MoF proposes elimination of ad spending limits

August 11, 2014 | 18:04

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The Ministry of Finance (MoF) has just proposed the abolishment of the cap on deductible advertising and promotion expenses to better support firms.

Accordingly, the current cap on advertisement and marketing, promotion and sales commissions of 15 per cent of total deductible expenses, as stipulated by the Corporate Income Tax (CIT) law, would be eliminated.

In the past, many firms have expressed their disapproval of the cap, citing it as “unfair”.

Some sectors barely need advertising and promotion, while others have to spend a lot on these areas, firms argued. Moreover, new brands need to spend a lot more on advertising and promotion than established ones do.

The cap was raised from 7 per cent in 1997 to 10 per cent in 2003, and eventually to 15 per cent in 2013, for a firm’s first three years.

Besides abolishing the cap, the MoF also proposed extending the deadline for VAT payment and giving more CIT incentives to some kinds of projects and firms, as well as writing off fines owed by some late paying firms. It is also simplifying tax procedures to make the process more convenient.

By Khanh Tran

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