and further encouraging investment in industries manufacturing products of high added value, support industries, industries applying high technology.
Besides, the Decision also adds regulations to embrace newly arising economic activities in an integrating market economy and in line with international practices, such as multilevel sale, e-commerce, development of business groups, the "thin capital" issue when determining expenses, especially loan expense, transfer or revaluation of assets upon enterprise restructuring, and advance price agreements of associated enterprises;
One of the other point to pay attention in this Decision is that the Government has policies to transform license tax into an annual business management fee; to further improve regimes and policies on collection of state budget revenues from national natural resources and minerals, such as levy from land use, levy from land rent, fee for auction of the mining right and revenue from oil and gas.