Firms getting back on their feet

How is the budget collection playing out this year compared to the previous years?

Around VND48.660 trillion ($2.3 billion) was paid to state coffers in September, driving up total budget revenue in the year ending September to VND498.490 trillion ($23.7 billion) tantamount to 67.3 per cent of the projection and up 1.3 per cent on-year. This level is modest compared to previous years, but it is better than recent months.

For instance, only VND45.020 trillion ($2.1 billion) was paid to state coffers in August, with aggregated budget revenue in the first eight months tantamount to 60.4 per cent of the projection merely and down 1.6 per cent on-year.

Did this encouraging outcome come on the back of consistent implementation of diverse solution packages under Resolution 13/NQ-CP, particularly those related to tax extension, reduction and exemption?

This acknowledgement came as ministries, sectors and localities ramped up efforts to handle a bunch of measures to help firms get out of the woods, bolster investment, promote exports, rein in inflation and trade deficit, with tax policies playing a crucial role.

After four months implementing Resolution 13/NQ-CP, the tax sector honoured value added tax (VAT) payment extensions worth VND9.987 trillion in six months on 208,250 businesses with 99.5 per cent of them small- and medium-sized (SMEs) making up 89 per cent of total VAT extended amount. Whereas 8,260 businesses enjoyed corporate income tax (CIT) payment extension worth VND347.5 billion ($16.5 million), up to 3,150 trade and service sectors businesses benefited from 50 per cent land rent reduction valued at VND339 billion ($16 million). Besides, the tax sector exempted VND10.6 billion ($50,400) worth in business tax in 2012 to 40,220 salt production and fisheries households.

The bailout package under Resolution 13 is estimated at VND29 trillion ($1.38 billion) but total extended, reduced and exempted tax amount as above said approximated VND10.684 trillion ($508 million). Isn’t it?

Parallel to the above-said tax reduction, exemption and extension, under Resolution 13 the tax sector honoured nine-month CIT tax payment extensions on tax amount due to be paid in 2011 and previous years, maximally 12-month land rent payment extensions to developers of projects facing financial woes and having decided not to collect some types of fees. If these plus VND2 trillion ($95 million) in supplemental capital pumped into reinforcing canal system, developing rural road network, electric pumping stations for agricultural production, aquacultural infrastructure and craft villages in rural areas were taken into account total support package could surpass VND29 trillion at this time.

What were the outcomes?

Businesses going bust or temporarily halting operations are falling in number whereas the number of those resuming operations and reporting profits grew month after month. Particularly, after over four months of Resolution 13 came into force, 6,100 businesses were revived and profitable businesses grew an average 3.4 per cent per month.

In fact, some firms are still facing difficulties. How will the financial sector support them?

Apart from accelerating pace of tax administrative procedure reforms, promoting e-customs, online tax declaration or tax payment via banks, the Ministry of Finance (MoF) proposed and got the government approval for three-month additional VAT payment extension to the tax amount having benefited from six-month payment extension under Resolution 13.

Besides, to uphold firms in the revised draft of the Law on Tax Administration the MoF proposed extending time for filling VAT declarations. If the revised Law on Tax Administration was approved at the upcoming National Assembly fourth session, from July 1, 2013 each year SMEs will be required to handle VAT declarations and payment four times only instead of 12 times.