Financial muscle to lift firms

The economy will continue grappling with hardships in 2013. What can the financial sector do to uphold firms and the market?

Tackling hardships, supporting the market, clearing unsold stock and dealing with bad debts are major tasks in 2013. This year, the financial sector ought to ensure balance in state budget collection and expenditure as well as safe budget overspending, public debt and sovereign debt rates.

In the meantime taking drastic measures towards economic restructuring leveraging posted achievements in 2012 is needed.

In a bid to prop up market and businesses, the Ministry of Finance (MoF) enacted Decision 128/QD-BTC on action plan to carry out Resolution 01/2013/NQ-CP presenting management measures for implementation of 2013 socio-economic development plan and estimated state budget allocations and Resolution 02/2013/NQ-CP stipulating measures to address difficulties to production and business, support market and clear bad debts.

This manifested MoF’s strong commitment to bring policies into life, lending a helping hand to firms amid persistent economic woes.

What are the incentives?

To scrutinise tax incentives to firms, the MoF is doing its utmost to shortly finalise and enact a circular on extension and reduction of some state budget collections in the spirit of Resolution 02.
Accordingly, excluding detailed instructions on cases with six month extensions for corporate income tax (CIT) businesses due to pay in 2013’s first quarter and three-month extension to CIT amount they must pay in 2013’s second and third quarters the circular encompasses cases in which firms benefit from six-month extensions for value added tax (VAT) payment in 2013’s first, second and third quarters.

Taxes are mostly extended, but not reduced or exempted. So their impacts to assist firms and market will not be large. Will the financial sector consider some tax breaks to help firms?

When current hardships challenge budget collections in 2013, tax reductions and extensions could threaten our budget collection-expenditure balance target. Thereby, any move relevant to tax exemptions shall be carefully considered to minimise threatening the budget, while practically supporting firms in priority areas to revive operations.

From this viewpoint, the MoF proposed competent government agencies keeping close eyes on market and firms’ performance to ensure remedies be presented on a timely and effective manner.

If the market and firms face bigger hurdles, the MoF will handle or propose the government or the National Assembly come up with additional support measures. The MoF made proposals to the government and the National Assembly concerning tax reductions to firms seen in the amended versions to the CIT and VAT laws which were recently discussed by government members. These two law versions are being compiled by the MoF and will be submitted to NA’s early 2013 section slated in May 2013 for consideration.