National Assembly deputies vote to approve the resolution that slashes 2020 income tax rate by 30 per cent for firms hit by COVID-19.

The three sub-projects are Vinh Hao-Phan Thiet, Mai Son-National Route 45 and Phan Thiet-Dau Giay highways.

No investors qualify for the Vinh Hao-Phan Thiet Highway project, so it must be funded by the State, a government report says.

Meanwhile in the two other projects, the State capital remains humble so it may be difficult to ask investors to take the risk, the report says.

The two projects must be completed as quickly as possible to resolve transport issues and connect various economic zones, the report says.

“The transformation of the two projects will make sure they are successfully completed,” according to the report.

After construction is completed, the three projects will be operated by private investors so the Government can cover its spending.

Extra funding for the three projects is set at a maximum of VND23.46 trillion (more than US$1 billion). Extra capital is taken from the State budget.

The extra capital will be allocated upon the Government’s annual and medium-term public investment plans to minimise the impact on public debt.

The other five sub-components of the North-South Highway will still be built in the form of PPP projects.

Investors are encouraged to take part in the projects so that the State budget will be spent on other essential and urgent matters.

Corporate income tax slashed

Under another resolution passed by the deputies on Friday, local firms with total 2020 revenue of maximum VND200 billion will enjoy a 30 per cent cut in corporate income tax.

Most of those firms operate in the fields of agriculture, forestry, aquaculture, industrials, construction and services.

Subject to the decision are companies, co-operatives, public non-business agencies and other organisations, which produce and trade goods and services.

The decision will take place in 45 days from the signing date.

The resolution would benefit small and medium enterprises (SMEs) that are impacted by the COVID-19 pandemic and are likely to suffer a prolonged downtrend in business performance, NA’s finance and budget committee chairman Nguyen Duc Hai said.

“Those companies often lack capital accessibility and technological background, and have low earnings, tepid market shares and small staff,” he said.

If all four proposed criteria regarding the number of employees, earnings, capital and sector are applied to address the beneficiaries, it would take a long time for the firms to enjoy the tax exemption, he added.

In addition, if only firms reporting annual earnings declines are subject to the policy, it would be unfair for those that have started operating since the beginning of the year, Hai said.

“The tax exemption is forecast to raise the State budget loss in 2020 to VND23 trillion from the expected VND15.84 trillion,” the chairman said.

“If the Vietnamese economy is still struggling at year-end and early next year, the NA Standing Committee will propose deputies extend the validity of the resolution,” he added. — VNS