VietNamNet Bridge - With a series of programs and incentive packages, including the small enterprise support draft law, the state budget is expected to have a new source of revenue worth $19.2 billion.

Vietnam can expect more benefits from the small enterprise support law if it is ratified, said Le Duy Binh, an independent expert, when presenting the regulatory impact analysis (RIA) for the law.

Binh showed that the law would have positive impact on the implementation of Vietnam’s plan to obtain 1 million businesses by 2020, and directly contribute to the process of legalizing businesses and expand the official economic sector.

There are 450,000 operational businesses in Vietnam. With the current rate of job creation, when 550,000 new businesses are set up, the national economy would have VND235 trillion more in capital, or $10.5 billion.

The new businesses are expected to create 8.5 million new jobs, including 7.5 million new jobs from new businesses and 200,000 jobs from public procurement contracts.

With a series of programs and incentive packages, including the small enterprise support draft law, the state budget is expected to have a new source of revenue worth $19.2 billion.

Thanks to this, Vietnam would have more taxpayers with tax collection revenue from businesses estimated to be at VND429 trillion, or $19.2 billion.

“Vietnamese private businesses pay VND200 trillion in taxes every year, including corporate income tax, VAT and luxury tax,” he said, adding that the tax sum is calculated on the basis of 40 percent of businesses making profit.

Deputy Minister of Planning and Investment Dang Huy Dong said that every business created 5-10 jobs, and with the minimum average pay of VND3 million to every worker, the income of one worker would be VND36 million a year. 

The income level is higher than the income from growing rice and industrial crops, estimated at VND20-30 million a year.

“This means that every job created by Vietnamese small & medium enterprises is equal to one hectare of rice,” Dong commented.

Elaborating on the draft law, Binh said the law offers financial support packages to enterprises with preferences on land access and tax. It would have a big impact on the establishment and operation of enterprises.

Also according to Binh, enterprises’ spending on tax would be decreasing by VND4-5 trillion a year because of the policy on five percent corporate income tax cut for startups. This would help improve the enterprises’ profitability.

Under the draft law, 20 percent of the state budget’s capital, or 20 percent of public procurement contracts, would be reserved for small and medium enterprises. 

This means that the enterprises would have opportunities to supply goods and services worth up to $21 billion. This could be seen as a stimulus package for the enterprises.

Pham Huyen