VietNamNet Bridge - Advocates of the government’s proposal to free SOEs (state-owned enterprises) from tax debts say the tax relief will help the state sell SOEs at better prices. Meanwhile, those, who are against the idea, say this will create an unleveled playing field for SOEs and private businesses.

The government has proposed to forgive tax debts for two groups of SOEs. The first group includes the SOEs which undergo restructuring and have tax debts equal or higher than the state’s stockholder equity in the enterprises. 

The second one includes SOEs which have been equitized but the tax debts were not deducted from the state’s capital when the ownership was transferred.

Tran Du Lich, a renowned economist, noted that the government may hope SOEs can be sold for better prices if SOEs’ financial situation gets better. 

“If the State sells ailing businesses with minus stockholder equity, no one will be interested in such businesses. But if the State forgives the SOEs debts, the enterprises’ financial situation would be better, thus becoming attractive to investors. If so, the State will be able to earn much money from the sale,” Lich explained.

Dang Thanh Tam, a National Assembly’s Deputy, also noted that the government was trying to optimize profits from SOEs sale.

“Once businesses are freed of debts, their value will be higher. If so, it would be easier to attract investors to IPOs and earn more money from the sale of stakes,” Tam said.

Tam went on to say that the businesses with bad financial situation will not be able to borrow money from banks to reorganize their production to improve their situation. They will also not have opportunities to cooperate with other businesses. 

Other National Assembly’s deputies disagree with the proposal, saying this will be unfair for private enterprises and the SOEs which have to pay debts.

“What will we say to the businesses which, though meeting difficulties, still pay tax to the State?” asked Legal Committee’s Deputy Chair Le Minh Thong. 

Mai Xuan Hung, a National Assembly’s Deputy from Hau Giang, while emphasizing that the state’s job is to create a level playing field for all economic sectors, warned that this was a biased idea.

“It is small & medium enterprises and private businesses which suffer most from economic recession. Meanwhile, the government plans to forgive SOEs debts. This is just like the state still continuing to give privileges to SOEs,” Hung said.

Disagreeing on the idea of freeing SOEs from their tax debts, Nguyen Thi Nguyet Huong from Hanoi, noted that the tax relief would ‘encourage businesses to evade tax’.

“The 2016 state budget is expected to be modest,” she noted.

VNE