Vietnam’s legislature approved a draft of tax relief measures on Wednesday, including a highly-anticipated move to make all advertising tax-deductible.
Nearly 86 percent of the National Assembly members voted for the new rules, which go into effect next year.
Ad cap eliminated
The country’s Corporate Tax Law currently allows businesses to deduct a maximum 15 percent of their advertising expenditures as a cost of doing business.
On September 11, the Ministry of Finance released draft bills that noted most countries allow businesses to deduct all advertising costs from their taxes.
The limit on advertising deductions was introduced after foreign giants like Coca-Cola deducted huge advertising costs to claim losses and enjoy tax breaks.
During Wednesday’s meeting of the house’s Finance Committee, Chairman Phung Quoc Hien said they decided to support businesses in promoting their images and products.
Hien said businesses, these days, face harsh competition.
“Limiting ad spending has hindered their operations, especially small and medium-sized ones,” he said.
His committee also added computing and electronics industries to the list of those entitled to tax breaks.
Tax hikes on tobacco, alcohol
The house agreed to raise special consumption taxes on tobacco, beer and alcoholic drinks in accordance with a government proposal that came out in October.
According to Vietnam’s Steering Committee on Smoking and Health, Vietnamese smokers spent VND45 trillion (US$2.12 billion) on tobacco and the treatment of related diseases in 2012 – that’s triple the revenue Vietnam took in from tobacco sales that same year.
The special consumption tax on tobacco will jump to 70 percent starting in 2016 and 75 percent three years later.
Cigarette smokers currently pay 65 percent of the value on each pack.
Some officials have suggested steeper hikes. The health ministry proposed raising taxes to at least 85 percent in 2015 and 105 percent in 2018.
But the committee said that will only fuel tobacco smuggling, a problem Vietnam has yet to control.
The Finance Ministry has said smuggling deprived the country of an estimated VND6.5 trillion ($305.5 million) annually in tax revenue. Cigarette imports are banned in Vietnam.
The assembly also approved the government’s proposal to increase luxury taxes on beer and alcohol, but to do so gradually.
Beer taxes will increase from the current 50 percent to 55 percent in 2016, to 60 percent in 2017, and 65 percent in 2018.
For products containing 20 percent of alcohol or more, the luxury tax will grow from 50 percent to 55 percent starting January 1, 2016, to 60 percent as of January 1, 2017 and 65 percent on January 1, 2018.
Tax on beverages containing less than 20 percent alcohol will increase from 25 percent to 30 percent in 2016 and 35 percent in 2018.
The National Assembly reduced its luxury tax on biofuel made from cassava: from 9 percent to 8 percent for E5 (e.g. gasoline that’s 5 percent ethanol) and 8.5 to 7 percent for E10.
Vietnam has required major cities like Hanoi, Hai Phong, Da Nang, Can Tho, Ho Chi Minh City, Ba Ria-Vung Tau, and Quang Ngai to completely switch from A92-RON to E5 starting this December.
The national deadline for the E5 switch is set for December of next year.
Tax cuts
The assembly’s Standing Committee agreed to impose an income tax of 15-20 percent on agriculture, forestry and aquaculture businesses.
Vietnam is applying the general corporate income tax rate of 22 percent.
The committee did not agree to allow the government to eliminate punitive fines on overdue tax payments. Some councilors said that would be unfair to businesses who have been paying taxes properly and will encourage further late payments.
The committee said they would consider each petition for relief on a case by case basis, if necessary.
Source: thanhniennews.com
 
 

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