The Government has approved a General Department of Taxation proposal toextend the declaration of value added tax (VAT) for small- andmedium-sized enterprises (SMEs) and family-run businesses.
Under the Resolution 68/NQ-CP recently released, SMEs will only have todeclare VAT every quarter starting January and family-run businessesevery six months. Previously, companies had to declare VAT every month.
Director of the Department of Administrative Reforms under theGovernment Office, Ngo Hai Phan said the extension is part of a taxreform programme to help SMEs and family-run businesses pay dues moreeasily, while saving both time and money by reducing the amount ofrequired paper work.
Phan said that the total VAT paid bymost of these small companies is very modest. Therefore, requiring allbusinesses to declare and pay the tax every month is not necessary andburdensome.
The extension has been popular in othercountries. Tax agencies of the Republic of Korea , for example,still supervise tax payments every quarter or every six months of SMEswith a yearly turnover of less than 46,600 USD.
Phan saidthe Government has also instructed the General Department of Taxation(GDT) to set a tax threshold earlier so that only businesses whoseearnings are above the threshold would have to declare VAT on a definedpercentage of their revenue. Those with turnover below the thresholdwill be allowed to pay a fixed rate for the entire year.
The Department of Administrative Reforms estimated that the new policywould directly affect more than 500,000 companies, 1.8 millionfamily-run businesses and millions of employees, as it will help thefirms save more than 600 billion VND (30.7 million USD) per year.
Nguyen Khuyen, director of the Tam Thinh Trading Co, a family-runbusiness in the capital's Tay Ho District, said his company previouslyhad to pay roughly 3 million VND in tax declarations every month, whiletheir monthly turnover is only about 40 million VND.
"Withthe tax declaration extension, our business performance will improve aswe can use the savings to pay for other input costs," Khuyen said.
According to the GDT, SMEs are businesses whose charter capital is lessthan 10 billion VND. Accounting for 98 percent of all Vietnamesecompanies, SMEs contribute more than 40 percent to the country's GDP anduse more than 50 percent of the country's labour force.
The department has so far simplified 271 out of 330 administrative taxprocedures, saving 1.9 trillion VND per year (97.4 million USD). One ofthe most significant changes, which took place early this year, is toallow companies to print and use their own invoices. That alone saved400 billion VND (20.5 million USD) per year./.
Under the Resolution 68/NQ-CP recently released, SMEs will only have todeclare VAT every quarter starting January and family-run businessesevery six months. Previously, companies had to declare VAT every month.
Director of the Department of Administrative Reforms under theGovernment Office, Ngo Hai Phan said the extension is part of a taxreform programme to help SMEs and family-run businesses pay dues moreeasily, while saving both time and money by reducing the amount ofrequired paper work.
Phan said that the total VAT paid bymost of these small companies is very modest. Therefore, requiring allbusinesses to declare and pay the tax every month is not necessary andburdensome.
The extension has been popular in othercountries. Tax agencies of the Republic of Korea , for example,still supervise tax payments every quarter or every six months of SMEswith a yearly turnover of less than 46,600 USD.
Phan saidthe Government has also instructed the General Department of Taxation(GDT) to set a tax threshold earlier so that only businesses whoseearnings are above the threshold would have to declare VAT on a definedpercentage of their revenue. Those with turnover below the thresholdwill be allowed to pay a fixed rate for the entire year.
The Department of Administrative Reforms estimated that the new policywould directly affect more than 500,000 companies, 1.8 millionfamily-run businesses and millions of employees, as it will help thefirms save more than 600 billion VND (30.7 million USD) per year.
Nguyen Khuyen, director of the Tam Thinh Trading Co, a family-runbusiness in the capital's Tay Ho District, said his company previouslyhad to pay roughly 3 million VND in tax declarations every month, whiletheir monthly turnover is only about 40 million VND.
"Withthe tax declaration extension, our business performance will improve aswe can use the savings to pay for other input costs," Khuyen said.
According to the GDT, SMEs are businesses whose charter capital is lessthan 10 billion VND. Accounting for 98 percent of all Vietnamesecompanies, SMEs contribute more than 40 percent to the country's GDP anduse more than 50 percent of the country's labour force.
The department has so far simplified 271 out of 330 administrative taxprocedures, saving 1.9 trillion VND per year (97.4 million USD). One ofthe most significant changes, which took place early this year, is toallow companies to print and use their own invoices. That alone saved400 billion VND (20.5 million USD) per year./.
